UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20192022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to  to

Commission File Number 001-36548

ATARA BIOTHERAPEUTICS, INC.

(Exact name of Registrant as specified in its Charter)

Delaware

46-0920988

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

611 Gateway Blvd.2380 Conejo Spectrum Street, Suite 900

South San Francisco, 200

Thousand Oaks, CA

9408091320

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 278-8930(805) 623-4211

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share,

ATRA

The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YesNONO

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YESNo

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesNO

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YesNO

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Small reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YESNO

The aggregate market value of common stock held by non-affiliates of the Registrant, based on the closing sales price for such stock on June 28, 201930, 2022 as reported by The Nasdaq Stock Market, was $760,739,420.$715,382,568. This calculation excludes 9,054,6042,522,882 shares held by executive officers, directors and stockholders that the Registrant has concluded are affiliates of the Registrant. Exclusion of such shares should not be construed to indicate that any such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the registrant or that such person is controlled by or under common control with the Registrant.

The number of outstanding shares of the Registrant’s Common Stock as of February 18, 2020January 31, 2023 was 58,571,550.95,926,711.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement relating to its 20202023 Annual Meeting of Stockholders are incorporated by reference into Part III of this Report where indicated. Such proxy statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.


ATARA BIOTHERAPEUTICS, INC.

TABLE OF CONTENTS

Page

PART I

Item 1.

Business

46

Item 1A.

Risk Factors

2333

Item 1B.

Unresolved Staff Comments

5577

Item 2.

Properties

5577

Item 3.

Legal Proceedings

5577

Item 4.

Mine Safety Disclosures

5577

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

5678

Item 6.

Selected Financial Data[Reserved]

5879

Item 7.7

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

5980

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

7091

Item 8.

Financial Statements and Supplementary Data

7192

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

98125

Item 9A.

Controls and Procedures

98125

Item 9B.

Other Information

100128

Item 9C.

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

128

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

102129

Item 11.

Executive Compensation

102129

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

102129

Item 13.

Certain Relationships and Related Transactions, and Director Independence

102129

Item 14.

Principal Accounting Fees and Services

102129

PART IV

Item 15.

Exhibits, Financial Statement Schedules

103130

Item 16.

Form 10-K Summary

106134


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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains “forward-looking statements”forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which represent our intent, belief or current expectations, involve risks and uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. In some cases you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “predict,” “plan,” “expect” or the negative or plural of these words or similar expressions. Forward-lookingThe forward-looking statements in this Annual Report on Form 10-K include, but are not limited to, statements about:

our expectations regarding the timing of initiating clinical studies, opening client sites, enrolling clinical studies and reporting results of clinical studies for our programs;
the likelihood and timing of regulatory submissions or related approvals for our product candidates, including the initiation, completion and expectations about the timing of approvals for a biologics license application (BLA) for tab-cel® for patients with Epstein-Barr virus with post-transplant lymphoproliferative disease (EBV+ PTLD);
the potential indications for our product and product candidates;
commercialization of Ebvallo™ in the European Union (EU) and our Commercialization Agreement with Pierre Fabre Medicament, including potential milestone and royalty payments under the agreement;
our Purchase and Sale Agreement and related transactions with HCR Molag Fund, L.P.;
our Commercial Manufacturing Services Agreement with Charles River Laboratories, Inc. (CRL) and other agreements we may enter into with CRL;
our Master Services and Supply Agreement and related transactions with FUJIFILM Diosynth Biotechnologies California, Inc.;
our expectations regarding the potential commercial market opportunities, market size and the size of the patient populations for our product and product candidates;
estimates of our expenses, capital requirements and need for additional financing;
our expectation regarding the length of time that our existing capital resources will be sufficient to enable us to fund our planned operations, including our ability to continue as a going concern;
our ability to enter into favorable commercialization arrangements with third parties to commercialize our product and product candidates;
our ability to develop, acquire and advance product candidates into, and successfully complete, clinical studies;
the initiation, timing, costs, progress and results of future preclinical studies and clinical studies and our research and development programs;
our ability to enter into and maintain contracts with clinical research organizations, manufacturing organizations and other vendors for clinical and preclinical studies, supplies and other services;
the scope of protection we are able to obtain and maintain for the intellectual property rights covering our product and product candidates;
our financial performance;
developments and projections relating to our competitors and our industry;
our ability to have our product and product candidates manufactured for our clinical studies or for commercial sale, including at commercially reasonable values;
the impact of COVID-19 to our business and operations, as well as the businesses and operations of third parties on which we rely;
our ability to attract and retain qualified personnel and to our business, operations and financial condition; and
timing and costs related to the qualification of our contract manufacturing organizations’ (CMO) manufacturing facilities for commercial production.

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our expectations regarding the timing of initiating clinical studies, enrolling clinical studies and reporting results of clinical studies for our programs;

the likelihood and timing of regulatory submissions or related approvals for our product candidates;

the potential market opportunities for commercializing our product candidates;

our expectations regarding the potential market size and the size of the patient populations for our product candidates, if approved for commercial use;

estimates of our expenses, capital requirements and need for additional financing;

our expectation regarding the length of time that our existing capital resources will be sufficient to enable us to fund our planned operations;

our ability to develop, acquire and advance product candidates into, and successfully complete, clinical studies;

the initiation, timing, progress and results of future preclinical studies and clinical studies and our research and development programs;

the scope of protection we are able to obtain and maintain for our intellectual property rights covering our product candidates;

our financial performance;

developments and projections relating to our competitors and our industry;

our ability to manufacture our product candidates for our clinical studies, or if approved, for commercial sale;

our ability to sell or manufacture approved products at commercially reasonable values; and

timing and costs related to qualification of our manufacturing plant for commercial production.

These statements are only current predictions and are subject to known and unknown risks, uncertainties, including, without limitation, risks and uncertainties associated with the costly and time-consuming pharmaceutical product development process and the uncertainty of clinical success; which may significantly impact (i) our business, research, clinical development plans and operations, including our operations in Southern California and Colorado and at our clinical trial sites, as well as the business or operations of our third party manufacturer, contract research organizations or other third parties with whom we conduct business, (ii) our ability to access capital, and (iii) the value of our common stock; the sufficiency of our capital resources and need for additional capital, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this report in greater detail under the heading “1A. Risk Factors” and elsewhere in this report. You should not rely upon forward-looking statements as predictions of future events. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risks and uncertainties.

In this Annual Report on Form 10-K, unless the context requires otherwise, “Atara,” “Atara Biotherapeutics,” “Company,” “we,” “our,” and “us” means Atara Biotherapeutics, Inc. and, where appropriate, its subsidiaries.

Summary Risk Factors

Our business is subject to numerous risks and uncertainties that may have a material adverse effect on our business, financial condition or results of operations. These risks are more fully described under the heading “1A. Risk Factors” and elsewhere in this report and include, among others:


we have incurred substantial cumulative losses since our inception and anticipate that we will continue to incur substantial losses for the foreseeable future;
we currently have only one approved product and no revenues from commercialization of any products and may never achieve profitability;
we are generally early in our development efforts, have only a small number of product candidates in clinical development, and we will need to successfully complete preclinical and clinical testing of our product candidates before we can seek regulatory approval and potentially generate commercial sales from them;
we will require substantial additional financing to achieve our goals, which may not be available to us on acceptable terms, or at all;
our future success depends on our ability to retain our executive officers and to attract, retain and motivate qualified personnel;
the results of preclinical studies or earlier clinical studies are not necessarily predictive of future results, and our existing product candidates in clinical studies, and any other product candidates we advance into clinical studies may not have favorable results in later clinical studies or receive regulatory approval;
clinical drug development, both in the U.S. and international jurisdictions, involves a lengthy and expensive process with an uncertain outcome and even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties;
our T-cell immunotherapy product candidates and our next-generation CAR T programs represent new therapeutic approaches that could result in heightened regulatory scrutiny or our inability to achieve regulatory approval, commercialization or payor coverage of our product candidates;
there can be no assurance that we will achieve all of the anticipated benefits of the Fujifilm Transaction and we could face unanticipated challenges;
the market opportunities for our product and product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small;
we may not be able to obtain or maintain orphan drug exclusivity for our product candidates;
the COVID-19 pandemic continues to impact our business and operations and could materially and adversely affect our business and operations in the future, as well as the businesses and operations of third parties on which we rely;

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our success depends upon our ability to obtain and maintain sufficient intellectual property protection for our product and product candidates, and we may not be able to protect our intellectual property rights throughout the world;
our principal stockholders own a significant percentage of our stock and, collectively, will be able to exert significant control over matters subject to stockholder approval;
our 2022 workforce reduction may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business; and
we may not be able to obtain and maintain the relationships with third parties that are necessary to develop, commercialize and manufacture some or all of our product and product candidates.

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PART I

Item 1. Business

Overview

Atara Biotherapeutics is a leading off-the-shelf,leader in T-cell immunotherapy, leveraging its novel allogeneic Epstein-Barr virus (EBV) T-cell platform to develop transformative therapies for patients with cancer and autoimmune disease. Tab-cel (tabelecleucel), our lead program in Phase 3 clinical development in the U.S., has received marketing authorization approval (MAA) for commercial sale in the European Union (EU) by the European Commission (EC) under the proprietary name Ebvallo™. We are the most advanced allogeneic T-cell immunotherapy company that is developing noveland intend to rapidly deliver off-the-shelf treatments forto patients with cancer, autoimmunehigh unmet medical need. Our platform leverages the unique biology of EBV T cells and viral diseases. We have several T-cell immunotherapies in clinical development and are progressinghas the capability to treat a next-generation allogeneicwide range of EBV-driven diseases or other serious diseases through incorporation of engineered chimeric antigen receptorreceptors (CARs) or T-cell receptors (TCRs). Atara is applying this one platform, that does not require TCR or CAR T program.HLA gene editing, to create a robust pipeline. Our strategic priorities are:

Tab-cel®: Atara’s most advanced T-cell immunotherapy program, tab-cel, has received MAA for commercial sale in the EU under the proprietary name Ebvallo and is partnered with Pierre Fabre Medicament (Pierre Fabre) for commercialization in Europe and potential commercialization, if approved, in select emerging markets. Tab-cel (tabelecleucel) is currently in Phase 3 development in the U.S. 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, and is currently in Phase 2 development; and
ATA3219: Allogeneic CAR T targeting CD19, currently in preclinical development, and being developed as a potential best-in-class product intended to target B-cell malignancies, 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.

In addition to the aforementioned strategic priorities, we also have a number of clinical and preclinical programs, including ATA2271, an autologous CAR T immunotherapy currently in Phase 1 development targeting solid tumors expressing the tumor antigen mesothelin; and ATA3271, an allogeneic CAR T immunotherapy currently in preclinical development targeting mesothelin.

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

ATA188: T-cell immunotherapy targeting EBV antigens believed to be important for the potential treatment of multiple sclerosis;

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

ATA3219: Allogeneic CAR T targeting CD19 as proof-of-concept for our next generation technologies and EBV T-cell CAR T platform.

Our T-cell immunotherapy platform includes the capability to progress both allogeneic and autologous programs and is potentially applicable to a broad array of targets and diseases. Our off-the-shelf, allogeneic T-cell platform allows for rapid delivery of a T-cell immunotherapy product that has been manufactured in advance 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.patient, requiring a complex logistics network. For tab-cel®,our allogeneic programs, we utilize a proprietary cell selection algorithm to select the appropriate set of cells for use based on a patient’s unique immune profile. This matchingOne of our contract manufacturing organizations (CMOs) has completed commercial production qualification activities for tab-cel and our other CMOs are currently in the process is designedof completing commercial production qualification activities for tab-cel while we build inventory according to allow our cellscommercial product supply strategy.

In October 2021, we entered into the Commercialization Agreement with Pierre Fabre (Pierre Fabre Commercialization Agreement), pursuant to be administered withoutwhich we granted to Pierre Fabre an exclusive, field-limited license to commercialize and distribute Ebvallo in Europe and select emerging markets in the pre-treatmentMiddle East, Africa, Eastern Europe and Central Asia following regulatory approval. We retain full rights to tab-cel in other major markets, including North America, Asia Pacific and Latin America. As contemplated by the Pierre Fabre Commercialization Agreement, we entered into (i) a Manufacturing and Supply Agreement (ii) a Pharmacovigilance Agreement (iii) and a Quality Agreement, in each case, with Pierre Fabre to further advance our partnership with Pierre Fabre. In September 2022, we amended the Pierre Fabre Commercialization Agreement to receive an additional $30 million milestone payment from Pierre Fabre following EC approval of Ebvallo for EBV+ PTLD and subsequent filing of the MAA transfer to Pierre Fabre, in exchange for, among other things, a reduction in: (i) royalties we are eligible to receive as a percentage of net sales of Ebvallo in the Territory, and (ii) the supply price mark up on Ebvallo purchased by Pierre Fabre. Additionally, we also agreed to extend the time period for provision of certain services to Pierre Fabre under the Pierre Fabre Commercialization Agreement. In December 2022, we sold a portion of our right to receive royalties and certain milestones in Ebvallo under the Pierre Fabre Commercialization Agreement to HCR Molag Fund L.P (HCRx) for a total investment amount of $31.0 million, subject to a cap between 185% and 250% of the total investment amount by HCRx.

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

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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. Collectively, the Bayer License Agreement, the Manufacturing and Supply Agreement and the Technology Transfer Agreement are referred to as the Bayer Agreements. In May 2022, Bayer notified us of its decision to terminate the Bayer Agreements, and on August 2, 2022, we entered into the Termination, Amendment and Program Transfer Agreement (Bayer Termination Agreement) with Bayer that is requiredterminated the Bayer Agreements and returned full product development rights for some therapiesATA2271 and ATA3271 to reduce monitoring following administration. In addition, our manufacturing facility is capableAtara effective as of producing multiple types of therapies and Atara MatchMe™, our proprietary T-cell order management platform, is being developed to provide patient care teams with access to therapy.July 31, 2022.

We have also entered into research collaborations with leading academic institutions such as Memorial Sloan Kettering Cancer Center or MSK,(MSK), the Council of the Queensland Institute of Medical Research or QIMR Berghofer,(QIMR Berghofer) and H. Lee Moffitt Cancer Center and Research Institute or Moffitt,(Moffitt) pursuant to acquirewhich we acquired rights to novel and proprietary technologies and programs.

Our research facilities in Thousand Oaks, California (ARC) and Aurora, 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 recognize thatalso entered into a Master Services and Supply Agreement with FDB (Fujifilm MSA) which became effective upon the closing and could extend for up to ten years. Pursuant to the Fujifilm MSA, FDB will supply us with specified quantities of our clinical studies maycell therapy products (if approved) and product candidates, manufactured in accordance with cGMP standards. The Fujifilm MSA does not be availableobligate us to allpurchase products and product candidates exclusively from FDB. Based on our expectations of patients and demand for product in the EU, we believe our current inventory of Ebvallo is sufficient to supply commercial demand in the EU until the end of 2023.

We also work with Charles River Laboratories (CRL) pursuant to a Commercial Manufacturing Services Agreement (CRL MSA) that we entered into in December 2019. Pursuant to the CRL MSA, CRL provides manufacturing services for our product and certain of our product candidates. In February 2023, we amended the CRL MSA to extend the term until the earlier of September 30, 2023 or receipt of certain batches of our product and product candidates.

We have established expanded accessnon-cancellable minimum commitments for products and compassionate use programsservices, subject to agreements with a term of greater than one year, with clinical research organizations and CMOs.

In August 2022, we announced a reduction in instances where thereworkforce of approximately 20% of total workforce to focus our activities as a leaner organization centered on research and development to further advance our innovative pipeline, while reducing cash burn. The workforce reduction is expected to include total restructuring charges of approximately $6.0 million, comprised primarily of severance payments, wages for the 60-day notice period in accordance with the California Worker Adjustment and Retraining Notification Act and continuing health care coverage over a period of time after separation. In most cases, the severance payments were paid as a lump sum in October 2022. Certain of the notified employees had employment agreements which provided for separation benefits in the form of salary continuation; these benefits will be paid between October 2022 and November 2023. All of the severance costs represent cash expenditures.

In December 2022, we entered into a Purchase and Sale Agreement (HCRx Agreement) with HCR Molag Fund, L.P. (HCRx), a Delaware limited partnership. Pursuant to the terms of the HCRx Agreement, we received a total investment amount of $31.0 million in exchange for HCRx being entitled to receive a portion of the tiered, sales-based royalties for Ebvallo, in amounts ranging from the mid-single digits to significant patient need.double digits, as well as certain milestone payments, both otherwise payable by Pierre Fabre to us under the Pierre Fabre Commercialization Agreement. The total royalties and milestones payable to HCRx under the HCRx Agreement are capped between 185% and 250% of the total investment amount by HCRx, dependent upon the timing of such royalties and milestones.


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Pipeline

Our pipeline is summarized below:

img120008200_0.jpg 

TheseExcept for Ebvallo in the EU, these investigational agents haveare not been approved by any regulatory agency.agencies. Efficacy and safety have not been established.

EBV+ PTLD: EBV-Associated Post-Transplant Lymphoproliferative Disease; RR: rituximab relapsed/refractory; HCT: allogeneic hematopoietic cell transplant; SOT: solid organ transplanttransplant.

We have entered into an agreement with Pierre Fabre to commercialize Tab-cel® for EBV+ cancers in Europe, Middle East, Africa, and other select emerging markets.

Other programs: ATA2321 (AML)EBV vaccine, other solid tumor, and infectious disease programs

(1)
Phase 2 multi-cohort initiated in Q3 2020, with possible indications including EBV+ PTLD with CNS involvement, EBV+ PID/AID LPD, EBV+ LMS and other potential EBV-associated diseases; Initial phase 2 data expected in 2023.
(2)
Phase 1b/2 study in combination with anti-PD-1 therapy, KEYTRUDA® (pembrolizumab), ATA2431 (B-cell malignancies), ATA230 (CMV), ATA368 (HPV), ATA520 (WT1)in patients with platinum-resistant or recurrent EBV-associated NPC.
(3)
Targeted antigen recognition technology; Phase 2 Randomized Controlled Trial.
(4)
Mesothelin is expressed at high levels on the surface of cells in aggressive solid tumors including mesothelioma, triple-negative breast cancer, esophageal cancer, pancreatic cancer and ATA621 (BK/JCV)

(1)

Phase 1b/2 study in combination with anti-PD-1 therapy, KEYTRUDA® (pembrolizumab), in patients with platinum-resistant or recurrent EBV-associated NPC.

non-small cell lung cancer​.

(2)(5)

Our CAR T collaboration with MSK will focus on development of a next-generation, mesothelin-targeted CAR T using novel 1XX CAR signaling and PD-1 dominant negative receptor (DNR) checkpoint inhibition technologies.

Phase 2 multi-cohort study planned with possible indications including EBV+ PTLD with CNS involvement, EBV+ PID/AID LPD, EBV+ LMS and other potential EBV-associated diseases

(3)

Targeted antigen recognition technology

(4)

Mesothelin is expressed at high levels on the surface of cells in aggressive solid tumors including mesothelioma, triple-negative breast cancer, esophageal cancer, pancreatic cancer and non-small cell lung cancer

(5)

MSK investigator-sponsored Phase 1 study (NCT02414269) of a mesothelin-targeted CAR T immunotherapy is ongoing; Atara’s CAR T collaboration with MSK will focus on development of a next-generation, mesothelin-targeted CAR T using novel 1XX CAR signaling and PD-1 dominant negative receptor (DNR) checkpoint inhibition technologies

Ebvallo™ (Tab-cel®)

Tab-cel®EBV+ PTLD

EBV+ PTLD

Since its discovery as the first human oncovirus, EBV has been implicated in the development of a wide range of diseases, including lymphomas and other cancers. EBV is widespread in human populations and persists as a lifelong, asymptomatic infection. In healthy individuals, a small percentage of T cells are devoted to keeping EBV in check. In contrast, immunocompromised patients, such as those undergoing hematopoietic cell transplants or HCT,(HCT) or solid organ transplants or SOT,(SOT) have a reduced ability to control EBV. Left without appropriate immune surveillance, EBV transformedEBV-transformed cells can, in some patients, proliferate and cause an aggressive, life-threatening cancer called EBV+ PTLD.PTLD. Nearly all cases of PTLD that occur following HCT are EBV positive while approximately 60% of PTLD cases that occur following SOT are EBV positive. Approximately 10-15% of PTLD patients are children.


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Historical studies suggest a high unmet medical need for improved therapies in patients with EBV+ PTLD who have failed rituximab or rituximab plus chemotherapy,, with approximately 40% to 60% of patients either not responding to or progressing following this first line of therapy. Expected median overall survival in patients with EBV+ PTLD following HCT who have failed rituximab-based first line therapy is between 16approximately 1.7 months, and 56 days, with a one-year survival rate of approximately 23% based on our evaluation of available historical outcomes data. Estimated one- and two-year survival following incomplete response to rituximab infor patients with high-risk EBV+ PTLD afterfollowing SOT who have failed rituximab-based first line therapy, the median overall survival is 36% and 0%, respectively.approximately 3.3 months. The use of chemotherapy in patients with EBV+ PTLD who have failed rituximab is frequently associated with significant rates of treatment-related mortality due to the frailty of the patients and severe toxicities associated with chemotherapy. Based on our market research, we estimate there were several hundred EBV+ PTLD patients who failed rituximab or rituximab plus chemotherapy in the U.S. in 2018.2019.

Tab-cel® (Ebvallo™) for EBV+ PTLD

In June 2015, we licensed certain patent rights, know-how and a library of T cells and cell lines specific to EBV from MSK in under an agreement we refer to asexclusive license agreement. In accordance with the 2015 MSK License Agreement. In the 2015 MSK License Agreement,license agreement, we agreed to use commercially reasonable efforts to commercialize the licensed products and to make milestone payments with respect to the licensed programs and to make royalty payments to MSK to the extent product candidates arising from the collaboration are commercialized. Our most advancedfirst commercial product, candidate, tab-cel®,Ebvallo, is part of this MSK collaboration and targets EBV.

Tab-cel® (Ebvallo™) is an allogeneic EBV-specific T-cell immunotherapy that is approved in development for the treatment of EBV-associated hematologic malignanciesEU and solid tumors.

Tab-cel® is currently in Phase 3 development in the U.S. for the treatment of patients with EBV+ PTLD who have failed rituximab or rituximab plus chemotherapy. Based on our market research, we estimate there were several hundredTab-cel is also under development for other EBV+ PTLD patients who failed rituximab or rituximab plus chemotherapydiseases with significant unmet medical need through a Phase 2 multi-cohort study that was initiated in the U.S. in 2018. third quarter of 2020.

Tab-cel® has received Breakthrough Therapy Designation or BTD,(BTD) from the U.S. Food and Drug Administration or FDA, (FDA) for the treatment of patients with EBV+ PTLD after HCT who have failed rituximab Priority Medicines, or PRIME, designation from the European Medicines Agency, or EMA, for the same indication, and orphan designation in the U.S. and European Union (EU) for the treatment of patients with EBV+ PTLD following HCT or SOT.

Tab-cel® is also under development for other EBV-associated hematologic malignancies and solid tumors through a multi-cohort study, and for nasopharyngeal carcinoma, or NPC, in a separate clinical study.

Tab-cel® for EBV+ PTLD

In clinical studies conducted at MSK that have enrolled patients with EBV+ PTLD following HCT and SOT, efficacy following treatment with tab-cel® monotherapy compared favorably with historical data in these patient populations. Patients with EBV+ PTLD after HCT who have failed rituximab and were treated with tab-cel® had one-yeartwo-year overall survival of approximately 70%83% in two separate clinical studies.studies. In the setting of EBV+ PTLD after SOT in patients who have failed rituximab,, similar results were observed, with one-yeartwo-year overall survival of approximately 60%86% in tab-cel®-treatedtab-cel-treated patients. A response rate of greater than or equal to 50% was observed in HCT and SOT patients in these studies.

In December 2017, we initiated two Phase 3 studies for tab-cel® intended to support approval in two separate indications, the treatment of EBV+ PTLD following HCT (which was referred to as the MATCH study) and SOT in patients who have failed rituximab (which(which was referred to as the ALLELE study).

The Phase 3 MATCH study was a multicenter, open label, single arm study designed to enroll approximately 35 patients with EBV+ PTLD following HCT who have failed rituximab. The Phase 3 ALLELE study was initially a multicenter, open label study designed with two non-comparative cohorts of approximately 35 patients each. The first cohort included patients who previously received rituximab monotherapy, and the second cohort included patients who previously received rituximab plus chemotherapy. The primary endpoint of both the MATCH and ALLELE studies was confirmed best objective response rate, or ORR, defined as the percent of patients achieving either a complete or partial response to treatment with tab-cel® confirmed after the initial tumor assessment showing a response.

In 2019,, after discussion and alignment with regulators, we combined MATCH and ALLELE into a single study (which we now refer to as the ALLELE study) that now consists of an HCT cohort for EBV+ PTLD patients who have failed rituximab, and ana single SOT cohort for EBV+ PTLD patients who have failed prior treatment with rituximab with both chemotherapyor without chemotherapy. Additionally, we expanded the ALLELE study geographically to include clinical sites in Europe and non-chemotherapy prior treatment experience.Canada.

In the third quarter of 2020, we completed an interim analysis for the ALLELE study. Data from the interim analysis showed a 50 percent objective response rate (ORR) to tab-cel with independent oncologic and radiographic assessment (IORA) in patients with relapsed-refractory EBV+ PTLD following HCT or SOT, that had reached at least six months follow-up after the ORR assessment. This ORR is consistent with previously published investigator assessed data. The primary endpointtab-cel safety profile is also consistent with previously published data, with no new safety signals. In December 2022, we presented updated interim analysis and safety results from the ALLELE study and updated efficacy and safety data from two single-center, open-label studies, and multicenter expanded access program in patients with EBV+ Leiomysosarcomas at the 2022 American Society of ALLELE remains as confirmed best ORR, as determinedHematology Annual Meeting.

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 Ebvallo in Europe and select emerging markets. We retain full rights to tab-cel in other major markets, including North America, Asia Pacific and Latin America. In September 2022, we amended the Pierre Fabre Commercialization Agreement to receive an additional $30 million milestone payment from Pierre Fabre in exchange for a reduction in royalties and the supply price mark up on Ebvallo purchased by independent review,Pierre Fabre. See section ‘Terms of Certain License and is designedCollaboration Agreements’ below for additional details. In December 2022, we sold a portion of our right to rule outreceive royalties and certain milestones in Ebvallo under the Pierre Fabre Commercialization Agreement to HCRx for a 20% ORR as the null hypothesis. This means that if the lower boundtotal investment amount of $31.0 million, subject to a cap between 185% and 250% of the 95% confidence interval on ORR amongtotal investment amount by HCRx.

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In November 2021, we submitted an EU marketing authorization application (MAA) for tab-cel in patients receiving at least one dose of tab-cel® exceeds 20% atwith EBV+ PTLD. In December 2022, the end ofEC granted marketing authorization for Ebvallo under the study, then the study would be expected to meet the primary endpoint“exceptional circumstances” regulatory pathway as a monotherapy for the treatment of PTLD.adult and pediatric patients two years of age and older with relapsed or refractory EBV+ PTLD who have received at least one prior therapy. For example, assuming enrollment of 33SOT patients, prior therapy includes chemotherapy unless chemotherapy is inappropriate. Our request to transfer the marketing authorization for Ebvallo to Pierre Fabre was adopted by the EC in a cohort of ALLELE, an observed


ORR above approximately 37% would be expectedFebruary 2023. Pierre Fabre is planning to meetcommence Ebvallo launch activities in the primary endpoint for that cohort. Secondary endpoints include duration of response, overall survival, safety, quality of life metrics, and other measures to evaluate its health economic impact. Additionally, we expect to expand the ALLELE study geographically to include clinical sites outside the U.S. We submitted clinical trial applications, or CTAs, to severalfirst European countries in 2019the first quarter of 2023. Under the “exceptional circumstances” marketing authorization, Pierre Fabre is subject to enable opening EU clinical sitescertain ongoing post-marketing obligations to continue confirmation of the benefits of Ebvallo. Since Ebvallo was approved under the exceptional circumstances regulatory pathway, continuation of the Ebvallo marketing authorization is subject to annual reassessments. The annual reassessments will determine whether the Ebvallo marketing authorization should be maintained, changed, or suspended, based on Pierre Fabre’s fulfillment of post-marketing obligations and the risk/benefit profile of Ebvallo.

In October 2022, we filed the MAA for Ebvallo with the Medicines and Healthcare Products Regulatory Authority (MHRA) in 2020, and our CTAs in Austria, Spain and the United Kingdom (UK) and anticipate a decision on the potential approval of the MAA in the UK by March 2023.

We have performed extensive studies demonstrating analytical comparability between the tab-cel manufacturing process versions used for the pivotal ALLELE study and that intended for commercialization. Comprehensive comparability analyses covered 21 key attributes for potency, purity and alloreactivity. We believe analytic comparability between tab-cel process versions has been demonstrated based on well-established statistical methodology and application of International Council for Harmonization (ICH) guidelines and is further supported by significant and consistent clinical experience. These comparability data analyses were submitted to the EMA through our MAA filing. EMA stated in its assessment report issued following approval of the MAA for tab-cel by the EC that it considered comparability of the intended commercial product with the clinically used product to be shown.

We have been approved.

We plan to initiate a biologics license application, or BLA, submission for patients with EBV+ PTLD to the FDA in the second half of 2020. We plan to discuss the totality of tab-cel® results with the FDA in a pre-BLA meeting prior to initiating the BLA submission.

We are also planning the submission of a marketing authorization of tab-cel® in the European Union. In February 2016, tab-cel® was granted orphan drug designation by the European Commission for the treatment of patients with post-transplant lymphoproliferative disorder. Tab-cel® has also been granted access to the PRIME scheme. PRIME is a program launched by the EMA to enhance support for the development of medicines that target an unmet medical need. This voluntary program is based on enhanced interaction and early dialogue with developers of promising medicines, to optimize development plans and speed up evaluation so these medicines can reach patients earlier. The program focuses on medicines that may offer a major therapeutic advantage over existing treatments, or benefit patients without treatment options. These medicines are considered priority medicines by EMA. To be accepted for PRIME, a medicine must show its potential to benefit patients with unmet medical needs based on early clinical data. We remainengaged in discussions with the European Medicines Agency, or EMA. FDA regarding a potential biologics license application (BLA) submission for tab-cel in the United States, including on (i) the content of chemistry, manufacturing and controls (CMC) module 3 and the assessment of comparability between the product used in the pivotal ALLELE study and that intended for commercialization and (ii) the clinical data package requirements.

In February 2022, we held a Type B CMC meeting with the FDA to discuss comparability between the intended commercial and pivotal clinical trial process versions. This meeting did not result in alignment on comparability and the FDA initially recommended we conduct a clinical study with commercial product as the FDA did not agree that comparability has been demonstrated between product used in the pivotal ALLELE study and the intended commercial product. Following further discussions, the FDA recommended a potential path to a BLA submission without the need for a new clinical study.

We have submittedsubsequently held another meeting with the FDA to discuss topics relating to CMC, which culminated in clear guidance and agreement on specific CMC module 3 requirements for a Pediatric Investigation Plan, or PIP,potential BLA submission. Following this meeting, we filed an amendment to EMA. Following an agreement with EMA on the PIP, we plan to submit a tab-cel® EU marketing authorizationInvestigational New Drug (IND) application for patients with EBV+ PTLD in 2021.

We are continuing our preparations to support the planned commercialization of tab-cel®. This includes the development of our proprietary T-cell order management platform, Atara MatchMeTM, that is being developed to provide patient care teamsadditional CMC information requested by the FDA.

In February 2023, we held a meeting with accessthe FDA on clinical aspects for a potential BLA submission for tab-cel. Following this discussion, we and the FDA expect to therapy throughhold another meeting to further discuss CMC matters relating to a web-based interface. potential BLA submission for tab-cel, including aspects related to comparability that may support pooling clinical data from different process versions. We expect to pursue approvals provide a further update on a potential BLA submission for tab-cel in key geographiesthe second quarter of 2023. and may seek partners to aid in our commercialization efforts in select markets.

Tab-cel® Multi-Cohort Study

We expectcontinue to pursue development of tab-cel® in earlier linesadditional patient populations, with a primary focus on immunodeficiency-associated lymphoproliferative diseases (IA-LPDs), given the commonality of therapy,their EBV-driven mechanism of disease in immunocompromised patients, high unmet medical need and positive clinical data to date with tab-cel. In patients where previous treatments have failed, the objective response rates, including complete response, were 33.3% (three out of nine patients) in our plannedAID-LPD and 37.5% (three out of eight patients) in PID-LPD groups. Tab-cel was generally well-tolerated with a favorable safety profile consistent with previously published clinical studies. These clinical data demonstrated that tab-cel was well-tolerated and showed encouraging clinical activity in this patient population, with objective response rates ranging from 50% (two out of four patients) to 80% (four out of five patients). The overall survival (OS) rate at one year in patients with EBV viremia treated in the EAP-201 study was 100 percent for a median follow-up of 14.6 months (min 12.2, max 17.8).

In the third quarter of 2020, we initiated a Phase 2 multi-cohort study and are actively opening sites and enrolling in six patient populations, including four within IA-LPDs and two in other EBV-driven diseases, in both the U.S. and EU. We continue to enroll

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patients in this study. We expect to initiate enrollment inanticipate investigating additional label expansion opportunities with this multi-cohort study. Data from this study including up to six additional EBV+ ultra-rare diseases for patients,is expected in the second half of 2020 based on previous clinical experience treating these patients.2023.

Tab-cel® for NPCNPC

NPCNasopharyngeal carcinoma (NPC) is a type of head and neck cancer that is primarily associated with EBV. Standard treatment for NPC typically includes radiation therapy, platinum-based chemotherapy or a combination of both. Surgical intervention is only rarely employed and is usually only utilized in select early stageearly-stage cases. There are no approved therapeutic agents available to treat relapsed/refractory NPC, although there are multiple agents in development for this patient population.

In April 2017, we entered into an agreement with Merck Sharp & Dohme (known as MSD outside of the U.S. and Canada) to provide drug supply for a study to be sponsored and conducted by us to evaluate tab-cel® in combination with Merck’s anti-PD-1 (programmed death receptor-1) therapy, KEYTRUDA® (pembrolizumab), in patients with platinum-resistant or recurrent EBV-associated NPC. ThisOur Phase 1b/21b study, which was initiated in 2018, achieved its safety endpoints and stable disease in some patients. Due to the fourth quarterevolving treatment landscape of 2018, will evaluate the safety, pharmacokinetics, pharmacodynamics, and preliminary efficacy of the combination. We enrolled the final planned patient in the Phase 1b part of the study in February 2020. Based on our market research, we estimate the incidence during 2018 of NPC in the U.S.EBV-driven nasopharyngeal carcinoma (NPC), United Kingdom, France, Italy and Spain was collectively approximately 3,800 patients and approximately 71,000 patients in East Asia. Our study is designed to address a sub-population of the total incidence of this disease.

EAP and SPU Programs

Atara continues to see strong tab-cel® investigator, physician and patient interest and, for cases in which we are not able to enroll patients in its EBV+ PTLD Phase 3 clinical study,actively conducting any development activities while we are providing tab-cel® to patients in need underreassess our expanded access protocol, or EAP,approach and single patient use, or SPU, programs. The primary objective of these programs is to provide tab-cel® monotherapy tothe development and regulatory pathways for patients with EBV-associated diseasesplatinum resistant or certain EBVrecurrent EBV-drive NPC.+ malignancies for whom there are no other therapeutic options.

ATA188

Multiple Sclerosis


Atara isWe are also developing ATA188, aan allogeneic T-cell immunotherapy targeting EBV antigens believed to be important for the potential treatment of multiple sclerosis or MS.(MS). MS is a chronic autoimmune disorder of the central nervous system or CNS,(CNS) that disrupts the myelination and normal functioning of the brain, optic nerves and spinal cord through inflammation and tissue loss. The evolution of MS results in an increasing loss of both physical and cognitive (e.g., memory) function. This has a substantial negative impact on the more-than twoapproximately 2.3 million peoplepatients worldwide affected bydiagnosed and living with MS, with approximately 800,000 diagnosed prevalent casesone million of MS in the U.S. and EU in 2019.those patients having a progressive form of MS.

There are two categories of MS: progressive MS or PMS,(PMS) and relapsing-remitting MS or RRMS.(RRMS). RRMS is a form of MS that is characterized by episodes of new or worsening signs or symptoms (relapses) followed by periods of recovery and quiescence during which the disease does not progress. PMS is a severe form of MS that is characterized by persistent progression and worsening of MS symptoms and physical disability over time for which there are few therapeutic options. There are two types of PMS: primary progressive MS or PPMS,(PPMS) and secondary progressive MS or SPMS. Published reports indicate that together, PPMS and SPMS make up approximately 43% of MS patients.(SPMS). PPMS occurs when the patient has a disease course characterized by steady and progressive worsening after disease onset. SPMS initially begins as RRMS, but once patients have continuous progression of their disease, they have developed SPMS.

Scientific and clinical findings support a potential biologic connection between EBV and MS. EBV is present in nearly all patients with MS. The MS disease course has been shown to correlate with measures of EBV activity, and with exhaustion of endogenous EBV-specific T cell populations. In addition, in separate studies, clear differences in location and frequency of EBV-infected B cells and plasma cells were evident between the brains of subjects without MS and the brains of MS patients, where EBV-infected B cells and plasma cells were in close proximity to areas of active demyelination. Further data suggest that EBV-positive B cells and plasma cells in the CNS have the potential to catalyze an autoimmune response, resulting in the typical MS pathophysiology. In patients with MS, their T cells may be unable to control EBV-positive B cells and plasma cells so that B cells and plasma cells could then accumulate in the brain, function as antigen-presenting cells and generate antibodies that attack and destroy myelin, the protective layer that insulates nerves in the brain and spinal cord. This loss of myelin ultimately leads to MS symptoms. The role of B cells in MS is supported by the approval by the FDA of ocrelizumab for PPMS, which broadly targets B cells (and not plasma cells) outside of the CNS through their expression of a cell surface marker known as CD20.

Based on our analysis of industry data and assumed increases in treatment rates and market share for a best-in-class treatment, we estimate that the potential annual U.S. market opportunity in PMS could be at least $3.5 billion by 2025.

ATA188 for MS

We licensed rights to certain know-how and technology from QIMR Berghofer that uses targeted antigen recognition to create off-the-shelf T-cell immunotherapy product candidates applicable to a variety of diseases, including autoimmune conditions such as MS. Our license agreement with QIMR Berghofer requires that we make various milestone and royalty payments to QIMR Berghofer based on the sales of products arising from this collaboration, if any. We are also working with QIMR Berghofer on the development of EBV-targeted and other virally targeted T cells. Through this technology, we are expanding the role of T-cell-based immunotherapy beyond oncology and viral infections to autoimmune diseases.

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Our T-cell immunotherapy product candidate utilizing this technology, ATA188, is an off-the-shelf EBV-specific T-cell preparation that utilizes an MS-specific targeted antigen recognition technology that enables the T cells we administer to selectively identify cells expressing the EBV antigens that we believe are important for the potential treatment of MS. ATA188 is designed to selectively target only those cells which are EBV-positive while sparing those that are not. Recent studies published in Science and Nature provide new epidemiological data suggesting that EBV is the leading cause of MS, and mechanistic data suggesting EBV infection can initiate and propagate the autoimmune attack on the brain in MS. We believe that eliminating only EBV-positive B cells and plasma cells has the potential to benefit some patients with MS.PMS and SPMS.

In the fourth quarter of 2017, we initiated an open label, single arm, multi-center, multi-national Phase 1 study with allogeneic ATA188 for patients with PMS. The primary objective of this Phase 1 study is to assess the safety of ATA188 in patients followed for at least one year after the first dose. Key secondary endpoints in the study include measures of clinical improvement, using recognized scales for MS symptoms, function and disability including Expanded Disability Status Scale or EDSS,(EDSS), Fatigue Severity Score, MS Impact Scale-29 (physical), Timed 25-Foot Walk (T25FW), 9-Hole Peg Test, 12-Item MS Walking Scale (MSWS-12) and Visual Acuity.

Enrollment for the fourth and final Phase 1 dose escalation cohort in the Phase 1a portion of the study was completed in the third quarter of 2019 and we presented initialupdated efficacy and updated safety results from this study at the MSVirtual2020: 8th Joint ACTRIMS-ECTRIMS Meeting in September 20192020. The data demonstrated that ATA188 was well-tolerated across all four dose cohorts, with no dose-limiting toxicities and no fatal adverse events. Additionally, patients who demonstrated sustained disability improvement (SDI) at any timepoint maintained improvement at all future timepoints, and higher proportion of patients showed SDI with increasing dose (42% in cohorts 3 and 4 (higher doses) versus 17% in cohorts 1 and 2 (lower doses)). SDI is defined as clinically significant improvement in EDSS or T25FW observed at two consecutive time points. ATA188 treatment showed no clinically meaningful effect on cytokine levels and no dose-related safety trends were identified. Rhinorrhea (runny nose) was the only treatment-related event that occurred in more than one subject. No dose-limiting toxicities and no fatal adverse events have been reported. The safety profile has remained consistent with previously reported data. We also presented preclinical translation data at ACTRIMS-ECTRIMS that further support the proposed mechanism of action of ATA188 targeting EBV-infected B cells. These combined analyses of T cells comprising ATA188 are consistent with its proposed mechanism of targeting EBV-infected B cells by recognizing MS-relevant EBV antigens on these cells via defined TCRs. While these data will need to be confirmed in a double-blind, placebo-controlled, randomized study, they indicate the potential for the first treatment option in PMS to halt or reverse the progression of disease. We believe these results align with the body of evidence supporting the important role of EBV-infected B cells in the chronic autoimmune pathology of MS.

We are currently progressing an open-label extension (OLE) of the Phase 1 study of ATA188 for patients with primary and secondary 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 3537th Congress of the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS). These results were basedBased on the clinical data, most patients either demonstrated sustained disability improvement or stable disease. The presentation also featured 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 July 29, 2019,EDSS improvement in our clinical assessment of ATA188.

In June 2020, we enrolled the first patient in our Phase 2, randomized, double-blind, placebo-controlled dose-expansion trial (EMBOLD) to evaluate the efficacy and showed that across four planned dose cohorts,safety of ATA188 was well tolerated in PMS patients with no evidencePMS and we continue to enroll patients in this study. Based on the data from the Phase 1a portion of cytokine release syndrome, graft versus host diseasethe study, we selected the cohort 4 dose for enrollment in the Phase 2 EMBOLD study. In addition to measuring change in disability measures compared to baseline, especially SDI over time, the study also includes multiple measures of patients’ function as well as various biomarkers.

In March 2022, we presented updated Phase 1 and OLE data that demonstrated 20 out of 24 patients have had either EDSS improvement or dose-limiting toxicities.


Following a six-month assessmentEDSS stability throughout their observation in the study with up to 42 months follow-up; 33% of patients in cohort 3the high-dose cohorts achieved confirmed expanded disability status scale (EDSS) improvement at the 12-month timepoint.

In January 2021, we discussed updates to the design of the EMBOLD study with the FDA and gained alignment on several points, as well as potential registrational studies: (i) a disability improvement endpoint is appropriate, with the FDA articulating a preference for EDSS improvement; (ii) the criteria used to enroll the study population of SPMS and PPPMS are appropriate; and (iii) the Phase 2 trial should run for at least 12 months, and a properly conducted interim analysis is appropriate. We also submitted a protocol amendment to the FDA, increasing the number of patients to 80, changing the primary end point of the study to EDSS disability improvement and maintaining the biological and functional endpoints.

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In June 2022, we completed the planned Interim Analysis (IA) of the EMBOLD study and determined no sample size adjustment or modification would be made to the study. Based on the analysis of the EMBOLD data available at the time of the IA, there was not a sufficient dataset to draw conclusions about the predictive value of six months EDSS improvement for 12 months EDSS improvement. The Independent Data and Safety Monitoring Committee (IDSMC) believes the six-month interim endpoint may be an inaccurate measure of the potential of this intervention in this condition. The IDSMC recommended the study we selected this cohort 3 dose to initiate the randomized, double-blind, placebo-controlled Phase 1b part of this study, for which we plan to initiatecontinue without sample size adjustment or modification. Based on enrollment for patients with PMS in the second or third quarterEMBOLD at the end of 2020. We expectJuly, approximately 90 patients are planned to present six- and twelve-month ATA188 Phase 1a clinical results for cohorts 3 and 4be included in the firstread out of the study primary endpoint of confirmed disability improvement of Expanded Disability Status Scale (EDSS) at 12 months. Communication of such data is planned to occur in an appropriate forum in October 2023.

In October 2022, we presented new magnetic resonance imaging (MRI) biomarker imaging and second halves of 2020, respectively.

In addition to ATA188, QIMR Berghofer had previously completed aOLE clinical data from the Phase 1 study of ATA190, an autologous EBV-specific T-cell preparation that utilizesATA188 in progressive MS at the same approach to targeted antigen recognition as 2022 European Committee for Treatment and Research In Multiple Sclerosis (ECTRIMS) conference.

ATA188 has received fast track designation for the treatment of patientsPPMS and SPMS from the FDA.

We continue to plan for Phase 3 readiness, including interacting with PMS. the FDA based on two fast track designations, and further developing our proprietary large-scale bioreactor manufacturing process.

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 domain and EBV T-cell platform and does not require TCR or human leukocyte antigen (HLA) gene editing. Data from preclinical studies for ATA3219 suggest enhanced functional persistence, polyfunctional phenotype and efficient targeting of CD19-expressing tumor cells both in vitro and in vivo with a manufacturing process that focuses on T cell stemness.

Based on continued encouraging ATA188 results, acceleration ofacademic data from a clinical study, an EBV T-cell platform has the ATA188 randomized Phase 1b study and the Company’s strategic focus onpotential to generate off-the-shelf, allogeneic T-cell immunotherapies, Atara does not plan to initiate a randomized study of ATA190 in PMS at this time and will evaluate strategic options for this program.

CAR T Programs

Our current CAR T pipeline is as follows:

AML: acute myeloid leukemia; DNR: Dominant Negative Receptor

(1)

Mesothelin is expressed at high levels on the surface of cells in aggressive solid tumors including mesothelioma, triple-negative breast cancer, pancreatic cancer and non-small cell lung cancer.

ATA2271/ATA3271

Atara’s pipeline includes next-generation CAR T immunotherapies with high response rates, durable responses and low risk of toxicity that can be rapidly delivered to patients.

We continue to make progress on the ATA3219 manufacturing process for patients with hematologic malignanciesscale-up. We currently intend to file an IND for the ATA3219 program in the second quarter of 2023 following completion of process optimization and solid tumors,manufacturing runs in the GMP manufacturing suites of our CMO. Our EBV CD19 CAR T program is enriched for a memory T-cell phenotype and viral diseases, includingcontinues to show robust activity in preclinical studies.

Additional Programs and Platform Expansion Activities

In addition to the prioritized programs described above, we have a number of other clinical and preclinical programs.

Our CAR T immunotherapy pipeline include autologous ATA2271 and allogeneic ATA3271 targeting mesothelin, which are partnered with MSKis 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). In May 2022, Bayer notified us of its decision to terminate the Bayer Agreements and on August 2, 2022, we entered into the Bayer Termination Agreement which returned full product development and commercialization rights for ATA2271 and ATA3271 to us effective July 31, 2022. See section ‘Terms of Certain License and Collaboration Agreements’ below for additional details..

In 2018, we entered into several agreements to expand our collaboration with MSK to the development of CAR T immunotherapies, with a license in May 2018 related to multiple collaboration targets and a license in December 2018 related to our next-generation CAR T program targeting mesothelin. Under these CAR T agreements, we agreed to use commercially reasonable efforts to develop, obtain regulatory approval and, if approved, commercialize certain collaboration targets and to make certain milestone and royalty payments.

We have prioritized our mesothelin-targeted next-generation13


ATA2271 is designed to improve efficacy persistence, and durability of response versus CD28/CD3z-based CARs by using a novel 1XX CAR T program,co-stimulatory signaling domain and cell intrinsic checkpoint inhibition technology with a PD-1 dominant negative receptor (DNR). Data from investigational new drug application (IND) enabling studies for ATA2271 were presented at the American Association for Cancer Research (AACR) Virtual Meeting II in June 2020. These data support the first application of the combination of 1XX co-stimulatory domain and cell intrinsic checkpoint inhibition technology with a PD-1 DNR that are associated with less cell exhaustion, improvements in functional persistence, serial cell killing and in vivo efficacy, which consists of ATA2271 and ATA3271. Results presentedwas maintained through multiple tumor re-challenges when compared with first-generation CD28/CD3z-based mesothelin CAR. The FDA accepted the IND application submitted by our collaborators at MSK have demonstrated that their regionally-delivered mesothelin-targeted,in August 2020, and in September 2020, MSK initiated an open-label, single-arm Phase 1st generation autologous CAR T cells were well tolerated and showed encouraging anti-tumor activity in combination with pembrolizumab, a PD-1 checkpoint inhibitor. These collaborator results support our planned development clinical study of ATA2271, a next-generation, mesothelin-targeted autologous CAR T immunotherapy using MSK’s novel 1XX CAR signaling domain and PD-1 dominant negative receptor, or DNR, checkpoint inhibition technologies for patients with mesothelin-associated solid tumors. We expect our collaborators at MSK to submit an investigational new drug, or IND, application to the FDA for ATA2271 for patients with advanced mesotheliomamesothelioma. The first preclinical, clinical and translational data from the lowest dose cohorts of this study, demonstrating early safety and persistence of ATA2271, was presented during a mini oral session at the European Society for Medical Oncology (ESMO) Immuno-Oncology Congress in December 2021. MSK has enrolled and dosed the third cohort of this study. In February 2022, MSK notified the FDA of a fatal serious adverse event associated with a patient treated in the second or third, quarterhigher dose cohort in this study. MSK voluntarily paused enrollment of 2020.new patients in this study on a temporary basis while additional information regarding this case is gathered and reviewed. In parallel, we are conducting preclinical work onOctober 2022, MSK communicated their assessment to the FDA, following which enrollment in this study recently resumed after the voluntary pause. In December 2022, the latest findings, including clinical and safety observations, were presented during a session at the ESMO Immuno-Oncology Congress.

ATA3271 is an off-the-shelf, allogeneic version of this mesothelin CAR T program,therapy targeting mesothelin using a PD-1 DNR and 1XX CAR co-stimulatory signaling domain through our EBV T-cell platform. In preclinical data for ATA3271 we observed anti-tumor activity that we believe indicated 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. Following termination of the Bayer Agreements, we have paused development of ATA3271.


ATA3219

We are also developing ATA3219, an off-the-shelfATA3431, a multi-targeted allogeneic CAR T immunotherapy targeting CD19 for patientsB-cell malignancies. We are also collaborating with B-cell lymphomas,QIMR Berghofer to serve asdevelop a potential proof-of-concept for our next generation technologies and allogeneic EBV CAR T platform.vaccine which is differentiated from earlier EBV vaccine efforts that solely focused on B cell responses to EBV.

In February 2020, an academic off-the-shelf, allogeneic CD19 CAR T clinical study using an EBV T-cell construct for patients with relapsed/refractory B-cell malignancies was presented at the 2020 Transplantation and Cellular Therapy (TCT) Meetings. Findings from this study provide initial clinical proof-of-principle that an EBV T-cell platform has the potential to generate off-the-shelf, allogeneic CAR T immunotherapies with high and durable responses, low risk of toxicity and that can be rapidly delivered to patients.

Additional Programs and Platform Expansion Activities

In addition to the prioritized programs described above, we have a number of preclinical programs. For example, in August 2018, we entered into a strategic collaboration with Moffitt. As part of this relationship, we agreed to collaborate with Moffitt to develop multi-targeted CAR T immunotherapies designed to address cancers with diverse cell types that often become resistant to treatment, such as acute myeloid leukemia, or AML, (ATA2321) and B-cell malignancies (ATA2431), and to make certain milestone and royalty payments associated with the collaboration targets. In addition, the collaboration includes the use of novel CAR T intracellular co-stimulatory domains that may improve CAR T proliferation when responding to an appropriate antigen and enhance CAR T persistence by reducing T-cell exhaustion.

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 expect to further research and develop additional cellular therapies, which may include T-cell programs targeted against other antigens as well as engineered T-cell immunotherapies such as CAR T-cell programs. We believe that viral antigens are well suited to adoptive immunotherapy given that people with normal immune systems are able to mount robust responses to these viral targets, but immunocompromised patients and some cancer patients are not.partners. We also continue to evaluate opportunities to license or acquire additional product candidates or technologies to enhance our existing platform.

Competition

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. We face competition from numerous pharmaceutical and biotechnology enterprises, as well as from academic institutions, government agencies and private and public research institutions for our current product candidates. Some of these competitors or potential competitors have significantly greater established presences in the market, financial resources and technical expertise than we do. Our commercial opportunities will be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer side effects or are less expensive than any products that we may develop.

Should any of our T-cell product candidates be approved for use, we will face substantial competition. In addition to the current standard of care for patients, commercial and academic clinical studies are being pursued by a number of parties in the field of immunotherapy. Early results from these studies have fueled continued interest in T-cell immunotherapy. In addition, if approved, our T-cell programs would compete with currently marketed drugs and therapies used for treatment of the indications we are addressing, and potentially with drugproduct candidates currently in development for the same indications.

EBV+ PTLD

There are currently no FDA- or EMA-approvedFDA-approved products for the treatment of EBV+ PTLD,. and there are no EC-approved products for this indication except for Ebvallo. However, we are aware that some marketed products and therapies are used off-label by some healthcare professionals and institutions in the treatment of EBV+ PTLD,, such as rituximab and combination chemotherapy regimens. In addition, a number of companies and academic institutions are developing drugproduct candidates for EBV+ PTLD and other EBV-associatedEBV-driven diseases including: Viracta Therapeutics, Inc., which is conducting a pivotal, Phase 1b/2 clinical study for nanatinostat (formerly named tractinostat, or VRx-3996) in combination with antiviral drug valganciclovir in relapsed/refractory EBV+lymphomas,EBV+ lymphomas; AlloVir (formerly known as ViraCyte), which has completed a Phase 2 clinical study for Viralym-Mposoleucel (ALVR105), an allogeneic, multi-virus T-cell product that targets six viruses in allogeneic HSCT recipients with ≥1 treatment-refractory infection, including EBV, and is planning to initiate severalconducting two Phase 3 studiesclinical trials for Virus-Associated Hemorrhagic-Cystitis, as well as a Phase 3 trial for the prevention of BKV,

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CMV, AdV, EBV, HHV06 and JCV in the next yearpost-allogeneic HSCT patients and Tessa Therapeutics Pte Ltd., or Tessa, which hasis conducting a preclinicalPhase 1 study with an allogeneic CD30-CAR EBVST product candidate that is an allogeneic CD30-targeted CAR EBV-specific T-cell therapy.


in relapsed refractory CD30 positive lymphoma.NPC

Drug therapies approved or commonly used for the treatment of NPC include radiation therapy, often given in combination with chemotherapy, and cetuximab, a monoclonal antibody targeting epidermal growth factor receptor, or EGFR. Surgery for NPC is also occasionally used after chemoradiotherapy or to treat relapsed/refractory NPC. Several development candidates are being evaluated for NPC. Tessa is evaluating TT10, an autologous, EBV-specific T-cell product, in a phase 3 clinical study for advanced NPC. In addition, a number of companies are evaluating immunotherapies in combination with PD1/PDL1 inhibitors for the treatment of head and neck cancers, including NPC. These include Bristol-Myers Squibb Company’s ipilimumab, relatilimab and daratumumab, Roche Pharmaceuticals’ bevacizumab and AstraZeneca PLC’s tremelimumab.

Multiple Sclerosis

Competition in the MS market is high with at least seventeen20 therapies, including threefour generics or bioequivalents, approved in the U.S. and EU for the treatment of RRMS in the U.S.various forms of MS, including clinically isolated syndrome, relapsing-remitting MS (RRMS), secondary progressive MS (SPMS) and EU.primary progressive MS (PPMS). There are many competitors in the RRMSMS market, including major multi-national fully-integrated pharmaceutical companies and established biotechnology companies. Most recently, Vumerity™ (diroximel fumarate)Briumvi (ublituximab), marketed by Biogen,TG Therapeutics, Ponvory (S1P modulator), marketed by Johnson & Johnson, and MayzentKesimpta® (siponimod) (anti-CD20 monoclonal antibody), marketed by Novartis, were approved in the U.S. and/or EU for the treatment of relapsing forms of MS in the U.S (Vumerity) and EU (Mayzent). MS.

There are numerous development candidates in Phase 3 studies for RRMS including TG Therapeutics’ anti-CD20 monoclonal antibody ublituximab and EMD Serono’s BTK inhibitor, evobrutinib. Novartis’ anti-CD20 monoclonal antibody ofatumumab and J&J/Janssen’s sphingosine-1-phosphate receptor 1 (S1P1) modulator, ponesimod have completed their Phase 3 studies and have filed (ofatumumab) both relapsing and/or plan to file (ponesimod) for regulatory approval in the future. Celgene’s ozanimod, an S1PR1 and S1PR5 agonist is awaiting FDA and EMA regulatory approval with a Prescription Drug User Fee Act, or PDUFA, date in March 2020, and EMA in the first halfprogressive forms of 2020.

Six therapies have been approved for the treatment of PMS. Ocrevus® is approved in the U.S. and EU for the treatment of PPMS. Extavia® (marketed by Novartis) and Betaferon® (marketed by Bayer AG) are approved in the European Union for the treatment of SPMS when disease is active, or active SPMS. Mayzent® (siponimod), marketed by Novartis and Mavenclad® (cladribine), marketed by EMD Serono, were most recently approved for the treatment of active SPMS in the U.S. and EU (Mayzent). In addition, mitoxantrone, which is now generic, is approved to treat SPMS in the U.S.

The SPMS and PPMS markets have active development pipelinesMS and additional novel agents could be approved in either or both indications in the future. Several development candidates are being evaluated in Phase 3 studies for progressive forms of MSfuture including primary and secondary progressive MS. These are MedDay’s MD-1003, a concentrated form of biotin,Merck KgaA’s Bruton’s tyrosine kinase (BTK) inhibitor, evobrutinib, Roche’s BTK inhibitor, fenebrutinib, Sanofi’s BTK inhibitor, tolebrutinib and AB Science’s masitinib, a tyrosine kinase inhibitor.inhibitor, masitinib. Medicinova is planning to initiate a Phase 3 study of its PDE inhibitor, ibudilast (MN166) in patients with non-relapsing secondary progressive MS.non-active SPMS.

CAR T Program

There are currently twosix autologous CAR T therapies approved in the U.S. and EU,and/or EU: Novartis’ Kymriah® (tisagenlecleucel) and, Gilead/Kite’s Yescarta® (axicabtagene ciloleucel). and TecartusTM(brexucabtagene autoleucel) and Bristol-Myers Squibb filed its BLASquibb’s Breyanzi®(lisocabtagene maraleucel) and Abecma (idecabtagene vicleucel) with the FDA for lisocabtagene maraleucel (liso-cel) in December 2019.2seventy bio and Johnson & Johnson and Legend Biotech’s Carykti™ (ciltacabtagene autoleucel). There are more than 100 CAR T’smany CAR-mediated cell therapies in development, including at least 35 whichand, although the majority are autologous, they also include allogeneic and off-the-shelf cell therapies. There are multiple allogeneic CAR platforms being developed with differences in approaches to minimize instances of donor cells recognizing the patient’s body as foreign or rejection of the donor cells by the patient’s body. These approaches include the use of gene-editing to remove or inhibit the TCR and the use of cell types without a TCR. The majority of clinical stage allogeneic CAR programs utilize alpha beta T cells as the cell type and gene editing of the T-cell receptor and HLA as the preferred technology approach, however, other strategies are also in development. It is possible that some of these other approaches will have more favorable characteristics than the approach we utilize, which would result in them being favored by potential partners or customers over our products. Depending on the diseases that our CAR T therapieswe target in the future, we may face competition from both autologous and allogeneic CAR T therapies and other modalities such as(e.g., small molecules, and antibodies, bispecifics) in the indication of interest.

Terms of Certain License and ResearchCollaboration Agreements

Out-licensing

Pierre Fabre Commercialization Agreement

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 Development Collaboration Agreements

2015 MSK Licensedistribute Ebvallo in Europe and select emerging markets in the Territory following regulatory approval. Atara retains full rights to tab-cel in other major markets, including North America, Asia Pacific and Latin America. In September 2022, we entered into Amendment No. 1 to the Pierre Fabre Commercialization Agreement (PF Amendment). Under the terms of the PF Amendment, following European Commission approval of Ebvallo for EBV+ PTLD and subsequent filing of the Marketing Authorization Application transfer to Pierre Fabre, we will be entitled to receive an additional $30 million milestone payment in exchange for, among other things, a reduction in: (i) royalties we are eligible to receive as a percentage of net sales of Ebvallo in the Territory, and (ii) the supply price mark up on Ebvallo purchased by Pierre Fabre. Additionally, we also agreed to extend the time period for provision of certain services to Pierre Fabre under the Pierre Fabre Commercialization Agreement. In December 2022, we sold a portion of our right to receive royalties and certain milestones in Ebvallo under the Pierre Fabre Commercialization Agreement to HCR Molag Fund L.P (HCRx) for a total investment amount of $31.0 million, subject to a cap between 185% and 250% of the total investment amount by HCRx.

We are responsible at our cost for the conclusion of the ongoing Phase 3 ALLELE clinical study and the Phase 2 multi-cohort clinical study. We will also be responsible at our cost for certain other activities directed to obtaining regulatory approval for tab-cel for EBV-positive lymphoproliferative disease pursuant to the terms of the Pierre Fabre Commercialization Agreement in Europe. Pierre Fabre will be responsible at its cost for obtaining and maintaining all other regulatory approvals, post-approval obligations and for commercialization and distribution of Ebvallo in the Territory. We will own any intellectual property rights developed solely by us under the Agreement.

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Pierre Fabre paid us an upfront cash payment of $45.0 million for the exclusive license grant in the fourth quarter of 2021. In December 2022, we met the contractual right to receive $40.0 million in milestone payments upon certain regulatory milestones. Subject to the terms of the HCRx Agreement, we are entitled to receive an aggregate of up to $308.0 million in remaining milestone payments upon achieving certain regulatory and commercial milestones in addition to double-digit tiered royalties as a percentage of net sales of Ebvallo, until the later of 12 years after the first commercial sale in such country, the expiration of specified patent rights, or the expiration of all regulatory exclusivity for such product on a country-by-country basis.

In December 2022, we entered into a separate manufacturing and supply agreement with Pierre Fabre for us to manufacture Ebvallo for Pierre Fabre to use in the Territory based on a fixed price through December 31, 2023 and cost plus a margin beginning on January 1, 2024. We are responsible for manufacturing and supplying Pierre Fabre with Ebvallo for commercialization in the Territory at Pierre Fabre’s cost for a minimum of seven years from the first commercial sale, as defined in the Pierre Fabre Commercialization Agreement, of Ebvallo in the Territory. Following this period, we have the option to transfer the manufacturing responsibility and related manufacturing technology to a third party CMO, and Pierre Fabre may also elect to directly assume the manufacturing responsibility and receive the related manufacturing technology.

We are also responsible for cell selection services at our cost for a certain period of time unless the parties agree to transfer the related cell selection technology to Pierre Fabre prior to this date. After this period of time, if we agree to continue to provide cell selection services, it shall be at the sole expense of Pierre Fabre.

Bayer License and Collaboration Agreements

In December 2020, we entered into the Bayer License Agreement to develop mesothelin-directed CAR T-cell therapies for the treatment of solid tumors, 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 (Licensed Products).

Under the terms of the Bayer License Agreement, we were responsible at our cost for all mutually agreed preclinical and clinical activities for ATA2271 through the first in human Phase 1 clinical study in collaboration with MSK, following which Bayer was to be responsible for the further development of ATA2271 at its cost. Bayer was responsible for the development of ATA3271 at Bayer’s cost, except for certain mutually agreed preclinical, translational, manufacturing and supply chain activities performed by us relating to ATA3271. Bayer was also solely responsible for commercializing the Licensed Products at its cost.

In May 2022, Bayer notified us of its decision to terminate the Bayer Agreements, and on August 2, 2022, we entered into the Bayer Termination Agreement with an effective date of July 31, 2022. Upon the termination effective date, full product development rights related to the Licensed Products reverted to Atara. In return for certain activities performed by Atara prior to the termination effective date, Bayer paid Atara $4.2 million in September 2022.

In-licensing

MSK Agreements

In June 2015, we entered into the 2015 MSK License Agreement. Under the terms of the 2015 MSK License Agreement, MSK granted us a worldwide,an exclusive license to certain patent rights, know-how and a library of T cells and cell lines, to research, develop, manufacture and commercialize T-cell products specific to cytomegalovirus, or CMV, EBV or WT1 that comprise or are based on or made using these licensed rights. We agreed to use commercially reasonable efforts to commercialize the licensed products and, if commercialized, continue active marketing effortsagreement with MSK for any commercialized licensed product through the term of the license agreement.

Under the 2015 MSK License Agreement, we are obligated to make milestone payments of up to $33.0 million with respect to the three licensed clinical stage T-cell programstherapies. We are required to make payments to MSK based on achievement of specified development, regulatory and sales-related milestones. We are also required to make escalating mid to high single-digitmilestones, as well as mid-single-digit percentage tiered royalty payments to MSK based on future sales of anyproducts resulting from the development of the licensed products.product candidates, if any. In addition, under certain circumstances, we mustare required to make certain minimum annual royalty payments to MSK, which are creditable against earned royalties owed for the same annual period. We are also obligatedrequired to pay a low double-digit percentage of any consideration we receive for sublicensing the licensed rights.


The 2015 MSK License Agreementlicense agreement expires for each licensed T-cell product on a licensed product-by-licensed product basisproduct-by-product and a country-by-country basis on the latest of: (i) expiration of the last licensed patent rights related to aeach licensed product, in a country, (ii) expiration of any market exclusivity period granted by law with respect to aeach licensed product, in a country, and (iii) a specified number of years after the first commercial sale of the licensed product in aeach country. Upon expiration of the 2015 MSK License Agreement,license agreement, Atara will retain non-exclusive rights to the licenses granted to us will become non-exclusive royalty-free, perpetual and irrevocable. MSK may terminate the 2015 MSK License Agreement if we materially breach the agreement and do not cure this breach within a specified period or if we experience certain insolvency events.licensed products.

In May and December 2018, we licensed additional CAR T-related technology from MSK. We are obligated to make additional milestone payments based on achievement of specified development, regulatory and sales-related milestones, as well as mid-single-digit percentage tiered royalty payments based on future sales of products resulting from the development of the licensed product candidates, if any.

In March 2021, we amended and restated our license agreement with MSK to terminate our license to certain rights and license additional know-how rights not otherwise covered by our existing agreements.

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QIMR Berghofer License Agreement and Research and Development Collaboration AgreementAgreements

In September 2016,October 2015, we entered into an amended and restatedexclusive license agreement and an amended and restateda research and development collaboration agreement with QIMR Berghofer, eachBerghofer. Under the terms of whichthe license agreement, we obtained an exclusive, worldwide license to develop and commercialize allogeneic T-cell therapy programs utilizing technology and know-how developed by QIMR Berghofer. In September 2016, the exclusive license agreement and research and development collaboration agreement were amended and restated. Under the amended and restated prior agreements, entered into with QIMR Berghoferwe obtained an exclusive and worldwide license to develop and commercialize additional T-cell programs, as well as the option to license additional technology in October 2015.June 2018. We further amended and restated our license agreement and research and development collaboration agreements with QIMR Berghofer in August 2019 to eliminateterminate our license to certain rights related to CMV.cytomegalovirus (CMV). In addition, we further amended and restated our license agreement and research and development collaboration agreements with QIMR Berghofer in August 2020 to terminate our license to certain rights related to BK polyomavirus and JC polyomavirus. In December 2021, we further amended and restated our license agreement and research and development collaboration agreements with QIMR Berghofer to terminate our license to certain rights related to HPV associated cancers. We refer to our August 2019 secondDecember 2021 fourth amended and restated license agreement with QIMR Berghofer as the QIMR License Agreement and our August 2019 secondDecember 2021 fourth amended and restated research and development collaboration agreement with QIMR Berghofer as our QIMR Collaboration Agreement.

Under the QIMR License Agreement and QIMR Collaboration Agreement, we possess an exclusive, worldwide license to develop and commercialize allogeneic T-cell programs utilizing technology and know-how developed by QIMR Berghofer.

The QIMR License Agreement provides for various milestone payments of up to $15 million and low to mid single-digit royalty payments to QIMR Berghofer based on future product sales, if any. Under the terms of the QIMR Collaboration Agreement, we are required to reimburse the cost of agreed-upon development activities related to programs developed under the collaboration. The QIMR Collaboration Agreement also provides for various milestone payments of up to $7 million to QIMR Berghofer based on the achievement of certain developmental and regulatory milestones.

We have the right at any time to terminate the QIMR License Agreement, at will, by providing written notice of termination to QIMR Berghofer and paying QIMR Berghofer a break-up fee equal to 50 percent of the amount of the next milestone payment that would be payable to QIMR Berghofer. QIMR Berghofer or we may terminate the QIMR Collaboration Agreement at any time if either party determines that the collaboration is no longer academically, technically, or commercially feasible by giving the other party 30-day written notice. In the event of a material breach of either agreement, QIMR Berghofer or we may terminate the agreement if the breaching party does not cure such breach within a specified period.

Intellectual Property

Our commercial success depends in part on our ability to obtain and maintain proprietary protection for our product candidates, to operate without infringing on the proprietary rights of others and to prevent others from infringing our proprietary rights. We seek to protect our proprietary position by, among other methods, filing U.S. and non-U.S. patent applications and other regulatory filings related to our proprietary technology, inventions and improvements that are important to the development and implementation of our business. We also rely on trademarks, trade secrets, know-how, continuing technological innovation and potential in-licensing opportunities to develop and maintain our proprietary position. Some of patents, trademarks, trade secrets, know-how and other intellectual property rights we rely on are owned by us and others are in-licensed from our partners. When we refer to “our” technologies, inventions, patents, patent applications or other intellectual property rights, we are referring to both the rights that we own or possess as well as those that we in-license. Additionally, we expect to benefit from a variety of statutory frameworks in the U.S., Europe and other countries that relate to the regulation of biosimilar molecules and orphan drug status. These statutory frameworks provide certain periods of regulatory exclusivity for qualifying molecules. See “Government Regulation.”


Patents

We seek composition-of-matter and/or associated method patents, including method-of-treatment patents, for each of our product candidates in key therapeutic areas. The U.S. patent system permits the filing of provisional and non-provisional patent applications. A provisional patent application is not examined for patentability by the U.S. Patent and Trademark Office or USPTO,(USPTO), and automatically expires 12 months after its filing date. As a result, a provisional patent application cannot mature into an issued patent. Provisional patent applications are often used, among other things, to establish an early effective filing date for a later-filed non-provisional patent application. A non-provisional patent application is examined by the USPTO and can mature into a patent once the USPTO determines that the claimed invention meets the standards of patentability.

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Individual patents extend for varying periods of time depending on the date of filing of the patent application, the priority date claimed, and the legal term of patents as determined by the applicable law in the countries in which those patents are obtained. Generally, patents issued from applications filed in the U.S. are effective for 20 years from the earliest non-provisional filing date. In addition, in certain instances, a patent term can be extended to recapture a portion of the term effectively lost as a result of the FDA regulatory review period; however, the restoration period cannot be longer than five years and the total patent term including the restoration period must not exceed 14 years following FDA approval. Additionally, patent term adjustments can extend term to account for certain delays by the USPTO during prosecution before that office. The duration of non-U.S. patents varies in accordance with provisions of applicable local law, but typically, the life of a non-U.S. patent is 20 years from the earliest international filing date, not inclusive of any patent term extension that may be available. The actual protection afforded by a patent varies on a product-by-product basis, from country to country and depends upon many factors, including the type of patent, the scope of its coverage, the availability of extensions of patent term, the availability of legal remedies in a particular country and the validity and enforceability of the patent.

National and international patent laws concerning protein-based biologics such as our products remain highly unsettled. No consistent policy regarding the patent-eligibility or the breadth of claims allowed in patents in this field has emerged to date among the U.S., Europe or other countries. Changes in either the patent laws or in interpretations of patent laws in the U.S. or other countries can diminish our ability to protect our inventions and enforce our intellectual property rights. Accordingly, we cannot predict the breadth or enforceability of claims that may be granted in our patents or in third-partythird party patents. The biotechnology and pharmaceutical industries are characterized by extensive intellectual property litigation. Our ability to maintain and solidify our proprietary position for our product candidates and technology will depend on our success in obtaining effective claims for our patents and enforcing those claims once a patent is granted. We do not know whether any of our patent applications will result in the issuance of any patents. Our issued patents may be challenged, invalidated or circumvented, and the rights granted under any issued patents may not provide us with sufficient protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop and commercialize similar drugs or duplicate our technology, business model or strategy without infringing our patents. Because of the extensive time required for clinical development and regulatory review of any drug we may develop from our product candidates, it is possible that, before any of our drugs can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of any such patent.

Our global patent estate consists of both solely-owned and in-licensed patents and patent applications, is directed to compositions of matter and/or associated methods, including methods of treatment, and consists of 4333 patent families having a total of more than 245330 issued patents or patent applications. Our patents and patent applications (if issued) are expected to expire between 20222023 and 2040,2042, not inclusive of any patent term extension that may be available in any associated jurisdiction.

Trade Secrets

In addition to patents, we rely upon unpatented trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements with our commercial partners, collaborators, employees and consultants and invention assignment agreements with our employees. These agreements are designed to protect our proprietary information and, in the case of the invention assignment agreements, to grant us ownership of technologies that are developed by an employee. These agreements may be breached, and we may not have adequate remedies for any such breach or any unauthorized disclosure of our proprietary information. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our commercial partners, collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.


Trademarks

We also rely upon trademarks to develop and maintain our competitive position, and we continue to pursue and obtain trademark rights relating to our business. We have a vigorous global program of trademark registration and enforcement to maintain and strengthen the value of our trademarks and prevent the unauthorized use of those trademarks. Our global trademark portfolio consists of sevensixteen different trademark families comprised of more than 100178 registrations and pending applications.

Government Regulation and Product Approval

As a biopharmaceutical company that operates in the United States, we are subject to extensive regulation. Our T-cell immunotherapies, if approved, will be products regulated as biological products, or biologics. With this classification, commercial production of our products will need to occur in registered facilities in compliance with current good manufacturing practice or cGMP,(cGMP) for biologics. The FDA categorizes human cell- or tissue-based products as either minimally manipulated or more than minimally manipulated and has determined that more than minimally manipulated products require clinical trials to demonstrate product safety

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and efficacy and the submission of a BLA for marketing authorization. Our product candidates are considered more than minimally manipulated and will require evaluation in clinical trials and the submission and approval of a BLA before we can market them.

Government authorities in the United States (at the federal, state and local level) and in other countries extensively regulate, among other things, the research, development, testing, manufacturing, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, tracking and tracing, post-approval monitoring and reporting, marketing and export and import of biopharmaceutical products such as those we are developing. Our product candidates must be approved by the FDA before they may be legally marketed in the U.S. and by the appropriate foreign regulatory agency before they may be legally marketed in foreign countries. Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the U.S., although there can be important differences. Additionally, some significant aspects of regulation in Europe are addressed in a centralized way, but country-specific regulation remains essential in many respects. The process for obtaining regulatory marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.

U.S. Product Development Process

In the U.S., the FDA regulates pharmaceutical and biological products under the Federal Food, Drug and Cosmetic Act or FDCA,(FDCA), the Public Health Service Act or PHSA,(PHSA), and their implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to administrative or judicial sanctions. FDA sanctions could include, among other actions, refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning or other enforcement letters, product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us. The process required by the FDA before a biological product may be marketed in the U.S. generally involves the following:

completion of nonclinical laboratory tests and animal studies according to good laboratory practices (GLPs), and applicable requirements for the humane use of laboratory animals or other applicable regulations;
submission to the FDA of an IND, which must become effective before human clinical trials may begin;
approval by an independent Institutional Review Board (IRB), or ethics committee at each clinical site before the trial is commenced at such clinical site;
performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as good clinical practices (GCPs), and any additional requirements for the protection of human research patients and their health information, to establish the safety and efficacy of the proposed biological product for its intended use;
submission to the FDA of a BLA for marketing approval that includes substantial evidence of safety, purity, and potency of the drug from analytical (CMC) studies and from results of nonclinical testing and clinical trials;
satisfactory completion of an FDA Advisory Committee review, if applicable;
satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with cGMP, to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity and, if applicable, the FDA’s current good tissue practices (GTPs) for the use of human cellular and tissue products;
potential FDA inspection of the nonclinical study and clinical trial sites that generated the data in support of the BLA; and
FDA review and approval, i.e., licensure of the product candidate that is the subject of the BLA.

completion of nonclinical laboratory tests and animal studies according to good laboratory practices, or GLPs, and applicable requirements for the humane use of laboratory animals or other applicable regulations;

submission to the FDA of an IND, which must become effective before human clinical trials may begin;

approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before the trial is commenced;

performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as good clinical practices, or GCPs, and any additional requirements for the protection of human research patients and their health information, to establish the safety and efficacy of the proposed biological product for its intended use;

submission to the FDA of a BLA for marketing approval that includes substantial evidence of safety, purity, and potency from results of nonclinical testing and clinical trials;

satisfactory completion of an FDA Advisory Committee review, if applicable;

satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with cGMP, to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity and, if applicable, the FDA’s current good tissue practices, or GTPs, for the use of human cellular and tissue products;


potential FDA audit of the nonclinical study and clinical trial sites that generated the data in support of the BLA; and

FDA review and approval, or licensure of the BLA.

Before testing any biological product candidate, including our product candidates, in humans, the product candidate enters the preclinical testing stage. Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product candidate. The conduct of the preclinical tests must comply with federal regulations and requirements including applicable GLPs. The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical trial protocol, to the FDA as part of the IND. Some preclinical testing may continue even after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions regarding the proposed clinical trials and places the trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may also impose

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clinical holds on a biological product candidate at any time before or during clinical trials due to safety concernsunacceptable and significant risks to clinical trial subjects or non-compliance.non-compliance with FDA requirements. If the FDA imposes a clinical hold, trials may not continue or recommence in the U.S. without FDA authorization and then only under terms authorized by the FDA. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate the conduct of such trials.trials in the U.S.

Clinical trials involve the administration of the biological product candidate to patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selectioninclusion and exclusion criteria, and the parameters to be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical trials must be conducted and monitored in accordance with the FDA’s regulations comprising the GCP requirements, including the requirement that all research patients provide informed consent. Further, each clinical trial must be reviewed and approved by an independent IRB at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed consent document that must be signed by each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed. Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy. There are also requirements governing the reporting of ongoing clinical studies and clinical study results to public registries.

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

Phase 1. The biological product is initially introduced into healthy human subjects and tested for safety. In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients rather than healthy human volunteers.
Phase 2. The biological product is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.
Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk to benefit ratio of the product and provide an adequate basis for marketing approval and product labeling.

Phase 1. The biological product is initially introduced into healthy human subjects and tested for safety. In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.

Phase 2. The biological product is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.

Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk to benefit ratio of the product and provide an adequate basis for product labeling.

Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted, and in some cases are required by the FDA, after initial marketing approval. These clinical trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up. During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA and theto investigators for serious and unexpected adverse events, any findings from other studies teststhat suggest a significant risk in humans exposed to the drug, laboratory animalsanimal testing or in vitro testing that suggest a significant risk forto human patients, or any clinically important increase in the rate of a serious suspected adverse reaction over thatthe rate listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, if at all. The FDA or the sponsor or its data safety monitoring board may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research patients are being exposed to poses an unacceptable health risk, including risks inferred from other unrelated immunotherapy trials. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biological product has been associated with unexpected serious harm to patients.


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Concurrently with clinical trials, companies usually complete additional studies and must also develop additional information about the physical characteristics of the biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. To help reduce the risk of the introduction of adventitious agents with use of biological products, the FDCA, PHSA emphasizesand FDA regulations emphasize the importance of manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality, potency and purity of the final biological product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.

U.S. BLA Review and Approval Processes

After the completion of clinical trials of a biological product, FDA approval of a BLA for an innovator biological product must be obtained before commercial marketing of the biological product. The BLA submission must include results of product development, laboratory and animal studies, human trials, information on the manufacture and composition of the product, proposed labeling and other relevant information. The testing and approval processes require substantial time and effort and there can be no assurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.

Under PDUFA,the Prescription Drug User Fee Act, as amended (PDUFA), each BLA must be accompanied by a significant user fee. The FDA adjusts the PDUFA user fees for licensed innovator biological products on an annual basis. PDUFA also imposes an annual program fee for innovator biological products. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on BLAs for innovator biological products designated as orphan drugs, unless the product also includes a non-orphan indication.

Within 60 days following submission of the application, the FDA reviews a BLA submission to determine if it is substantially complete before the agency accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the BLA. The FDA reviews the BLA to determine, among other things, whether the proposed product is safe, potent, and/or effective for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, safety, strength, quality, potency and purity. The FDA may refer applications for novel biological products or biological products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. During the biological product approval process, the FDA also will determinedetermines whether a Risk Evaluation and Mitigation Strategy or REMS,(REMS) is necessary to assure the safe use of the biological product. A REMS is a safety strategy to manage a known or potential serious risk associated with a medicine and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit and obtain approval for a proposed REMS. The FDA will not approve a BLA without a REMS, if required.

Before approving a BLA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliancecomply with cGMP requirements and adequate to assure consistent production of the product within required specifications. For immunotherapy products, the FDA also will not approve the product if the manufacturer is not in compliance with the GTPs, to the extent applicable. TheseGTPs are FDA regulations and guidance documents that govern the methods used in, and the facilities and controls used for, the manufacture of human cells, tissue, and cellular and tissue basedtissue-based products or HCT/Ps,(HCT/Ps), which are human cells or tissue intended for implantation, transplant, infusion, or transfer into a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue-based products are manufactured in a manner designed to prevent the introduction, transmission and spread of communicable disease. FDA regulations also require tissue establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical trials were conducted in compliance with IND trial requirements and GCP requirements. To assure cGMP, GTP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.

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Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria for approval and deny approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret the same data. If the agency decides not to approve the BLA in its present form, the FDA will issue a complete response letter that describes all of the specific deficiencies in the BLA identified by the FDA. The deficiencies identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical trials. Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval. If a complete response letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.


If a product receives regulatory approval, the approval may be limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a risk management plan or REMS, or otherwise limit the scope of any approval. In addition, the FDA may require post marketing clinical trials, sometimes referred to as Phase 4 clinical trials, designed to further assess a biological product’s safety and effectiveness, and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized.

In addition, under the Pediatric Research Equity Act or PREA, a BLA or supplement(PREA) requires applicants to a BLA must contain data to assess the safetystudy certain drugs and effectiveness of the product for the claimed indicationsbiological products in all relevant pediatric subpopulations, and to support dosing and administrationwith the potential of obtaining pediatric labeling for each pediatric subpopulation for which the product, if the drug is found to be safe and effective. effective for use in children. With enactment of the Food and Drug Administration Safety and Innovation Act of 2012, or FDASIA, sponsors must submit an initial pediatric study plan in the BLA. Pediatric study plans must contain an outline of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, any deferral or waiver requests, and other information required by regulation and must be agreed upon by the FDA. The FDA or the applicant may request an amendment to the plan at any time.

The FDA may grant deferrals for submission of data or full or partial waivers.waivers for pediatric studies, including the study of all pediatric patients or subpopulations based on age on its own initiative or at the request of the applicant. Additional requirements and procedures relating to deferral requests and requests for extension of deferrals are contained in FDASIA. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation. Pediatric exclusivity is a type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity. This six-month exclusivity may be granted if a BLA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application.

Orphan Drug Designation in the U.S.

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the cost of developing and making available in the U.S. a drug or biologic for this type of disease or condition will be recovered from sales in the U.S. for that drug or biologic. Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. The orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. Orphan drug exclusivity does not prevent the FDA from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA application user fee.

A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. In addition, exclusive marketing rights in the U.S. may be lost if the FDA later determines

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that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Expedited Development and Review Programs in the U.S.

The FDA has a fast track program that is intended to expedite or facilitate the process for reviewing new products that meet certain criteria. Specifically, new products are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address an unmet medical needsneed for the disease or condition. Fast track designation applies to the combination of the product and the specific indication for which it is being studied. Unique toFor a product that has received fast track product,designation, the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if thesubmitted. A sponsor providesseeking a rolling submission must provide a schedule for the submission of the sections of the BLA, the FDA agrees to accept sectionseach section of the BLA, and determinesthe FDA must agree to the rolling submission and that the schedule is acceptable, andacceptable. In addition, the sponsor paysmust pay any required user fees upon submission of the first section of the BLA.

Any product, submitted to the FDA for approval, including a product with a fast track designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. A product is eligible for priority review if it is intended for treatment of a serious condition and has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment, diagnosis or prevention of a disease compared to marketed products. The FDA will attempt to direct additional resources to the evaluation of an application for a new product designated for priority review in an effort to facilitate the review. The FDA intends to take action on applications under priority within 6 months of the application filing date, compared with 10 months from the filing date for regular applications.

Additionally, a product may be eligible for accelerated approval. Products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug or biological product receiving accelerated approval perform adequate and well-controlled post-marketing clinical studies.studies to demonstrate clinical benefit. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.


Regenerative Medicine Advanced Therapy (RMAT) designation was established by FDA in 2017 to facilitate an efficient development program for, and expedite review of, any drug that meets the following criteria: (1) it qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions; (2) it is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and (3) preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for such a disease or condition. RMAT designation provides potential benefits that include more frequent meetings with FDA to discuss the development plan for the product candidate and eligibility for rolling review and priority review. Products granted RMAT designation may also be eligible for accelerated approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites. Once approved, when appropriate, the FDA can permit fulfillment of post-approval requirements under accelerated approval through the submission of clinical evidence, clinical studies, patient registries, or other sources of real worldreal-world evidence such as electronic health records; through the collection of larger confirmatory datasets; or through post-approval monitoring of all patients treated with the therapy prior to approval.

Breakthrough therapy designation is also intended to expedite the development and review of products that treat serious or life-threatening conditions. The designation by FDA requires preliminary clinical evidence that a product candidate, alone or in combination with other drugs and biologics, demonstrates substantial improvement over currently available therapy on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Breakthrough therapy designation comes with all of the benefits of fast trackFast Track designation, which means that the sponsor may file sections of the BLA for review on a rolling basis if certain conditions are satisfied, including an agreement with FDA on the proposed schedule for submission of portions of the application and the payment of applicable user fees before the FDA may initiate a review.

Fast Track designation, priority review, RMAT and breakthrough therapy designation do not change the standards for approval but may expedite the development or approval process. The FDA may revoke any of these designations if the product no longer meets applicable criteria.

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Post-Approval Requirements in the U.S.

Any products for which we receive FDA approvals are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, and complying with FDA promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting products for uses or in patient populations that are not described in the product’s approved uses (known as “off-label use”), limitations on industry-sponsored scientific and educational activities, and requirements for promotional activities involving the internet. Although a physician may prescribe a legally available product for an off-label use, if the physician deems such product to be appropriate in his/her professional medical judgment, a manufacturer may not market or promote off-label uses. However, it is permissible to share in certain circumstances truthful and not misleading information that is consistent with the product’s approved labeling.

In addition, the distribution of prescription drug products, including most biological products that require a prescription, are subject to the Prescription Drug Marketing Act, or the PDMA, which regulates the distribution of drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states. Both the PDMA and state laws limit the distribution of prescription drug product samples and impose requirements to ensure accountability in distribution.

Furthermore, quality control and manufacturing procedures must continue to conform to applicable manufacturing requirements after approval to ensure the long-term stability of the product. cGMP regulations require among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Manufacturers and other entities involved in the manufacture and distribution of approved products are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved BLA, including, among other things, recall or withdrawal of the product from the market. In addition, changes to the manufacturing process are strictly regulated, and depending on the significance of the change, may require prior FDA approval before being implemented. Other types of changes to the approved product, such as adding new indications and claims, are also subject to further FDA review and approval.

The FDA also may require post-marketing testing, known as Phase 4 testing, and surveillance to monitor the effects of an approved product. Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development.


U.S. Marketing Exclusivity

The Biologics Price Competition and Innovation Act or BPCIA,(BPCIA), amended the PHSA to authorize the FDA to approve similar versions of innovative biologics, commonly known as biosimilars. A competitor seeking approval of a biosimilar must file an application to establish that its molecule asis highly similar to an approved innovator biologic, among other requirements. notwithstanding minor differences in clinically inactive components, and shows no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, which can generally be shown through analytical studies, animal studies, and a clinical study or studies. Separately, a product that is biosimilar to the reference product is considered interchangeable if the product demonstrates that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the interchangeable biosimilar and the reference biological product may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biological product. A product shown to be biosimilar or interchangeable with an FDA-approved reference biologic which can potentially reduce the cost and time required to obtain approval to market the product. Complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles and have slowed implementation of the BPCIA by the FDA.

The BPCIA, however, bars the submission of BLAs for biosimilars to an approved application until four years after the licensure date for the reference biologic. In addition, the FDA from approvingmay not approve biosimilar applications for 12 years after an innovator biological product receives initial marketing approval. During this 12-year period of reference product exclusivity, another company may obtain FDA licensure and market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s own preclinical data and data from adequate and well controlled clinical trials to demonstrate the

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safety, purity and potency of its product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law. This 12-year period of data exclusivity may be extended by six months, for a total of 12.5 years, if the FDA requests, thatand the innovator company conductcompletes pediatric clinical investigations of the product.

The development and, if approved, marketing of biosimilars is subject to user fees under the Biosimilar User Fee Amendments of 2022 (BsUFA), which currently apply through September 2027 and may be renewed or amended thereafter. Sponsors must submit an initial biosimilar biological product development (BPD) fee on the earlier of the submission of an IND or within 7 calendar days of FDA granting a first BPD meeting, and annually thereafter until the sponsor submits a BLA that is accepted for filing, or the sponsor discontinues participation in the BPD program. FDA may also remove a sponsor from the BPD program if the sponsor has failed to pay annual BPD fees for a period of 2 consecutive fiscal years. Sponsors who discontinue participation in the BPD program but want to reengage FDA on product development must also pay all prior assessed BPD fees still owed and a reactivation fee and will be subject to annual BPD fees. Once a sponsor submits a BLA for a biosimilar, they are subject to application fees. And, once a biosimilar BLA is approved, the sponsor is subject to annual program fees. The FDA amends the specific fee amounts under BsUFA on an annual basis.

The BPCIA is complex and continues to be interpreted and implemented by the FDA. In addition, there has been discussion of whether Congress should reduce the 12-year reference product exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. As a result, the ultimate implementation of the BPCIA is subject to significant uncertainty.

Depending upon the timing, duration and specifics of the FDA approval of the use of our product candidates, some of our U.S. patents, if granted, may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act. The Hatch-Waxman Act permits a patent restoration term of up to five years, as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of a BLA plus the time between the submission date of a BLA and the approval of that application. Only one patent applicable to an approved product is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The U.S. Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, we may intend to apply for restoration of patent term for one of our currently owned or licensed patents to add patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.

Pediatric exclusivity is another typeReimbursement of regulatory market exclusivityApproved Products in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request” for such a trial.U.S.

Reimbursement

In both domestic and foreign markets, sales and reimbursement of any approved products will depend, in part, on the extent to which the costs of such products will be covered by third-partythird party payors, such as government health programs, commercial insurance and managed healthcare organizations. Third party payors determine which medications they will cover and establish reimbursement amounts. There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or comparable foreign regulatory authorities. Interim reimbursement amounts for new drugs, if applicable, may also be insufficient to cover our costs and may only be temporary. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the U.S. Coverage and reimbursement policies for drug products can differ significantly from payor to payor as there is no uniform policy of coverage and reimbursement for drug products among third party payors in the U.S. Third party payors in the U.S. often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. There may be significant delays in obtaining coverage and reimbursement as the process of determining coverage and reimbursement is often time consuming and costly which will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage or adequate reimbursement will be obtained. It is difficult to predict at this time what government authorities and third party payors will decide with respect to coverage and reimbursement for our drug products.

These third-partythird party payors are increasingly challenging the prices charged for medical products and services and imposing controls to manage costs. The containment of healthcare costs has become a priority of federal and state governments and the prices of drugs have been a focus in this effort. Governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. For example, inIn the U.S. there have

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been several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drugs. For example, included in the Consolidated Appropriations Act of 2021 were several drug price reporting and transparency measures, such as a new requirement for certain Medicare plans to develop tools to display Medicare Part D prescription drug benefit information in real time and for group and health insurance issuers to report information on pharmacy benefit and drug costs to the Secretaries of the Departments of Health and Human Services, Labor and the Treasury. Additionally, on July 9, 2021, President Biden issued an Executive Order to promote competition in May 2018, the U.S. presidentialeconomy that included several initiatives addressing prescription drugs. Among other provisions, the Executive Order stated that the Biden administration laid out a “Blueprint”will “support aggressive legislative reforms that would lower prescription drugs, including by allowing Medicare to lowernegotiate drug prices, by imposing inflation caps, and reduce out of pocket costs of drugs that contains additional proposalsthrough other related reforms.” In response to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lowerExecutive Order, on September 9, 2021, the list price of their products and reduce the out of pocket costs of drug products paid by consumers. The Department of Health and Human Services or HHS, has startedissued a Comprehensive Plan for Addressing High Drug Prices that identified potential legislative policies and administrative tools that Congress and the processagency can pursue in order to make drug prices more affordable and equitable, improve and promote competition throughout the prescription drug industry, and foster scientific innovation. Most recently, in August 2022, President Biden signed into law the Inflation Reduction Act of soliciting feedback on some of these measures2022, which implements substantial changes to the Medicare program, including drug pricing reforms and atchanges to the same time, is immediately implementing others under its existing authority. In January 2019, the HHS Office of Inspector General proposed modifications to U.S. federal healthcare Anti-Kickback Statute safe harbors which, among other things, will affect rebates paid by manufacturers to Medicare Part D plans,benefit design. Among other reforms, the purposeInflation Reduction Act of which is2022 imposes inflation rebates on drug manufacturers for products reimbursed under Medicare Parts B and D if the prices of those products increase faster than inflation; implements changes to further reduce the costMedicare Part D benefit that, beginning in 2025, will cap benefit annual out-of-pocket spending at $2,000 while imposing new discount obligations for pharmaceutical manufacturers; and, beginning in 2026, establishes a “maximum fair price” for a fixed number of drugpharmaceutical and biological products to consumers. Although some of thesecovered under Medicare Parts B and other proposals may require authorization through additional legislation to become effective, members of CongressD following a price negotiation process with the Centers for Medicare and the presidential administration have indicated that they will continue to seek new legislative or administrative measures to control drug costs. Medicaid Services. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, to encourage importation from other countries and bulk purchasing.

Within the U.S., if we obtain appropriate approval in the future to market any of our product candidates, we may seek approval and coverage for those products under Medicaid, Medicare and the Public Health Service or PHS,(PHS), pharmaceutical pricing program and also seek to sell the products to federal agencies.


Medicaid is a joint federal and state program that is administered by the states for low income and disabled beneficiaries. Under the Medicaid Drug Rebate Program, manufacturers are required to pay a rebate for each unit of producta covered outpatient drug reimbursed by the state Medicaid programs. The amount of the rebate for each product is set by law and may be subject to an additional discount if certain pricing increases more than inflation.

Medicare is a federal program administered by the federal government that covers individuals age 65 and over as well as those with certain disabilities. Medicare Part D provides coverage to enrolled Medicare patients for self-administered, outpatient drugs (i.e., drugs typically dispensed by a pharmacy and that do not need to be administered by a physician). Medicare Part D is administered by private prescription drug plans approved by the U.S. government and each drug plan establishes its own Medicare Part D formulary for prescription drug coverage and pricing, subject to CMS rules and requirements, which the drug plan may modify from time-to-time.

Medicare Part B covers most injectable drugs given in an in-patient setting, and some drugs administered by a licensed medical provider in hospital outpatient departments and doctors’ offices. Medicare Part B is administered by Medicare Administrative Contractors, which generally have the responsibility of making coverage decisions.decisions in accordance with CMS rules and requirements. Subject to certain payment adjustments and limits, Medicare generally pays for Part B covered drugs based on a percentage of manufacturer-reported average sales price.

Drug products are subject to discounted pricing when purchased by federal agencies via the Federal Supply Schedule or FSS.(FSS). FSS participation is required for a drug product to be covered and paid for by certain federal agencies and for coverage under Medicaid, Medicare Part B and the PHS pharmaceutical pricing program.program, commonly referred to as the 340B Drug Pricing Program. FSS pricing is negotiated periodically with the Department of Veterans Affairs. FSS pricing is intended to not exceed the price that a manufacturer charges its most-favored non-federal customer for its product. In addition, prices for drugs purchased by the Veterans Administration, Department of Defense (including drugs purchased by military personnel and dependents through the TRICARE retail pharmacy program), Coast Guard, and PHS are subject to a cap on pricing (known as the “federal ceiling price”) and may be subject to an additional discount if pricing increases more than inflation.

To maintain coverage of drugs under the Medicaid Drug Rebate Program, manufacturers are required to extend discounts to certain purchasers under the PHS pharmaceutical pricing program. Purchasers eligible for discounts include hospitals that serve a

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disproportionate share of financially needy patients, community health clinics and other entities that receive health services grants from the PHS.

In March 2010, the U.S. Congress enacted the Patient Protection and Affordable Care Act, andas amended by the Health Care and Education Reconciliation Act or(collectively, the Affordable Care Act,Act), which included changes to the coverage and payment for drug products under government health care programs. Since its enactment, there have been judicial and Congressional challenges to numerous elements of the Affordable Care Act, as well as efforts by both the executive and legislative branches of the federal government to repeal or replace certain aspects of the Affordable Care Act. For example, the President signed Executive Orders designed to delay the implementation of certain provisions of the Affordable Care Act or otherwise circumvent some of the requirements for health insurance mandated by the Affordable Care Act. In addition, the U.S. Congress has considered legislation that would repeal or repeal and replace all or part of the Affordable Care Act. Whilewhile Congress has not passed comprehensive repeal legislation, it has enacted laws that modify certain provisions of the Affordable Care Act, such as removing penalties, starting January 1, 2019, for not complying with the Affordable Care Act’s individual mandate to carry health insurance, delaying the implementation of certain mandated fees, and increasing the point-of-sale coverage gap discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D. In December 2019,June 2021, the U.S. Supreme Court dismissed a lawsuit challenging the constitutionality of Appealscertain aspects of the ACA, without ruling on the merits of the constitutionality arguments. Additionally, the American Rescue Plan of 2021, Pub. L. No. 117-2, enacted on March 11, 2021, temporarily increased premium tax credit assistance for those eligible for subsidies for 2021 and 2022 and removed the 5th Circuit upheld a District Court ruling400% federal poverty level limit that otherwise applies for purposes of eligibility to receive premium tax credits. Most recently, the individual mandate was unconstitutionalInflation Reduction Act of 2022 extended this increased tax credit assistance and remandedremoval of the case back to400% federal poverty limit through 2025.It is unclear how the Texas District Court to determine whetherhealthcare reform measures of the remaining provisions ofBiden administration and any future litigation will impact the Affordable Care Act and our business.

U.S. Health Care Laws

Healthcare providers and third party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain regulatory approval. Our current and future arrangements with third party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we conduct research and would market, sell and distribute our products. As a biopharmaceutical company, even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are invalidand will be applicable to our business. Restrictions under applicable federal and state healthcare laws and regulations that may affect our ability to operate include the following:

the federal healthcare Anti-Kickback Statute, which, for example, governs our marketing practices, educational programs, pricing policies, and relationships with healthcare providers or other entities, by prohibiting, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as well.Medicare and Medicaid;
federal civil and criminal false claims laws, including the civil False Claims Act, which can be enforced through civil whistleblower or qui tam actions, and civil monetary penalty laws that impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment or approval that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; the FDCA and PHSA, which prohibit the misbranding and adulteration of biological products that are regulated as drugs, and which regulate the marketing of biological products;
the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services;
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), which also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates and their subcontractors that use, disclose or otherwise process individually identifiable health information as well as their covered subcontractors;
the federal Physician Payments Sunshine Act, implemented as the Open Payments Program, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to CMS information related to payments and other transfers of value to U.S.-licensed physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, certified nurse midwives and U.S. teaching hospitals, as well as

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ownership and investment interests held by physicians and their immediate family members and applicable group purchasing organizations;
state and foreign laws and regulations that are analogous to the federal laws and regulations described in the preceding subsections of this risk factor, such as state anti-kickback and false claims laws, including but not limited to the UK Bribery Act 2010, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers;
state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; including those that require drug manufacturers to report information regarding pricing and marketing information related to payments and other transfers of value to physicians and other healthcare providers as well as those that require the registration of pharmaceutical sales representatives. Some state laws require the protection of the privacy and security of health information in a manner that may differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. For example, California enacted the California Consumer Privacy Act (CCPA), effective January 1, 2020, which was recently amended by the California Privacy Rights Act of 2020 (CPRA); and
similar healthcare and privacy laws and regulations in the European Economic Area (EEA), the UK and other jurisdictions, such as, the General Data Protection Regulation (EU) 2016/679 (GDPR), which imposes obligations and restrictions on the collection and use of personal information relating to individuals located in the EEA (including health information).

Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government-funded healthcare programs, such as Medicare and Medicaid, disgorgement, additional reporting requirements or oversight if we become subject to a corporate integrity agreement or similar agreement, and the curtailment or restructuring of our operations.

Foreign Regulation

In addition to regulations in the U.S., we are subject to a variety of foreign regulations governing clinical studies and commercial sales and distribution of our product candidates.candidates and interactions with healthcare professionals. Whether or not we obtain FDA approval for a product candidate, we must obtain approval from the comparable regulatory authorities of foreign countries or economic areas, such as the European Union, before we may commence clinical studies or market products in those countries or areas. The approval process and requirements governing the conduct of clinical studies, product licensing, pricing and reimbursement vary greatly from place to place, and the time may be longer or shorter than that required for FDA approval.

Certain countries outside of the U.S. have a process that requires the submission of a clinical studytrial application or CTA,(CTA), which is much like an IND in the U.S., prior to the commencement of human clinical studies. In Europe,the EU, for example, in accordance with the requirements of the EU Clinical Trials Regulation 536/2014 (CTR), a CTA must be submitted to the competent national health authority or a single application must be made to the centralized EU Portal, Clinical Trials Information System (CTIS) and to independent ethics committees in each country in which a company intends to conduct clinical studies. Once the CTA is approved in accordance with a country’s requirements, clinical study development may proceed in that country. In all cases, the clinical studies must be conducted in accordance with GCP and other applicable regulatory requirements. As part of the application process, the sponsor shall propose a reporting Member State, who will coordinate the validation and evaluation of the application. The reporting Member State shall consult and coordinate with the other concerned Member States. If an approval is issued, the sponsor can start the clinical trial in all concerned Member States. However, a concerned Member State can in limited circumstances declare an “opt-out” from an approval. In such a case, the clinical trial cannot be conducted in that Member State. The CTR also aims to streamline and simplify the rules on safety reporting and introduces enhanced transparency requirements such as mandatory submission of a summary of the clinical trial results to the EU Database. Under the CTR, clinical trial sponsors have been able to, but are not obligated to, use the CTIS starting January 31, 2022. Beginning January 31, 2023, clinical trial sponsors must use the CTIS to apply to start a new clinical trial in the EU or EEA, but clinical trials already approved under the previous law, the Clinical Trials Directive (CTD) can continue running under the CTD until January 31, 2025, at which time the sponsor must comply with the CTR and record information on these studies in the CTIS. National regulators in the EU Member States and EEA countries began to carry out their legal responsibilities in evaluating and overseeing clinical trials using the CTIS beginning January 31, 2022.


Under EU regulatory systems, a company may submit marketing authorization applications eitherMarketing Authorization Applications under anational, centralized or decentralized, procedure.or mutual-recognition procedures. We expect to utilize the centralized procedure, which is compulsory for medicinal

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products produced by biotechnology or those medicinal products containing new active substances for specific indications such as the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, viral diseases and designated orphan medicines, and optional for other medicines which are highly innovative. Under the centralized procedure, a marketing application is submitted to the European Medicines Agency, or EMA, where it will be evaluated by the Committee for Medicinal Products for Human Use. If this committee delivers a favorable opinion, this typically results in the grant by the European Commission of a single marketing authorization that is valid for all EU member states within 67 days of receipt of the opinion. The initial marketing authorization is valid for five years, but once renewed is usually valid for an unlimited period. Conditiona

lmarketingConditional marketing authorization in the European UnionEU is permittedbasedonincompleteclinicaldat based on incomplete clinical data for aforalimitednumberofmedicinalproductsfor limited number of medicinal products for human use, including products designated as orphan medicinal products under EU law, if (1) the risk-benefit balance of the product is positive, (2) it is likely that the applicant will be in a position to provide the required comprehensive clinical study data, (3) unmet medical needs will be fulfilled and (4) the benefit to public health of the immediate availability on the market of the medicinal product outweighs the risk inherent in the fact that additional data are still required. Specific obligations, including with respect to the completion of ongoing or new studies, and with respect to the collection of pharmacovigilance data, may be specified in the conditional marketing authorization. Conditional marketing authorizations are valid for one year and may be renewed annually, if the risk-benefit balance remains positive, and after an assessment of the need for additional or modified conditions. A different marketing authorization pathway is also available to sponsors, called “exceptional circumstances” under which the EC grants marketing authorization of a product for a specific condition or disease when comprehensive data cannot be obtained even after authorization (e.g., for rare conditions or diseases). Sponsors who obtain marketing authorization for a drug product under exceptional circumstances are subject to ongoing post-marketing obligations to continue confirmation of the benefits of the product. Continuation of a marketing authorization granted under the “exceptional circumstances” regulatory pathway is subject to annual re-assessments. The annual re-assessment will determine whether the marketing authorization should be maintained, changed, or suspended, based on sponsor’s fulfillment of its post-marketing obligations and the risk/benefit profile of product.,includingproductsdesignatedasorphanmedicinalproductsunderEUlaw,if(1)therisk-benefitbalanceoftheproductispositive,(2)itis likelythattheapplicantwillbeinapositiontoprovidetherequiredcomprehensiveclinicalstudydata,(3)unmetmedicalneedswillbefulfilledand(4) thebenefittopublichealthoftheimmediateavailabilityonthemarketofthemedicinalproductoutweighstheriskinherentinthefactthatadditionaldataarestillrequired.Specificobligations,includingwithrespecttothecompletionofongoingornewstudies,andwithrespecttothe collectionofpharmacovigilancedata,maybespecifiedintheconditionalmarketingauthorization.Conditionalmarketingauthorizationsarevalidfor oneyearandmayberenewedannually,iftherisk-benefitbalanceremainspositive,andafteranassessmentoftheneedforadditionalormodified conditions.

As in the U.S., we may apply for designation of a product as an orphan drug for the treatment of a specific indication in the European UnionEU before the application for marketing authorizationMAA is made. Orphan drugs in Europe enjoy economic and marketing benefits, including up to 11 years of orphan market exclusivity for the approved indication unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan-designated product. The PRIority MEdicines, or PRIME initiative was established by the EMA to help promote and foster the development of new medicines in the European Union that demonstrate potential for a major therapeutic advantage in areas of unmet medical need. Benefits from theof PRIME designation include early confirmation of potential for accelerated assessment, early dialogue and increased interaction with relevant regulatory committees to discuss development options, scientific advice at key development milestones, and proactive regulatory support from the EMA.EMA in order for the product to obtain a faster MAA.

In the EU, companies developing a new medicinal product must agree to a Pediatric Investigation Plan, or PIP,pediatric investigation plan (PIP) with the EMA and must conduct pediatric clinical trials in accordance with that PIP, unless a deferral or waiver applies, (e.g., because the relevant disease or condition occurs only in adults).PIP. The marketing authorization applicationMAA for the product must include the results of pediatric clinical trials conducted in accordance with the PIP, unless a waiver applies, in which case studies in children are not required (for example, if the disease or condition occurs only in adults). or a deferral has been granted, in which case the pediatric clinical trials must be completed at a later date. Products that are granted a marketing authorization on the basis of the pediatric clinical trials conducted in accordance with the PIP are eligible for a six month extension of the protection under a supplementary protection certificate (if any is in effect at the time of approval) or, in the case of orphan medicinal products, a two year extension of the orphan market exclusivity. This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and submitted.

Outside the U.S., there are additional challenges in ensuring adequate coverage and payment for our products. Pricing of prescription pharmaceuticals is subject to governmental control in many countries. Pricing negotiations with governmental authorities can extend well beyond the receipt of regulatory approval for a product and may require us to conduct a clinical study that compares the cost effectiveness of our product candidates or products to other available therapies. The conduct of this type of clinical study could be expensive and result in delays into our or our commercialization partners’ commercialization efforts. Third-partyThird party payors are challenging the prices charged for medical products and services, and many third-partythird party payors limit reimbursement for newly-approved health care products. Budgetary pressures in many European UnionEU countries are also causing governments to consider or implement various cost-containment measures, such as price freezes, increased price cuts and rebates. If budget pressures continue, governments may implement additional cost-containment measures. Cost-control initiatives could decrease the price we might establish for products that we may develop or sell, which would result in lower product revenues or royalties payable to us. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products.

The EC is currently conducting a wholesale review of the pharmaceutical legal framework, which includes the regulatory protection afforded to medicinal products such as data exclusivity, marketing protection, market exclusivity for orphan indications and pediatric extension. It is expected that the protection currently afforded in the EU will be reduced in the years to come and the new EU

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legislative proposal is expected to be published by the EC in the second quarter of 2023, although this timeline may be further prolonged.

Brexit and the Regulatory Framework in the United Kingdom

Following the result of a referendum in 2016, the United Kingdom left the EU on January 31, 2020, commonly referred to as Brexit. Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the EU, the United Kingdom was subject to a transition period until December 31, 2020 (the Transition Period) during which EU rules continued to apply. A UK-EU Trade and Cooperation Agreement (the Deal) that outlines the future trading relationship between the United Kingdom and the EU was agreed in December 2020 and has been approved by each EU member state and the United Kingdom.

Since a significant proportion of the regulatory framework in the United Kingdom applicable to our business and our product candidates is derived from EU directives and regulations, UK Legislation has retained existing EU law. However, new UK legislation is being drafted and the UK has not implemented new EU law, such as the CTR; therefore Brexit has had, and will continue to have, a material impact upon the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our product candidates in the United Kingdom and the EU. Great Britain (made up of England, Scotland and Wales) is no longer covered by the EEA’s procedures for the grant of marketing authorizations (Northern Ireland will be covered by the centralized authorization procedure and can be covered under the decentralized or mutual recognition procedures, as the EU legal framework continues to apply in Northern Ireland, under the Northern Ireland Protocol). A separate marketing authorization will be required to market drugs in Great Britain. It is currently unclear whether the Medical Healthcare products Regulatory Agency (MHRA) in the United Kingdom is sufficiently prepared to handle the increased volume of Marketing Authorization Applications that it is likely to receive. Any delay in obtaining, or an inability to obtain, any marketing approvals, would delay or prevent us from commercializing our product candidates in the United Kingdom or the EU and restrict our ability to generate revenue and achieve and sustain profitability.

While the Deal provides for the tariff-free trade of medicinal products between the United Kingdom and the EU there may be additional non-tariff costs to such trade which did not exist prior to the end of the Transition Period. Further, should the United Kingdom diverge from the EU from a regulatory perspective in relation to medicinal products, tariffs could be put into place in the future. We could therefore, both now and in the future, face significant additional expenses (when compared to the position prior to the end of the Transition Period) to operate our business, which could significantly and materially harm or delay our ability to generate revenues or achieve profitability of our business. Any further changes in international trade, tariff and import/export regulations as a result of Brexit or otherwise may impose unexpected duty costs or other non-tariff barriers on us. These developments, or the perception that any of them could occur, may significantly reduce global trade and, in particular, trade between the impacted nations and the United Kingdom. It is also possible that Brexit may negatively affect our ability to attract and retain employees, particularly those from the EU.

Orphan designation in Great Britain following Brexit is granted on an essentially identical basis to in the EU, but is based on the prevalence of the condition in Great Britain. It is therefore possible that conditions that are currently designated as orphan conditions in Great Britain will no longer be designated as such and that conditions that are not currently designated as orphan conditions in the EU will be designated as such in Great Britain.

Additional Regulation

As a pharmaceuticalbiopharmaceutical company, even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-partythird party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business. We are also subject to regulation under the Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other present and potential federal, state or local regulations. These and other laws govern our use, handling and disposal of various biological and chemical substances used in, and waste generated by, our operations. Our research and development involves the controlled use of hazardous materials, chemicals and viruses. Although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed by state and federal regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, we could be held liable for any damages that result and any such liability could exceed our resources.


Manufacturing

Our manufacturingIn April 2022, we sold all of our 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 hasto FDB. We also entered into a Master Services and

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Supply Agreement with FDB (Fujifilm MSA) which became effective in April 2022 and could extend for up to ten years. Pursuant to the flexibilityFujifilm MSA, FDB will supply us with specified quantities of our product and product candidates, manufactured in accordance with cGMP standards. The Fujifilm MSA does not obligate us to manufacture multiplepurchase our product and product candidates exclusively from FDB. Based on our expectations of patients and demand for product in the EU, we believe our current inventory of Ebvallo is sufficient to supply commercial demand in the EU until the end of 2023.

We continue to scale our EBV T-cell manufacturing platform to improve product yields from a single donor leukapheresis collection and have generated data confirming the use of stirred-tank bioreactors to improve yield and cell growth productivity. We believe our scalable technology can potentially be a key enabler to deliver biologic-like cost of goods manufactured and could be leveraged across our portfolio, including our CAR T immunotherapies while integrating researchprograms. There have been transient interruptions in the supply of raw materials and process science functions to enable increased collaboration for rapid product development. Our research andconsumables used in the development and processmanufacturing of our preclinical and analytical development labs are currently supporting preclinical development activities. Our facility is designedclinical cell therapies related to global regulatory standards, and the required facility commissioning and qualification activities to support clinical manufacturing are complete. Commercial production qualification activitiesCOVID-19 pandemic, including leukapheresis collections, which supply raw materials used for our facilityproduct candidates. If we are progressing wellunable to obtain such raw materials or other necessary raw materials in a timely manner, our business operations and togethermanufacturing capabilities could be adversely affected.

In addition to FDB, we also work with our contracted manufacturing partner, are aligned with our planned commercial product supply strategy.

In December 2019, we entered intoCharles River Laboratories Inc. (CRL) pursuant to a Commercial Manufacturing Services Agreement or the Manufacturing Agreement, with Cognate Bioservices, Inc., or Cognate. The Manufacturing Agreement supersedes the Development and Manufacturing Services Agreement, or the DMSA Agreement, with Cognate dated August 10, 2015, as amended. The Manufacturing Agreement governs similar manufacturing services provided for under the DMSA Agreement with similar terms. Specifically, pursuantCRL MSA) that we entered into in December 2019. Pursuant to the Manufacturing Agreement, CognateCRL MSA, CRL provides manufacturing services for our product and certain of our product candidates. The initial term of the Manufacturing Agreement runs until December 31, 2021 and is renewable with Cognate’s approval for an additional one-year period. We may terminate the Manufacturing Agreement for convenience on six months’ written notice to Cognate, or immediately if Cognate is unable to perform the services under the Manufacturing Agreement or fails to obtain or maintain certain necessary approvals. The Manufacturing Agreement includes standard mutual termination rights for uncured breach or insolvency, or a force majeure event preventing the performance of services for at least ninety days. In connection with the entry into the Manufacturing Agreement,February 2023, we and Cognate also entered into a Fifth Amendment to the DMSA Agreement, which amended the expiration dateCRL MSA to extend the term until the earlier of the DMSA Agreement to December 31, 2019.September 30, 2023 or receipt of certain batches of our product and product candidates.

Our current manufacturing strategy is to evaluate each product candidate and determine which site in our manufacturing network provides the phase-appropriate technical, quality and regulatory compliance requirements. In addition, the long-range supply requirements of our product candidates are evaluated periodically to ensure we are planning manufacturing capacity and capabilities accordingly across our network. Our manufacturing network is comprised of our own facility and the manufacturing capabilities of our partners, including MSK and Q-Gen Cell Therapeutics, an affiliate of QIMR Berghofer, and contract manufacturing organizations or CMOs,(CMOs), including Cognate.SAFC Carlsbad, Inc., FDB and CRL. This strategic approach provides us with the flexibility to support our clinical and commercial production needs, address time or capacity constraints as well as provide supply redundancy, where appropriate.

Our T-cell product candidates require blood-derived starting materials which are received from healthy, consenting third-partythird party donors through FDA- and EMA-compliant collection centers. Our manufacturing operations are conducted under Code of Federal Regulations Good Manufacturing Practices or GMPs,(GMPs), as well as Good Tissue Practices or GTPs.(GTPs). GTPs are FDA regulations and guidance documents that govern the methods used in, and the facilities and controls used for, the manufacture of human cells, tissues and cellular- and tissue-based products, or HCT/Ps, which are human cells or tissue intended for implantation, transplant, infusion or transfer into a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue-based products are manufactured in a manner designed to prevent the introduction, transmission and spread of communicable disease. FDA regulations also require tissue establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing.

Through agreements with our partners, we have acquired the right to use certain manufacturing process know-how related to producing clinical research-related drug supply. These include materials to support the manufacturing of clinical study material, including key starting materials and intermediates as well as existing inventory of clinical study materials. We also have the ability to obtain supply from third parties to ensure we have the necessary bloodstarting materials donated from healthy consenting third-partythird party donors.

EmployeesHuman Capital Management

As of December 31, 2019,2022, we had 393334 employees. We believe that the success of our business will depend, in part, on our ability to attract and retain qualified personnel. Our human capital strategy is designed to enable successful execution of our business objectives, while fostering a collaborative and innovative culture, that embraces diversity and inclusion. We monitor our success with insights across human capital metrics such as employee engagement, vacancy rates, time to hire, promotion rates, performance ratings, succession depth, retention, EEO compliance, pay equity, and diversity representation. The principal purposes of our compensation policies and equity incentive plans are to attract, retain and motivate employees and directors by paying for performance through the granting of stock-based compensation awards and cash-based performance bonus awards. None of our employees are represented by a labor union or are a party to a collective bargaining agreement and we consider our relations with our employees to be good.

COVID-19 Business Update

We continue to monitor the impact of the COVID-19 pandemic on our business and operations and have taken steps designed to minimize such impacts and maintain business continuity. We have transitioned a portion of our workforce to a remote,

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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.

Our clinical study and operational teams work with clinical sites to minimize the impact of the COVID-19 pandemic. 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 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.

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 “1A. Risk Factors” under Part I, Item 1A in this Annual Report on Form 10-K.

Corporate Information

We were incorporated in Delaware in 2012. Our principal corporate offices are located at 611 Gateway Blvd.2380 Conejo Spectrum St., Suite 900, South San Francisco,200, Thousand Oaks, California 9408091320 and our telephone number at that address is (650) 278-8930.(805) 623-4211. Our website address is www.atarabio.com.


Available Information

We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and other materials with the Securities and Exchange Commission or SEC.(SEC). We make these reports available free of charge through our website as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the SEC. The information contained on, or that can be accessed through, our website is not a part of or incorporated by reference in this Annual Report on Form 10-K or in any other filings we make with the SEC.

The SEC also maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.

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Item 1A. Risk Factors

Investing in our common stock involves a high degree of risks.risk. Investors should carefully consider all of the risk factors and uncertainties described below, in addition to the other information contained in this Annual Report on Form 10-K, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before investing in our common stock.

The risks described below may not be the only ones relating to our company and additional risks that we currently believe are immaterial may also affect us. If any of these risks, including those described below, materialize, our business, competitive position, reputation, financial condition, results of operations, cash flows and future prospects could be seriously harmed. In these circumstances, the market price of our common stocksecurities could decline, and investors may lose all or a part of their investment.

Risks Related to Our Financial Results and Capital Needs

We have incurred substantial losses since our inception and anticipate that we will continue to incur substantial and increasing losses for the foreseeable future.

We are a clinical-stage biopharmaceutical company. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that a product candidatecandidates will fail to prove effective, gain regulatory approval or become commercially viable. We do not have any productsone product, Ebvallo, which is approved by regulatory authoritiesin the EU and have not generated any revenues from commercial product sales, or otherwise to date, and have incurred significant research, development and other expenses related to our ongoing operations and expect to continue to incur such expenses. As a result, we have not been profitable and have incurred significant operating losses in every annual reporting period since our inception. For the year ended December 31, 2019,2022, we reported a net loss of $291.0 million and$228.3 million.

To date, we had an accumulated deficit of $818.0 million as of December 31, 2019.

have not generated any revenue from commercial product sales. We do not expectknow when, or if, we will generate sufficient revenue from commercial product sales to generate revenues for the foreseeable future, if at all.offset our operating expenses. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate these losses to increasefuture as we continue to research, develop and seek regulatory approvals for our product candidates and any additional product candidates we may acquire, in-license or develop, and potentially begin to commercialize product candidates that may achieve regulatory approval.develop. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growthchange of our expenses and our ability to generate revenues. If any of our product candidates fails in clinical studies or does not gain regulatory approval, or if approved, fails to achieve market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. We anticipate that ourOur expenses willmay increase in the future as we continue to invest in research and development of our existing product candidates, investigate and potentially acquire new product candidates and expand our manufacturing and commercialization activities.candidates.

We have a limited operating history, which may make it difficult to evaluate the success of our business to date and to assess our future viability.

Our company was formed in August 2012. Our operations to date have been limited to organizing and staffing our company, acquiring product and technology rights and conducting product development activities for our product candidates. We have not yet demonstrated our ability to successfully complete any Phase 2 or Phase 3 clinical studies, obtain regulatory approval in the U.S., consistently manufacture a commercial scale product or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful commercialization for any of our product candidates.candidates or arrange for a third party to do so on our behalf. In addition, the adoptive immunotherapy technology underlying our T-cell product candidates, including our next-generation CAR T programs, is new and largely unproven. Any predictions about our future success, performance or viability, particularly in view of the rapidly evolving immunotherapy field, may notprove to be as accurate as they could be if we had a longer operating history or approved products on the market.inaccurate.


In addition, as a young business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition at some point from a company with a research and development focus to a company capable of supporting commercial activities. We may not be successful in such a transition. We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, any of our quarterly or annual periods’ results are not indicative of future operating performance.

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We currently have no source ofcommercial product revenues. We may never generate revenues from the sale of commercial products or achieve profitability.

To date, we have not generated any revenues from commercial product sales or otherwise. Even if we are able to successfully achievesales. We have regulatory approval for one product, Ebvallo, in the EU. We have outlicensed the commercialization rights to Ebvallo in the EU to Pierre Fabre under the Pierre Fabre Commercialization Agreement and we have sold certain of our product candidates, we do not know when we will generate revenues or become profitable, if at all.royalty and milestone interests under the Pierre Fabre Commercialization Agreement, subject to a specified cap, to HCRx pursuant to the HCRx Agreement. Our ability to generate revenues from product sales and achieve profitability will be subject to the Pierre Fabre Commercialization Agreement, the HCRx Agreement and depend on our commercialization partners’ ability to successfully commercialize products, including any of our current product and product candidates, and other product candidates that we may develop, in-license or acquire in the future. Our ability to generate revenues from the sale of products and achieve profitability will also dependsdepend on a number of additional factors, including our ability to:

successfully complete development activities, including the necessary clinical studies with positive results;
complete and submit regulatory submissions to the FDA, EMA or other agencies and obtain regulatory approval for indications for which there is a commercial market;
develop manufacturing and distribution processes for our novel T-cell immunotherapy product candidates;
develop commercial quantities of our products at acceptable cost levels;
establish and maintain adequate supply of our products, including cell lines with sufficient breadth to treat patients;
establish and maintain manufacturing and commercialization relationships with reliable third parties;
qualify our CMOs’ manufacturing facilities such that we can maintain the supply of our products by ensuring adequate manufacturing of bulk drug substances and drug products in a manner that is compliant with global legal and regulatory requirements;
achieve market acceptance of and pricing and reimbursement for our products, if any;
attract, hire and retain qualified personnel;
protect our rights in our intellectual property and regulatory protections portfolio; and
find suitable commercialization partners who can obtain coverage and adequate reimbursement from third parties, including government payors, set commercially viable prices, market, sell and distribute our approved products.

successfully complete development activities, including the necessary clinical studies;

complete and submit regulatory submissions to the FDA, EMA or other agencies and obtain regulatory approval for indications for which there is a commercial market;

obtain coverage and adequate reimbursement from third parties, including government and private payors;

set commercially viable prices for our products, if any;

develop manufacturing and distribution processes for our novel T-cell immunotherapy product candidates;

develop commercial quantities of our products at acceptable cost levels;

establish and maintain adequate supply of our products, including cell lines with sufficient breadth to treat patients;

establish and maintain manufacturing relationships with reliable third parties or qualify our manufacturing facility such that we can maintain the supply of our products by ensuring adequate, manufacturing of bulk drug substances and drug products in a manner that is compliant with global legal requirements;

achieve market acceptance of our products, if any;

attract, hire and retain qualified personnel;

protect our rights in our intellectual property portfolio;

develop a commercial organization capable of sales, marketing and distribution for any products we intend to sell ourselves in the markets in which we choose to commercialize on our own; and

find suitable distribution partners to help us market, sell and distribute our approved products in other markets.

Our revenues forfrom Ebvallo or any product candidate for which regulatory approval is obtained will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the product, the ability to get reimbursement at any price, and whether we own the commercial rightsterms and conditions of our commercialization agreement with our partner for that territory. Except for certain milestone payments payable to us in connection with the approval and transfer of the Ebvallo marketing authorization, we will not receive any meaningful milestones or royalty payments from Pierre Fabre until the applicable royalty caps under the HCRx Agreement are met, which could take many years, if at all. If the number of our addressable disease patients is not as significant as we estimate, the indication approved by regulatory authorities is narrower than we expect, or the reasonably accepted population for treatment is narrowed by competition, physician choice, or treatment guidelines weor a reduction in the incidence of the addressable disease, our partners may not generate significant revenues from sales ofsuccessfully commercialize our products, even if approved. In addition,The timing and amount of any milestone and royalty payments we anticipate incurring significant costs associated with commercializing any approved product candidate.may receive from our partners, as well as the commercial success of our products will depend on, among other things, the efforts, allocation of resources, negotiation of pricing and reimbursement and successful commercialization of our products by our partners. As a result, even if we generate product revenues, we may not become profitable and may need to obtain additional funding to continue operations. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and may be forced to reduce our operations.

We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercializationmanufacturing efforts.

We expect to expend substantial resources for the foreseeable future to continue the clinical development and manufacturing of our T-cell immunotherapy product candidates, and the advancement and expansion of our preclinical research pipeline. We also expect to continue to expend resources for the development and manufacturing of our product and product candidates and the technology we have licensed or have an exclusive right to license from our partners. These expenditures will include costs associated with research and development, potentially acquiring or licensing new product candidates or technologies, conducting preclinical and clinical studies and potentially obtaining regulatory approvals and manufacturing products, as well as marketing and selling products approved for


sale, if any.products. Under the terms of our license agreements with each of our in-license partners, we are obligated to make payments upon the achievement of certain development, regulatory and

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commercial milestones. We will also need to make significant expenditures to develop a commercial organization capable of sales, marketing and distribution for any products, if any, that we intend to sell ourselves in the markets in which we choose to commercialize on our own. In addition, other unanticipated costs may arise. Because the design and outcome of our ongoing, planned and anticipated clinical studies is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our product and product candidates.

Our future capital requirements depend on many factors, including:

the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical and clinical studies;

the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical and clinical studies;

the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates, if clinical studies are successful, including any costs from post-market requirements;

the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates, if clinical studies are successful, including any costs from post-market requirements;

the cost of commercialization activities for our product candidates, if any of these product candidates is approved for sale, including marketing, sales and distribution costs;

the cost of contracting for the manufacture of our product and product candidates for clinical studies in preparation for regulatory approval and in preparation for commercialization;

the cost of manufacturing our product candidates for clinical studies in preparation for regulatory approval and in preparation for commercialization;

our ability to establish and maintain strategic licensing or other arrangements and the financial terms of such agreements;

our ability to establish and maintain strategic licensing or other arrangements and the financial terms of such agreements;

the costs to develop, acquire or in-license future product candidates or technologies;

the costs to develop, acquire or in-license future product candidates or technologies;

the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;

the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;

the timing, receipt and amount of sales of, or royalties on, our product and future products, if any; and

the timing, receipt and amount of sales of, or royalties on, our future products, if any; and

the emergence of competing technologies or other adverse market developments.

the emergence of competing technologies or other adverse market developments.

We believeexpect that our existing cash, cash equivalents and short-term investments as of December 31, 2019,2022, together with net proceeds from the sale of our common stock from our 2019 ATM Facility$40.0 million received in January 2020, described in Management’s Discussion and Analysis2023 for achievement of Financial Condition and Results of Operations – Liquidity and Capital Resources section of this Annual Report on Form 10-K,certain milestones under the Pierre Fabre Commercialization Agreement, will be sufficient to fund our planned operations into the second quarter of 2021.2024. As of December 31, 2019,2022, we had total cash, cash equivalents and short-term investments of $259.1$242.8 million. However, our operating plan may change as a result of many factors currently unknown to us, and we may need additional funds sooner than planned. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

We do not have any committed external source of funds. Additionalfunds other than milestone and royalty payments that we may receive under the Pierre Fabre Commercialization Agreement, subject to the terms of the HCRx Agreement. Except for certain milestone payments payable to us in connection with the approval and transfer of the Ebvallo marketing authorization, we will not receive any meaningful milestone or royalty payments from Pierre Fabre until the applicable royalty caps under the HCRx Agreement are met, if at all. While 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, additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may not have sufficient working capital to fund our operations or be able to continue as a going concern, and we may be required to delay, limit, reduce or terminate preclinical studies, clinical studies or other development activities for one or more of our product candidates or delay, limit, reduce or terminate our establishment of sales, marketing and distribution capabilities or other activities that may be necessary to commercialize our product candidates.

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our product candidates on terms that are unfavorable to us.

We may seek required additional capital through a variety of means, including through private and public equity offerings and debt financings. For example, in December 2022, we sold certain of our royalty and milestone interests under the Pierre Fabre Commercialization Agreement, subject to a specified cap, to HCRx pursuant to the HCRx Agreement. To the extent that we raise additional capital through the sale of equity or convertible debt securities, or if existing holders of warrants exercise their rights to purchase common stock, the ownership interest of existing stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of stockholders. To the extent equity valuations, including the trading price of our common stock, are depressed as a result of economic disruptions or other uncertainties, for example due to the COVID-19 pandemic, rising inflationary pressures, the ongoing Russian invasion of Ukraine or other factors, the potential magnitude of this dilution will increase. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take certain actions, including incurring additional debt, making capital expenditures, entering into licensing arrangements, or declaring dividends. If we raise additional funds from third parties, we may have to relinquish valuable rights to our technologies or product candidates or grant licenses or other rights on terms that are not favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts for our product candidates, grant to others the rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves or take other actions that are adverse to our business.


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Our announced workforce reduction may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business.

In August 2022, we announced a reduction in workforce by approximately 20% across all areas of our company, including members of management. The reduction in force reflects a prioritization around key research and development programs and the reduction of our expense profile. We may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from our restructuring efforts due to unforeseen difficulties, delays or unexpected costs. If we are unable to realize the expected operational efficiencies and cost savings from the restructuring, our operating results and financial condition would be adversely affected. We also cannot be certain that we will not have to undertake additional workforce reductions or restructuring activities in the future. Furthermore, our cost savings plan may be disruptive to our operations, which could affect our ability to generate product revenue. In addition, our workforce reductions could yield unanticipated consequences, such as attrition beyond planned staff reductions, or disruptions in our day-to-day operations. Our workforce reduction could also harm our ability to attract and retain qualified management, scientific, clinical, and manufacturing personnel who are critical to our business. Any failure to attract or retain qualified personnel could prevent us from successfully developing and commercializing Ebvallo in the EU or our product candidates in the future.

There can be no assurance that we will achieve all of the anticipated benefits of the Fujifilm Transaction and we could face unanticipated challenges.

We may not realize some or all of the anticipated benefits from the Fujifilm Transaction and we may encounter post-closing risks, including associated with the provision of (i) certain transition services to FDB by us and (ii) the provision of services to us by FDB pursuant to the Fujifilm MSA. We may experience increased difficulty and loss of institutional knowledge as a result of the transfer of ATOM Facility employees to FDB in connection with the Fujifilm Transaction, which could harm our business. During the transition period, the Fujifilm Transaction will require significant time and resources from us which may disrupt our business and distract management from other responsibilities, which may result in losses or continued financial involvement in the ATOM Facility, including through indemnification or other financial arrangements, which could adversely affect our financial results.

Risks Related to the Development of Our Product and Product Candidates

We are generally early in our development efforts and have only a small number of product candidates in clinical development. All of our other product candidates are still in preclinical development. If we or our collaborators are unable to successfully develop, manufacture and commercialize our product or product candidates or experience significant delays in doing so, our business may be materially harmed.

We are generally early in our development efforts, and only a small number of our product candidates are in clinical development. The majority of our product candidates are currently in preclinical development. We have invested substantial resources in identifying and developing potential product candidates, conducting preclinical and clinical studies, manufacturing activities, and preparing for the potential commercial launch of our product and product candidates. Our ability to generate revenues which we do not expect will occur for several years,from the sale of our product and product candidates, if ever,approved, will depend heavily on the successful development, manufacture and our partners' eventual commercialization of our product and product candidates.

The success of our product and product candidates will depend on many factors, including the following:

completion of preclinical and clinical studies with positive results, including demonstrating the stability, safety, purity, and potency of our product candidates to the satisfaction of the FDA or other regulatory agencies;
receipt of regulatory approvals from applicable authorities, including required authorizations for clinical trials and marketing authorizations;
protecting our rights in our intellectual property portfolio, including by obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;
establishing or making successful arrangements with third party manufacturers and commercialization partners;

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qualifying our and our CMOs’ manufacturing facilities for clinical and commercial manufacturing purposes;
developing manufacturing and distribution processes for our novel T-cell product candidates and next-generation CAR T programs;
contracting with third parties for the manufacture of our product candidates at an acceptable cost;
contracting with third parties for commercialization of our products on terms favorable to us, if approved by applicable regulatory authorities;
acceptance of our products, if approved by applicable regulatory authorities, by patients and the medical community;
our partners’ ability to obtain and maintain coverage and adequate reimbursement by third party payors, including government payors, for our products, if approved by applicable regulatory authorities;
effectively competing with other therapies;
maintaining a continued acceptable benefit/risk profile of the products following approval; and
maintaining and growing an organization of scientists and functional experts who can develop our products and technology

completion of preclinical and clinical studies with positive results;

receipt of regulatory approvals from applicable authorities;

protecting our rights in our intellectual property portfolio, including by obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;

establishing or making arrangements with third-party manufacturers or completing our own manufacturing facility for clinical and commercial manufacturing purposes;

developing manufacturing and distribution processes for our novel T-cell product candidates and next-generation CAR T programs;

manufacturing our product candidates at an acceptable cost;

launching commercial sales of our products, if approved by applicable regulatory authorities, whether alone or in collaboration with others;

acceptance of our products, if approved by applicable regulatory authorities, by patients and the medical community;

obtaining and maintaining coverage and adequate reimbursement by third-party payors, including government payors, for our products, if approved by applicable regulatory authorities;

effectively competing with other therapies;

maintaining a continued acceptable benefit/risk profile of the products following approval; and

maintaining and growing an organization of scientists and functional experts who can develop and commercialize our products and technology.

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully develop and commercialize our product and product candidates, which could materially harm our business.

Our business and operations have been affected by and could be materially and adversely affected in the future by the effects of health epidemics and pandemics, including the evolving and ongoing effects of the COVID-19 pandemic, in particular with respect to any new variants or resurgences of the pandemic. The COVID-19 pandemic continues to impact our business and operations and could materially and adversely affect our business and operations in the future, as well as the businesses and operations of third parties on which we rely.

Our business could be adversely affected by health epidemics and pandemics, including the ongoing COVID-19 pandemic, which has presented a substantial public health and economic challenge around the world and has affected, and continues to affect, our employees, patients, communities and business operations, as well as the U.S. economy and financial markets. As a result of the ongoing COVID-19 pandemic, we transitioned most of our employees to a work-from-home model. We continue to maintain essential in-person manufacturing and laboratory functions in order to advance key research, development and manufacturing priorities. In connection with these measures, we may be subject to claims based upon, arising out of, or related to COVID-19 and our actions and responses thereto, including any determinations that we may make to continue to operate our offices and facilities where permitted by applicable law. The effects of potential future state executive orders, local shelter-in-place orders, government-imposed quarantines, our work-from-home policies and other similar actions may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

Further quarantines, shelter-in-place or similar restrictions and other actions taken by foreign, federal, state and local governments, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could be reinstated, related to the ongoing COVID-19 pandemic or other infectious diseases, could impact our manufacturing capabilities and third party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which would disrupt our supply chain. In particular, standard transportation channels have been impacted and we and other manufacturing, testing, product disposition, CMOs and external testing laboratories are subject to enhanced risk assessment and mitigation measures. In addition, there have been and may continue to be interruptions in the supply of leukapheresis collections, which supply raw materials used in our products.

Our clinical trials may also be affected by health epidemics and have been affected by the ongoing and evolving COVID-19 pandemic. Clinical site initiation and patient enrollment have experienced delays as a result of the COVID-19 pandemic, including due to the prioritization of hospital resources toward COVID-19 and away from clinical trials or as a result of changing practice patterns that impact the diseases our trials address. Some patients may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services or if patients contract COVID-19 or are forced to quarantine. For example, while most clinical trial sites for our studies, including our Phase 3 clinical trial of tab-cel in patients with EBV+ PTLD, remain open to enrollment for patients, some sites have limited the screening and enrollment of new patients due to governmental orders related to COVID-19, or fear of infection of COVID-19, have limited, and may continue to limit, patients’ abilities to access clinical sites. COVID-19-related travel restrictions may also interrupt key clinical trial activities, such as clinical trial site data monitoring and efficacy, safety and translational data collection, processing and analyses. At the outset of the COVID-19 pandemic, we observed a

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temporary slow-down in stem cell and solid organ transplant volumes, which may have decreased the eligible patient population for the tab-cel Phase 3 study. In April 2020, we initiated a temporary pause in the screening and enrollment of patients in our EMBOLD study of ATA188 in patients with PMS. Although we were able to resume the screening and enrollment of patients in our EMBOLD study and enrolled the first patient in the study in June 2020, the ongoing COVID-19 pandemic may require us to pause screening and enrollment of patients in our clinical studies. Similarly, our ability to recruit and retain principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may be adversely impacted.

In addition, to the extent the evolving effects of the ongoing and evolving COVID-19 pandemic adversely affect our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties described elsewhere in this “Risk Factors” section.

Our future success is dependent on the regulatory approval of our product candidates.

We do notonly have any productsone product, Ebvallo, that havehas gained regulatory approval.approval in the EU. Currently, our prioritized clinical-stage product candidates include tab‑cel®ATA188 and ATA188.tab-cel in the U.S. Our business is substantially dependent on our ability to obtain regulatory approval for, and, if approved, to find a partner who can successfully commercialize our product candidates in a timely manner.

We cannotNeither we nor our partners can commercialize product candidates in the U.S. without first obtaining regulatory approval for the product candidates from the FDA; similarly, neither we cannotnor our partners can commercialize product candidates outside of the U.S. without obtaining regulatory approval from comparable foreign regulatory authorities. Before obtaining regulatory approvals for the commercial sale of any product candidate for a target indication, we must demonstrate with substantial evidence gathered in preclinical and clinical studies that the product candidate is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate with respect to such product candidate to assure stability, safety, purity and potency.

The time required to obtain approval by the FDA and comparable foreign regulatory authorities is unpredictable but typically takes many years following the commencement of preclinical and clinical studies and depends upon numerous factors, including the substantial discretion of the regulatory authorities. The novel nature of our product candidates may create further challenges in obtaining regulatory approval. For example, the FDA and comparable foreign regulatory authorities have limited experience with regulating the development and commercialization of T-cell immunotherapies, particularly allogeneic T-cell product candidates, and CAR T therapies, including assessing the comparability of different versions of such product candidates. In addition, approval policies, regulations, regulatory positions or the type and amount of clinical and other data necessary to gain approval may change during the course of a product candidate’s clinical development and throughout regulatory interactions, and may vary among jurisdictions.jurisdictions, particularly for novel therapies. The EC has approved the Marketing Authorization Application for Ebvallo as a monotherapy treatment for patients with EBV+ PTLD who have received at least one prior therapy under “exceptional circumstances”, which is a pathway under which EC grants marketing authorization when “comprehensive data cannot be obtained even after authorization”. Under the exceptional circumstances marketing authorization, our commercial partner, Pierre Fabre, is subject to ongoing post-marketing obligations to continue confirmation of the benefits of Ebvallo, and if any of our other product candidates are approved under this pathway, we or our future commercial partners will be subject to this obligation. Continuation of the Ebvallo marketing authorization is subject to annual re-assessment. The annual re-assessment will determine whether the Ebvallo marketing authorization should be maintained, changed, or suspended, based on Pierre Fabre’s fulfillment of post-marketing obligations and the risk/benefit profile of Ebvallo. If we, or our commercial partners, do not satisfy the ongoing post-marketing obligations or the EC determines that the risk/benefit profile of Ebvallo is not acceptable, the EC may change or suspend the marketing approval for Ebvallo. We have not obtained regulatory approval for any other product candidate, and it is possible that none of our existing product candidates or any future product candidates will ever obtain regulatory approval.


Our product candidates could fail to receive regulatory approval from the FDA or a comparable foreign regulatory authority for many reasons, including:

disagreement with the design or conduct of our clinical studies;
failure to demonstrate positive benefit/risk profile of the product candidate for its proposed indication;
failure to demonstrate the stability, safety, purity and potency of the product candidate;
failure of clinical sites to conduct the study in accordance with applicable regulatory requirements;
failure of clinical studies to meet the level of statistical significance required for approval;
disagreement with our interpretation of data from preclinical studies or clinical studies;

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the insufficiency of data collected from clinical studies of our product candidates to support the submission and filing of a BLA or other submission or to obtain regulatory approval;
inability to reach agreement with the FDA or comparable foreign regulatory authorities on the methodologies for, and assessment of, comparability of different versions of product candidates used in non-pivotal studies, pivotal studies and for intended commercial use;
failure to obtain approval of our manufacturing processes or facilities of third party manufacturers with whom we contract for clinical and commercial supplies or our own manufacturing facility; or
changes or inconsistencies in the requested or required methodologies, statistical analyses, specification criteria or regulatory submission requirements for a product candidate, including changes to, or inconsistencies with, applicable industry practice or precedent; or
changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval or in positions, guidance or feedback communicated by the FDA or comparable foreign regulatory authorities that have a negative impact on the potential approval of a product candidate.

disagreement with the design or conduct of our clinical studies;

failure to demonstrate positive benefit/risk profile of the product candidate for its proposed indication;

failure of clinical studies to meet the level of statistical significance required for approval;

disagreement with our interpretation of data from preclinical studies or clinical studies;

the insufficiency of data collected from clinical studies of our product candidates to support the submission and filing of a BLA or other submission or to obtain regulatory approval;

failure to obtain approval of our manufacturing processes or facilities of third-party manufacturers with whom we contract for clinical and commercial supplies or our own manufacturing facility; or

changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval.

The FDA or a comparable foreign regulatory authority may require more information, including additional CMC information, preclinical or clinical data to support approval, which may delay or prevent approval and our commercialization plans, or we may decide to abandon the development program. For example, at a Type B meeting in February 2022, we were not able to align with the FDA on comparability between tab-cel product versions used in the pivotal ALLELE study and the intended commercial product. The FDA initially recommended we conduct a new clinical trial with the commercial product to address the lack of alignment on comparability and to gain additional clinical experience with the intended commercial product. In February 2023, we held a meeting with the FDA on clinical aspects for a potential BLA submission for tab-cel. We expect to hold a near-term meeting to further discuss CMC matters relating to a potential BLA submission for tab-cel, including aspects related to comparability that may support pooling clinical data from different process versions. While we continue to discuss such potential pathways with the FDA to enable filing of a BLA for tab-cel without the need for a new clinical trial, we may not ultimately reach agreement with the FDA on a pathway to BLA submission with the current clinical dataset. In this case, the conduct of an additional clinical trial or trials in the lead indication may be necessary to support a BLA for tab-cel, which would result in considerable delay to a BLA submission or could lead us not to pursue a BLA submission. Conducting a clinical trial may prove too difficult or too expensive, and the process of designing a clinical trial, enrolling enough patients, and completing treatment and data collection under the protocol could take a significant amount of time, effort, and resources. Even if we complete the clinical trial, the study may not meet its prespecified endpoints, and even if it does, the FDA may still disagree that the clinical trial is sufficient to support submission and approval of a BLA for tab-cel, or may consider that the data, while adequate for BLA submission, can support only a more limited indication than that for which we initially applied.

Our development activities and/or commercialization planning with our partners could be harmed or delayed by governmental or regulatory delays due to a variety of factors. These factors include limitations on the availability of governmental and regulatory agency personnel to review regulatory filings or engage with us (caused by global health concerns or otherwise, including the ongoing and evolving COVID-19 pandemic); changes to governmental regulatory requirements, policies, guidelines or priorities, reallocation, or availability of government resources; or for other reasons, that may significantly delay the FDA’s, or other regulatory agencies', ability to review and process any submissions we have filed or may file or cause other regulatory delays. If global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, or impact reviews or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to review and process our regulatory submissions in a timely fashion, which could have a material adverse effect on our business. For example, in response to the COVID-19 pandemic, on March 10, 2020, the FDA announced its intention to postpone most inspections of foreign manufacturing facilities and products inspections of domestic manufacturing facilities through April 2020. On March 18, 2020, the FDA announced its intention to postpone temporarily routine surveillance inspections of domestic manufacturing facilities and provided guidance regarding the conduct of clinical trials. On July 10, 2020, the FDA announced that it is working toward the goal of restarting on-site inspections it deems to be “mission critical.” In May 2021, the FDA updated its guidance, first published in August 2020, clarifying how it intends to conduct inspections during the COVID-19 pandemic, including how it plans to determine which inspections are “mission critical.” Additionally, on April 14, 2021, the FDA issued a guidance document in which the FDA described its plans to conduct voluntary remote interactive evaluations of certain drug manufacturing facilities and clinical research sites. According to the guidance, the FDA intends to request such remote interactive evaluations in situations where an in-person inspection would not be prioritized, deemed mission-critical, or where direct inspection is otherwise limited by travel restrictions, but where the FDA determines that remote evaluation would still be appropriate. The FDA intends to use this risk-based assessment system to identify the categories of regulatory activity that can occur within a given geographic area, ranging from mission critical inspections to resumption of all regulatory activities. The FDA has since adjusted its inspection activities in response to the ongoing COVID-19 pandemic. On December 29, 2021, the FDA implemented temporary changes to its inspectional activities to ensure the safety of its employees and

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regulated firms. On February 2, 2022, FDA announced that it would resume domestic surveillance inspections across all product areas on February 7, 2022. In July 2022, FDA published a draft guidance document outlining its policies regarding remote regulatory assessments. We cannot predict whether, and when, FDA will decide to pause or resume inspections due to the COVID-19 pandemic. Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic. It is unclear how FDA’s and other health agencies’ policies and guidance will impact any inspections of our facilities or clinical trial sites involved without clinical studies.

If we were todo obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request (including failing to approve the most commercially promising indications), may grant approval contingent on the performance of costly post-marketing clinical studies, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.

In addition, the clinical study requirements of the FDA, EMA and other regulatory agencies and the criteria these regulators use to determine the safety and efficacy of a product candidate are determined according to the type, complexity, novelty and intended use and market of the potential products. The regulatory approval process for novel product candidates, such as our novel T-cell product candidates and next-generation CAR T programs, can be more complex and consequently more expensive and take longer than for other, better known or extensively studied pharmaceutical or other product candidates. Approvals by the EMAEC and FDA for existing autologous CAR T therapies, such as Novartis’sNovartis’ Kymriah® and Gilead’s Yescarta®, may not be indicative of what these regulators may require for approval of our therapies. We have multiple clinical trials of our product candidates currently ongoing. If an adverse safety issue, clinical hold or other adverse finding occurs in one or more of our clinical trials, such event could adversely affect our other clinical trials of the same or related product candidates. Moreover, our product candidates may not perform successfully in clinical studies or may be associated with adverse events that distinguish them from those that which have previously been approved, such as existing autologous CAR T therapies. For instance, allogeneic product candidates may result in adverse events not experienced with autologous products.

In January 2019, the U.S. federal government entered a prolonged shutdown suspending services deemed non-essential, including certain activities of the FDA, and U.S. politicians have expressed interest in future similar shutdowns as a negotiating tactic. Our development and commercialization activities could be harmed or delayed by a similar shutdown of the U.S. federal government in the future, which may significantly delay the FDA’s ability to timely review and process any submissions we have filed or may file or cause other regulatory delays.

Even if a product candidate werewas to successfully obtain approval from the FDA and comparable foreign regulatory authorities, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements. If we are unable to obtain regulatory approval for one of our product candidates in one or more jurisdictions, or any approval contains significant limitations, we may not be able to obtain sufficient funding to continue the development of that product or generate revenues attributable to that product candidate. Also, any regulatory approval of our current or future product candidates, once obtained, may be withdrawn.withdrawn in a region or country by the respective regulatory agency.

Our T-cell immunotherapy product and product candidates and our next-generation CAR T programs represent new therapeutic approaches that could result in heightened regulatory scrutiny, delays in clinical development or delays in or our inability to achieve regulatory approval, commercialization or payor coverage of our product candidates.

Our future success is dependent on the successful development and commercialization of T-cell immunotherapies and our next-generation CAR T programs in general and our development product candidates in particular. Because these programs, particularly our pipeline of allogeneic T-cell product and product candidates that are bioengineered from donors, represent a new approach to immunotherapy for the treatment of cancer and other diseases, developing and commercializing our product candidates subject us to a number of challenges, including:

obtaining regulatory approval from the FDA and other regulatory authorities, which have limited experience with regulating the development and commercialization of T-cell immunotherapies, particularly allogeneic T-cell products and product candidates;
developing and deploying consistent and reliable processes for procuring blood from consenting third party donors, isolating T cells from the blood of such donors, activating the isolated T cells against a specific antigen, characterizing and storing the resulting activated T cells for future therapeutic use, selecting and delivering a sufficient supply and breadth of appropriate partially HLA-matched cell line from among the available T-cell lines, and finally infusing these activated T cells into patients;
utilizing these product candidates in combination with other therapies (e.g., immunomodulatory approaches such as checkpoint inhibitors), which may increase the risk of adverse side effects;
educating medical personnel regarding the potential side effect profile of our product and each of our product candidates, particularly those that may be unique to our allogeneic T-cell product and product candidates and to our next-generation CAR T programs;
understanding and addressing variability in the quality of a donor’s T cells, which could ultimately affect our ability to manufacture products and product candidates in a reliable and consistent manner;

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developing processes for the safe administration of these product and product candidates, including long-term follow-up and registries, for all patients who receive these product candidates;
establishing or making arrangements with third party manufacturers to manufacture, or manufacturing on our own, product and product candidates to our specifications and in a timely manner to support our clinical studies and, if approved, commercialization;
sourcing clinical and, if approved by applicable regulatory authorities, commercial supplies for the materials used to manufacture and process these product and product candidates that are free from viruses and other pathogens that may increase the risk of adverse side effects;
developing a manufacturing process and distribution network that can provide a stable supply with a cost of goods that allows for an attractive return on investment;
establishing favorable terms with commercialization partners that possess appropriate sales and marketing capabilities ahead of and after obtaining any regulatory approval to gain market acceptance, and obtaining adequate coverage, reimbursement and pricing by third party payors and government authorities; and
developing therapies for types of diseases beyond those initially addressed by our current product and product candidates.

obtaining regulatory approval from the FDA and other regulatory authorities, which have limited experience with regulating the development and commercialization of T-cell immunotherapies;

developing and deploying consistent and reliable processes for procuring blood from consenting third-party donors, isolating T cells from the blood of such donors, activating the isolated T cells against a specific antigen, characterizing and storing the resulting activated T cells for future therapeutic use, selecting and delivering a sufficient supply and breadth of appropriate partially HLA-matched cell line from among the available T cell lines, and finally infusing these activated T cells into patients;


utilizing these product candidates in combination with other therapies (e.g. immunomodulatory approaches such as checkpoint inhibitors), which may increase the risk of adverse side effects;

educating medical personnel regarding the potential side effect profile of each of our product candidates, particularly those that may be unique to our allogeneic T-cell product candidates and to our next-generation CAR T programs;

understanding and addressing variability in the quality of a donor’s T cells, which could ultimately affect our ability to manufacture product in a reliable and consistent manner;

developing processes for the safe administration of these products, including long-term follow-up and registries, for all patients who receive these product candidates;

manufacturing our product candidates to our specifications and in a timely manner to support our clinical studies and, if approved, commercialization;

sourcing clinical and, if approved by applicable regulatory authorities, commercial supplies for the materials used to manufacture and process these product candidates that are free from viruses and other pathogens that may increase the risk of adverse side effects;

developing a manufacturing process and distribution network that can provide a stable supply with a cost of goods that allows for an attractive return on investment;

establishing sales and marketing capabilities ahead of and after obtaining any regulatory approval to gain market acceptance, and obtaining adequate coverage, reimbursement and pricing by third-party payors and government authorities; and

developing therapies for types of diseases beyond those initially addressed by our current product candidates.

We cannot be sure that the manufacturing processes used in connection with our T-cell immunotherapy product and product candidates will yield a sufficient supply of satisfactory products that are stable, safe, pure, and potent, or comparable to those T cells historically produced by our partners, historically,be scalable or profitable.

Moreover, actual or perceived safety issues, including adoption of new therapeutics or novel approaches to treatment, may adversely influence the willingness of subjects to participate in clinical studies, or, if one of our product candidates is approved by applicable regulatory authorities, of physicians to subscribe to the novel treatment mechanics.mechanics or of patients to provide consent to receive a novel treatment despite its regulatory approval. The FDA or other applicable regulatory authorities may ask forrequire specific post-market requirements, andstudies or additional information informingthat communicates the benefits or risks of our productsproducts. New data may emergereveal new risks of our product candidates at any time prior to or after regulatory approval.

Physicians, hospitals and third-partythird party payors often are slow to adoptutilize new products, technologies and treatment practices that require additional upfront costs and training. Physicians may not be willing to undergo training to adopton this novel therapy, may decide the therapy is too complex to adopt without appropriate training or not cost-efficient, and may choose not to administer the therapy. Based on these and other factors, hospitals and payors may decide that the benefits of this new therapy do not or will not outweigh its costs.

The results of preclinical studies or earlier clinical studies are not necessarily predictive of future results. Our existing product candidates in clinical studies, and any other product candidate we advance into clinical studies, may not have favorable results in later clinical studies or receive regulatory approval.

Success in preclinical studies and early clinical studies does not ensure that later clinical studies will generate adequate data to demonstrate the efficacy and safety of an investigational drug. Likewise, a number of companies in the pharmaceutical and biotechnology industries, including those with greater resources and experience than us, have suffered significant setbacks in clinical studies, even after seeing promising results in earlier preclinical studies or clinical studies. Despite the results reported in earlier preclinical studies or clinical studies for our product candidates, wethere can be significant variability in safety and efficacy results between different clinical trials of the same product candidate due to numerous factors. We do not know whether the clinical studies we may conduct, or clinical studies in progress, will demonstrate adequate efficacy and safety to result in regulatory approval to market tab-cel®, ATA188, any product candidates resulting from our next-generation CAR T programs or any of our other product candidates in any particular jurisdiction.


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Tab-cel®has been predominantly evaluated in single-center studies under investigator-sponsored INDsinvestigational new drug (INDs) applications held by MSK and in our EAP,Expanded Access Programs, utilizing different response criteria and endpoints from those we have or may utilize in later clinical studies. The findingsFindings from early studies may not be reproducible in late phase studies we conduct. For instance, the current protocol for our ALLELE study in EBV+ PTLD is designed to rule out a 20% ORR as the null hypothesis. This means that if the lower bound of the 95% confidence interval on ORR among patients receiving at least one dose of tab-cel® exceeds 20% at the end of the study, then the study would be expected to meet the primary endpoint for the treatment of PTLD. For example, assuming enrollment of 33 patients in a cohort of ALLELE, an observed ORR above approximately 37% would be expected to meet the primary endpoint for that cohort. In addition, our amended ALLELE study protocol includes an interim analysis as well as a final study analysis. Depending on discussions with regulators, weWe have previously received feedback from the FDA that an interim analysis of the ALLELE study may for example, submitnot be sufficient to support approval of a filingBLA.. Furthermore, modifications to the total sample size of the ALLELE study and the statistical approach may be necessary depending on the basisFDA’s conclusion regarding the comparability of interim data from a subsetdifferent process versions of tab-cel used in the ALLELE study. Ebvallo was approved under the exceptional circumstances regulatory pathway, therefore continuation of the required patientsEbvallo marketing authorization is subject to annual reassessments. The annual re-assessments will determine whether the Ebvallo marketing authorization should be maintained, changed, or submit a filing on the basis of the final data. A filingsuspended, based on interim data would impactPierre Fabre’s fulfillment of post-marketing obligations and the required ORR.risk/benefit profile of Ebvallo.

For regulatory approvals of tab-cel,®, we plan on using independent radiologist and/or oncologist assessment of responses which may not correlate with the investigator-reported assessments. In addition, the Phase 2 clinical studies with tab-cel® enrolled a heterogeneous group of patients with a variety of EBV-associatedEBV-driven malignancies, including EBV+ PTLD after HCT and EBV+ PTLD after SOT. These Phase 2 studies were not prospectively designed to evaluate the efficacy of tab-cel® in the treatment of a single disease state for which we may later seek approval. If conditional marketing authorization is granted from the European Commission, we may be subject to ongoing obligations, including the need to provide additional clinical data at a later stage to confirm a positive benefit/risk balance.

Moreover, final study results may not be consistent with interim study results. Efficacy data from prospectively designed studies may differ significantly from those obtained from retrospective subgroup analyses. In addition, clinical data obtained from a clinical study with an allogeneic product candidate such as ATA188 may not yield the same or better results as compared to an autologous product candidate such as ATA190.candidate. If later-stage clinical studies do not produce favorable results, our ability to achieve regulatory approval for any of our product candidates may be adversely impacted. Even if we believe that we have adequate data to support an application for regulatory approval to market any of our product candidates, the FDA or other regulatory authorities may not agree and may require that we conduct additional clinical studies.

Interim “top line” and preliminary data from our clinical studies that we or our partners may announce or share with regulatory authorities from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we or our partners may announce or share with regulatory authoritiesinterim “top line” or preliminary data from our clinical studies. Interim data from clinical studies that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or “top line” data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously announced. As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could impact the regulatory approval of, and significantly harm the prospects of any product candidate that is impacted by the applicable data.

Clinical drug development involves a lengthy and expensive process with an uncertain outcome.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical study process. Product candidates in later stages of clinical studies may fail to show the desired safety and efficacy traits despite having progressed through preclinical and clinical studies.


We may experience delays in our ongoing or future clinical studies, and we do not know whether clinical studies will begin or enroll subjects on time, will need to be redesigned or will be completed on schedule, if at all. There can be no assurance that the FDA or comparable foreign regulatory authorities will not put clinical studies of any of our product candidates on clinical hold in the future. Clinical studies may be delayed, suspended or prematurely terminated for a variety of reasons, such as:

delay or failure in reaching agreement with the FDA or a comparable foreign regulatory authority on a study design that we are able to execute;

delays in enrollment due to travel, shelter-in-place or quarantine policies, or other factors, related to the ongoing COVID-19 pandemic or other epidemics or pandemics;

delay or failure in obtaining authorization to commence a study or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a study;

delay or failure in reaching agreement with the FDA or a comparable foreign regulatory authority on a study design that we are able to execute;

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delay or failure in obtaining authorization to commence a study or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a study;

delay or failure in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and study sites;

delay or failure in reaching agreement on acceptable terms with prospective contract research organizations (CROs) and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and study sites;

delay or failure in obtaining institutional review board, or IRB, approval or the approval of other reviewing entities, including comparable foreign regulatory authorities, to conduct a clinical study at each site;

delay or failure in obtaining institutional review board (IRB) approval or the approval of other reviewing entities, including comparable foreign regulatory authorities, to conduct a clinical study at each site;

withdrawal of clinical study sites from our clinical studies or the ineligibility of a site to participate in our clinical studies;

withdrawal of clinical study sites from our clinical studies or the ineligibility of a site to participate in our clinical studies;

delay or failure in recruiting and enrolling suitable subjects to participate in a study;

delay or failure in recruiting and enrolling eligible subjects to participate in a study;

delay or failure in subjects completing a study or returning for post-treatment follow-up;

delay or failure in subjects completing a study or returning for post-treatment follow-up;

clinical sites and investigators deviating from study protocol, failing to conduct the study in accordance with regulatory requirements, or dropping out of a study;

clinical sites and investigators deviating from study protocol, failing to conduct the study in accordance with regulatory requirements, or dropping out of a study;

inability to identify and maintain a sufficient number of study sites, including because potential study sites may already be engaged in competing clinical study programs for the same indication that we are treating;

an FDA or other regulatory authority clinical site inspection reveals serious violations of regulations applicable to clinical investigations, which may result in requests for additional data analyses and/or rejection of data deemed unreliable;

failure of our third-party clinical study managers to satisfy their contractual duties, meet expected deadlines or return trustworthy data;

inability to identify and maintain a sufficient number of study sites, including because potential study sites may already be engaged in competing clinical study programs enrolling the same population;

delay or failure in adding new study sites;

failure of our third party clinical study managers to satisfy their contractual duties, meet expected deadlines or return trustworthy data;

interim results or data that are ambiguous or negative or are inconsistent with earlier results or data;

delay or failure in adding new study sites;

feedback from the FDA, the IRB, data safety monitoring boards or comparable foreign authorities, or results from earlier stage or concurrent preclinical and clinical studies, that might require modification to the protocol for a study;

interim results or data that are ambiguous or negative or are inconsistent with earlier results or data;

a decision by the FDA, the IRB, comparable foreign authorities, or us, or a recommendation by a data safety monitoring board or comparable foreign authority, to suspend or terminate clinical studies at any time for safety issues or for any other reason;

feedback from the FDA, the IRB, data safety monitoring boards or comparable foreign authorities, or results from earlier stage or concurrent preclinical and clinical studies, that might require modification to the protocol for a study;

unacceptable benefit/risk profile, unforeseen safety issues or adverse side effects;

a decision by the FDA, the IRB, comparable foreign authorities, or us, or a recommendation by a data safety monitoring board or comparable foreign authority, to suspend or terminate clinical studies for non-compliance with regulatory requirements, safety issues, including a finding that our product candidates have undesirable side effects or other unexpected characteristics, or a finding that the participants are being exposed to unacceptable health risk, or for any other reason;

failure to demonstrate a benefit from using a product candidate;

unacceptable benefit/risk profile, unforeseen safety issues or adverse side effects;

difficulties in manufacturing or obtaining from third parties sufficient quantities and breadth of appropriate partially HLA matched cell lines from among the available T-cell lines to start or to use in clinical studies;

failure to demonstrate a benefit from using a product candidate;

lack of adequate funding to continue a study, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional studies or increased expenses associated with the services of our CROs and other third parties; or

difficulties in manufacturing or obtaining from third parties sufficient quantities and breadth of appropriate partially HLA matched cell lines from among the available T-cell lines to start or to use in clinical studies;

changes in governmental regulations or administrative actions or lack of adequate funding to continue a clinical study.

lack of adequate funding to continue a study, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional studies or increased expenses associated with the services of our CROs and other third parties; or

changes in governmental regulations or administrative actions or lack of adequate funding to continue a clinical study.

Patient enrollment, a significant factor in the timing of clinical studies, is affected by many factors including:

the size and nature of the patient population;
the possibility that the rare diseases that many of our product candidates address are under-diagnosed;
changing medical practice patterns or guidelines related to the diseases or conditions we are investigating;
the severity of the disease under investigation;
our ability to open clinical study sites;
the proximity of subjects to clinical sites;
the patient referral practices of physicians;

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the design and eligibility criteria of the clinical study;
ability to obtain and maintain patient consents;
risk that enrolled subjects will drop out or die before completion;
competition for patients from other clinical studies;
our or our partner’s ability to manufacture the requisite materials for a study;
risk that we do not have appropriately matched HLA cell lines;
clinicians’ and patients’ perceptions as to the potential advantages and risks of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the diseases or conditions we are investigating; and
disruptions caused by man-made or natural disasters or public health pandemics or epidemics, including, for example, the ongoing COVID-19 pandemic.

the size and nature of the patient population;

the possibility that the rare diseases that many of our product candidates address are under-diagnosed;

changing medical practice patterns or guidelines related to the indications we are investigating;

the severity of the disease under investigation, our ability to open clinical study sites;

the proximity of subjects to clinical sites;

the patient referral practices of physicians;

the design and eligibility criteria of the clinical study;

ability to obtain and maintain patient consents;

risk that enrolled subjects will drop out or die before completion;

competition for patients from other clinical studies;

our ability to manufacture the requisite materials for a study;

risk that we do not have appropriately matched HLA cell lines; and

clinicians’ and patients’ perceptions as to the potential advantages and risks of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.

As an example, we activated additional clinical sites for the ALLELE study of tab-cel over the course of 2018 and increased HLA coverage during this period. As a result, enrollment in our studies was limited in the early part of 2018 and increased through the course of the year as we increased clinical sites and HLA coverage. However, in May 2019, we announced that enrollment in our Phase 3 studies of tab-cel® for patients with EBV+ PTLD was proceeding slower than anticipated. Many of our product candidates are designed to treat rare diseases, and as a result, the pool of potential patients with respect to a given disease is small. We may not be able to initiate or continue to support clinical studies of tab-cel,®, ATA188 or any other product candidates if we are unable to locate and enroll a sufficient number of eligible participants in these studies as required by the FDA or other regulatory authorities. We have experienced some transient delays in clinical trial site initiation and patient enrollment in certain of our clinical trials, including our ALLELE study, as a result of the evolving impact of the ongoing COVID-19 pandemic. Even if we are able to enroll a sufficient number of patients in our clinical studies, if the pace of enrollment is slower than we expect, the development costs for our product candidates may increase and the completion of our studies may be delayed or our studies could become too expensive to complete.

We rely on CROs, other vendors and clinical study sites to ensure the proper and timely conduct of our clinical studies, and while we have agreements governing their committed activities, we have limited influence over their actual performance. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. Reliance on CROs entails risks to which we would not be subject if we conducted our clinical studies ourselves, including reliance on the CRO for clinical site initiation and monitoring, the possibility that the CRO does not maintain the financial resources to meet its obligations under our agreements, the possibility of breach of these agreements by the CRO because of factors beyond our control, including a failure to properly perform their obligations under these agreements, and the possibility of termination or nonrenewal of the agreements by the CROs, based on their own business priorities, at a time that is costly or damaging to us. Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our regulatory responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan, study protocols for the trial, statistical analysis plan and other study-specific documents (for example, monitoring and blinding plans). Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practice (GCP), International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use, or ICH, guidelines, and regulations regarding the informed consent process, safety reporting requirements, data collection guidelines, and other regulations for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. The EMA also requires us to comply with similar standards. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of our CROs fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, EMA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP and other applicable regulations. In addition, our clinical trials must be conducted with product produced under applicable current Good Manufacturing Practices (cGMP) and current Good Tissue Practices (cGTP) regulations. Our failure to comply with these regulations may require us to conduct new clinical trials, which would delay the marketing approval process. We also are required to register certain ongoing clinical trials and post the results of certain completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.

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If we experience delays or quality issues in the conduct, completion or termination of any clinical study of our product candidates, the approval and commercial prospects of such product candidate will be harmed, and our ability to generate product revenues from such product candidate will be delayed. In addition, any delays in completing our clinical studies will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenues. Any delays in completing our clinical studies for our product candidates may also decrease the period of commercial exclusivity. In addition, many of the factors that could cause a delay in the commencement or completion of clinical studies may also ultimately lead to the denial of regulatory approval of our product candidates.

Our product and product candidates, the methods used to deliver them or their dosage levels may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following any regulatory approval.

Undesirable side effects caused by our product and product candidates, their delivery methods or dosage levels could cause us or regulatory authorities to interrupt, delay or halt clinical studies and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authority. As a result of safety or toxicity issues that we or our partners may experience in our clinical studies, we or our partners may not receive approval to market any product candidates, which could prevent us from ever generating product or royalty revenues for such product candidates or achieving profitability. Results of our studies could reveal an unacceptably high severity and incidence of side effects, or side effects outweighingrisks that outweigh the benefits of our product and product candidates. In such an event, our studies could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications. The drug-related side effects could affect patient recruitment or the ability of enrolled subjects to complete the study or result in potential product liability claims.


Additionally, if any of our product candidates receives regulatory approval, and we or others later identify undesirable side effects caused by such product, a number of potentially significant negative consequences could result, including that:

we may be forced to suspend marketing of that product;
regulatory authorities, IRBs, or other clinical trial oversight bodies may place a hold on any ongoing clinical trials;
regulatory authorities may withdraw or change their approvals of that product;
regulatory authorities may require additional warnings on the label or limit access of that product to selective specialized centers with additional safety reporting and with requirements that patients be geographically close to these centers for all or part of their treatment;
we may be required to conduct post-marketing studies;
we may be required to change the way the product is administered;
we could be sued and held liable for harm caused to subjects or patients;
our products may be seized, or we may be required to recall our products;
our products may become less competitive in the marketplace; and
our reputation may suffer.

we may be forced to suspend marketing of that product;

regulatory authorities may withdraw or change their approvals of that product;

regulatory authorities may require additional warnings on the label or limit access of that product to selective specialized centers with additional safety reporting and with requirements that patients be geographically close to these centers for all or part of their treatment;

we may be required to conduct post-marketing studies;

we may be required to change the way the product is administered;

we could be sued and held liable for harm caused to subjects or patients; and

our reputation may suffer.

Any of these events could diminish the usage or otherwise limit the commercial success of our product and product candidates and prevent us from achieving or maintaining market acceptance of the affected product candidate, if approved by applicable regulatory authorities.

The market opportunities for our product and product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small.

The FDA often approves new cancer therapies initially only for use in patients with relapsed or refractory metastatic disease. We expect to initially seek initial approval of tab-cel® and our other oncology product candidates in this setting. Subsequently, for those products that prove to be sufficiently beneficial, if any, we would expect tomay seek approval infor earlier lines of treatment and potentially as a first line therapy, but there is no guarantee that our product and product candidates, even if approved, would be approved for earlier lines of therapy, and, prior to any such approvals, we will have to conduct additional clinical trials.

Our projections of both the number of people who have the diseases we are targeting, as well as the subset of people with these diseases in a position to receive second or later lines of therapy, and who have the potential to benefit from treatment with our product

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and product candidates, are based on our current beliefs and estimates. These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations, or our own market research, and may prove to be incorrect. Further, new studies, product approvals or market research may change the estimated incidence or prevalence of these diseases. Thediseases, and the number of patients may turn out to be lower than expected. Additionally, the potentially addressable patient population for our product candidates may be limited or may not be amenable to treatment with our product candidates. For instance, we expect our lead product, candidate, tab-cel,®, to initially target a small patient population that suffers from aggressive EBV+PTLD who haveand has failed rituximab or rituximab plus chemotherapy. Our commercial partners may have different estimates of the market opportunities for our product or product candidates. At the outset of the COVID-19 pandemic, we initially observed a temporary slow-down in stem cell and solid organ transplant volumes. These reductions were transient, but if a reduction in such volumes resumes, it could result in lower PTLD incidence and thus reduce the demand for tab-cel. Even if weour product and product candidates obtain significant market share, for our product candidates, because the potential target populations are small, we may never achieve profitability without obtaining regulatory approval for additional indications.

We may not be able to obtain or maintain orphan drug exclusivity for our product candidates.

Regulatory authorities in some jurisdictions, including the U.S., EU and Europe,the United Kingdom (UK), may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the U.S. Both the FDA and the EMA have granted us orphan drug designation for tab-cel® for EBV+ PTLD after HCT or SOT.

Generally, if a product with an orphan drug designation subsequently receives the first regulatory approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the EMA or the FDA from approving another marketing application for the same drugbiologic for the same indication for that time period. The applicable period is seven years in the U.S. and ten years in Europe. The European exclusivity period can be reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified. Furthermore, these periods are expected to be reduced in the EU following the publication of a new applicable legal framework by the EC expected to be published in Q2 2023. Orphan drug exclusivity may be lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition. In the U.S., the FDA may still approve a later marketing application blocked by an ongoing period of orphan drug exclusivity in limited circumstances such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the product was approved. As a result, even if one of our product candidates receives orphan exclusivity, the FDA can still approve or license other drugs or biological products that have a different active ingredient for use in treating the same indication or disease.

In addition, Congress is considering updates to the orphan drug provisions of the FDCA in response to a recent 11th Circuit decision. Any changes to the orphan drug provisions could change our opportunities for, or likelihood of success in obtaining, orphan drug exclusivity and could materially adversely affect our business, financial condition, results of operations, cash flows and prospect.

Even if we obtain orphan drug exclusivity for a product, that exclusivity may not be maintained or effectively protect the product from competition because different drugs can be approved for the same condition. Even after an orphan drug is approved,

BTD by the FDA can subsequently approve a new drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.


Breakthrough Therapy Designationand PRIME designation by the FDAEMA may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval.

Although we have obtained Breakthrough Therapy Designation, or BTD for tab-cel® in the U.S. for treatment of patients with EBV+ PTLD thiswho have failed rituximab, these designations may not lead to faster development or regulatory review and doesdo not increase our likelihood of success. A breakthrough therapy is defined as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug, or biologic in our case, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For product candidates that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the study can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Biologics designated as breakthrough therapies by the FDA may also be eligible for other expedited review programs, such as priority review. Based on our BTD, we may pursue a rolling submission strategy for our BLA for tab-cel for EBV+ PTLD in the U.S. While rolling review process may provide the opportunity for ongoing communications with and feedback from the FDA, it may not result in a faster timeline to marketing approval and has no bearing on whether or not tab-cel is ultimately approved. The FDA may raise issues and pose questions to us that may delay the initiation and completion of our BLA submission, acceptance of the complete BLA for

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filing, and approval of the BLA. We may not be able to provide a satisfactory or a timely response to FDA questions or we may not be able to gather the required data to prepare our BLA submissions as we plan. If we are unable to address all questions or concerns that the FDA may raise or if we do not have timely access to the data required for the preparation of the BLA, we may not be able to timely initiate and complete our BLA in a timely manner and ultimately receive FDA approval. In addition, even if we submit our BLA under the rolling review process, the FDA may decide not to review portions of our BLA under the rolling review process until the submission is deemed to be complete.

PRIME designation supports the development and accelerated review by the EMA of new therapies to treat patients with unmet medical need. Despite this designation and the associated opportunity for accelerated assessment, the EMA may decide that additional time is needed for the MAA review and convert the MAA to a standard review timeline.

Designation as a breakthrough therapy is withinat the discretion of the FDA.FDA, and access to PRIME is at the discretion of the EMA. Receipt of a BTD or PRIME designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under non-expedited the FDA or EMA review procedures and does not assure ultimate approval by either the FDA.FDA or EMA. In addition, the FDA or EMA, respectively, may later decide that the product no longer meets the conditions for qualification and rescind the BTD or PRIME designation or decide that the time period for FDA or EMA, respectively, review or approval will not be shortened. For example, in June 2022, FDA published a draft guidance document outlining considerations for the FDA in rescinding BTD for products that no longer meet the requirements for that designation.

A fast track designation by the FDA, even if granted for other current or future product candidates, may not lead to a faster development or regulatory review, licensure process and does not increase the likelihood that our product candidates will receive marketing licensure.

We may seek fast track designation for one or more of our future product candidates. In December 2021, ATA188 received fast track designation for treatment of patients with PPMS and SPMS. If a drug or biological product is intended for the treatment of a serious or life-threatening disease or condition and it demonstrates the potential to address unmet medical needs for such a disease or condition, the drug sponsor may apply for FDA fast track designation for a particular indication. We may seek fast track designation for our product candidates, but there is no assurance that the FDA will grant this designation to any of our proposed product candidates. Marketing applications submitted by sponsors of products in fast track development may qualify for priority review under the policies and procedures offered by the FDA, but the fast track designation does not assure any such qualification or ultimate marketing licensure by the FDA. The FDA has broad discretion whether or not to grant fast track designation, so even if we believe a particular product candidate is eligible for this designation, there can be no assurance that the FDA would decide to grant it. Even if we do receive fast track designation, we may not experience a faster development process, review or licensure compared to conventional FDA procedures or pathways and receiving a fast track designation does not provide assurance of ultimate FDA licensure. In addition, the FDA may withdraw fast track designation at any time, including if it believes that the designation is no longer supported by data from our clinical development program.

Failure to obtain regulatory or payor approval in international jurisdictions would prevent our product candidates from being marketed abroad.

In addition to regulations in the U.S., to market and sell our products in the European Union,EU, the UK, many Asian countries and other jurisdictions, we, or our current or future commercialization partners, must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements, both from a clinical and manufacturing perspective. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the U.S. generally includes all of the risks associated with obtaining FDA approval.approval and may include additional risks. Clinical studies accepted in one country may not be accepted by regulatory authorities in other countries. In addition, many countries outside the U.S. require that a product be approved for reimbursement before it can be approved for sale in that country. A product candidate that has been approved for sale in a particular country may not receive reimbursement approval in that country. We may not be able to obtain approvals from regulatory authorities or payor authorities outside the U.S. on a timely basis, if at all. Approval by the FDAa regulatory agency or payor does not ensure approval by any other regulatory or payor authorities in other countries or jurisdictions, and approval by one regulatory or payor authority outside the U.S. does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA.jurisdictions. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any market. If we are unable to obtain approval of any of our product candidates by regulatory or payor authorities in the European Union,US, EU, the UK, Asia or elsewhere, the commercial prospects of that product candidate may be significantly diminished.

Even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties.

Even if we, or our partners obtain regulatory approval for a product candidate, it would be subject to ongoing requirements by the FDA and comparable foreign regulatory authorities governing the manufacture, quality control, further development, labeling,

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packaging, storage, distribution, adverse event reporting, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-marketing information. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance by us and/or our contract manufacturing organizations, or CMOs and CROs for any post-approval clinical studies that we conduct. They also include any post-approval requirements or commitments imposed by FDA or comparable foreign regulatory authorities as a condition of approval, or any risk evaluation or mitigation strategies (REMS), if applicable. The safety profile of any product will continue to be closely monitored by the FDA and comparable foreign regulatory authorities after approval. If the FDA or comparable foreign regulatory authorities become aware of new safety information after approval of any of our product candidates, they may require labeling changes or establishment of a risk evaluation and mitigation strategy, impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance.


In addition, manufacturers of drug products and their facilities are subject to initial and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practices, or cGMP, current Good Clinical Practices, or GCP, current good tissue practices, or cGTP and other regulations. If we or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. If we, our product candidates, or the manufacturing facilities for our product candidates fail to comply with applicable regulatory requirements, a regulatory agency may:

issue warning letters or untitled letters;
mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners;
require us or our partners to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;
seek an injunction or impose civil or criminal penalties or monetary fines;
suspend, withdraw or modify regulatory approval;
suspend or modify any ongoing clinical studies;
refuse to approve pending applications or supplements to applications filed by us;
suspend or impose restrictions on operations, including costly new manufacturing requirements; or
seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall.

issue warning letters or untitled letters;

mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners;

require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;

seek an injunction or impose civil or criminal penalties or monetary fines;

suspend, withdraw or modify regulatory approval;

suspend or modify any ongoing clinical studies;

refuse to approve pending applications or supplements to applications filed by us;

suspend or impose restrictions on operations, including costly new manufacturing requirements; or

seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall.

The occurrence of any event or penalty described above may also generate negative publicity or inhibit our ability to successfully commercialize our products.

Advertising and promotion of any product candidate that obtains approval in the U.S. will be heavily scrutinized by the FDA, the Department of Justice or the DOJ,(DOJ), the Office of Inspector General of the HHS,Department of Health and Human Services (HHS), state attorneys general, members of the U.S. Congress and the public. Additionally, advertising and promotion of any product candidate that obtains approval outside of the U.S. will be heavily scrutinized by comparable foreign entities and stakeholders. For example, a company may not promote “off-label” uses for its drug products. An off-label use is the use of a product for an indication that is not described in the product’s FDA-approved label in the U.S. or for uses in other jurisdictions that differ from those approved by the applicable regulatory agencies. Physicians, on the other hand, may prescribe products for off-label uses. Although the FDA and other regulatory agencies do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment, they do restrict promotional communications from companies or their sales force with respect to off-label uses of products for which marketing clearance has not been issued. However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA approved labeling. Violations, including actual or alleged promotion of our products for unapproved or off-label uses, are subject to enforcement letters, inquiries and investigations, and civil and criminal sanctions by the FDA or comparable foreign bodies. Any actual or alleged failure to comply with labeling and promotion requirements may result in fines, warning letters, mandates to corrective information to healthcare practitioners, injunctions, or civil or criminal penalties.

Regulations, guidelines and recommendations published by various government agencies and organizations may affect the use of our product candidates.

Changes to regulations, recommendations or other guidelines advocating alternative therapies for the indications we treat could result in decreased use of our products. For example, although treatment with EBV-specific T cells is recognized as a recommended treatment for persistent or progressive EBV+ PTLD as set forth in the 2017 National Comprehensive Cancer Network Guidelines, future

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guidelines from governmental agencies, professional societies, practice management groups, private health/science foundations and other organizations could lead to decreased ability of developingto develop our product candidates, or decreased use of our products once approved by applicable regulatory authorities.

We may not successfully identify, acquire, develop or commercialize new potential product candidates.

Part of our business strategy is to expand our product candidate pipeline by identifying and validating new product candidates, which we may develop ourselves, in-license or otherwise acquire from others. In addition, in the event that our existing product candidates do not receive regulatory approval or are not successfully commercialized, then the success of our business will depend on our ability to expand our product pipeline through internal development, in-licensing or other acquisitions. We may be unable to identify relevant product candidates. If we do identify such product candidates, we may be unable to reach acceptable terms with any third party from which we desire to in-license or acquire them. Any product candidates we identify, acquire, in-license, or develop may not be safe or effective for their targeted diseases, and may not receive marketing authorization in a timely manner, or at all.

Risks Related to Manufacturing

We are subject to a multitude of manufacturing risks, any of which could substantially increase our costs and limit supply of our product and product candidates.

Concurrently with the in-license of our existing product and product candidates, we acquired manufacturing process know-how and, in some cases, inventory of process intermediates and clinical materials from our partners. Transferring manufacturing processes, testing and associated know-how is complex and involves review and incorporation of both documented and undocumented processes that may have evolved over time. In addition, transferring production to different facilities may require utilization of new or different processes and/or equipment to meet the specific requirements of a given facility. Each stage is retroactively and concurrently verified to be compliant with appropriate regulations. As a result, there is a risk that all relevant know-how was not adequately transferred to us from our partners or that previous execution was not compliant with applicable regulations.

In addition, we need to conduct significant development and scale-up work to transfer these processes and manufacture each of our product and product candidates for various studies, clinical studies and commercial launch readiness. To the extent we elect to transfer manufacturing within our network of third party CMOs, we are required to demonstrate that the product manufactured in the new or “receiving” facility is comparable to the product manufactured in the original or “sending” facility. The inability to demonstrate to each of the applicable regulatory authorities that comparable drug product was manufactured could delay the development of our product candidates.

The processes by which some of our product and product candidates are manufactured were initially developed by our partners for clinical purposes. We intend to evolve the processes developed by our partners and the processes developed by us to support advanced clinical studies and commercialization requirements. We similarly intend to evolve the processes originating at Atara to support advanced clinical studies and commercialization requirements. Developing commercially viable manufacturing processes is a difficult and uncertain task, and there are risks associated with scaling to the level required for advanced clinical studies or commercialization, including cost overruns, potential problems with process scale-up, process reproducibility, comparability issues, stability, safety, purity and potency issues, consistency and timely availability of reagents or raw materials. The manufacturing facilities in which our product and product candidates will be made could be adversely affected by the ongoing COVID-19 pandemic, earthquakes and other natural or man-made disasters, equipment failures, labor shortages, power failures, and numerous other factors. In addition, there have been, and there may continue to be, transient interruptions in the supply of raw materials and consumables used in the development and manufacturing of our preclinical and clinical cell therapies related to raw material shortages due to the COVID-19 pandemic or other global pressures, including leukapheresis collections, which supply starting materials used in our product and product candidates, and raw materials and consumables specialized for cell therapy manufacturing. If we are unable to obtain such raw materials or other necessary raw materials in a timely manner, our business operations and manufacturing capabilities could be adversely affected.

The process of manufacturing cellular therapies is susceptible to product loss due to contamination, equipment failure or improper installation or operation of equipment, or vendor or operator error. Even minor deviations from normal manufacturing and distribution processes for any of our product and product candidates could result in reduced production yields, impact to key product quality attributes, and other supply disruptions. Product defects can also occur unexpectedly. If microbial, viral or other contaminations are discovered in reagents or in our product and product candidates or in the manufacturing facilities in which our product and product candidates are made, these manufacturing facilities may need to be closed for an extended period of time to allow us to investigate and remedy the contamination. Because our T-cell immunotherapy product and product candidates are manufactured from cells collected from the blood of third party donors, the process of manufacturing is susceptible to the availability of the third party donor material. The process of developing products that can be commercialized may be particularly challenging, even if they

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otherwise prove to be safe and effective. The manufacture of these product and product candidates involves complex processes. Some of these processes require specialized equipment and highly skilled and trained personnel. The process of manufacturing these product and product candidates will be susceptible to additional risks, given the need to maintain aseptic conditions throughout the manufacturing process. Contamination with viruses or other pathogens in either the donor material or materials utilized in the manufacturing process or ingress of microbiological material at any point in the process may result in contaminated or unusable product. Viral contaminants may also arise in recombinant viral reagent production systems used to manufacture viral reagents used to manufacture product and product candidates. These types of contaminations could result in delays in the manufacture of products which could result in delays in the development of our product candidates. These contaminations could also increase the risk of adverse side effects. Furthermore, our allogeneic products ultimately consist of many individual cell intermediate or cell product lots, each with a different HLA profile. As a result, the selection and distribution of the appropriate cell product lot for therapeutic use in a patient requires close coordination between clinical operations, supply chain and quality assurance personnel.

Any adverse developments affecting our, or our CMOs’ manufacturing operations for our product and product candidates may result in lot failures, inventory shortages, shipment delays, product withdrawals or recalls or other interruptions in the supply of our drug product which could delay the development of our product candidates. We may also have to write off inventory, incur other charges and expenses for supply of drug product that fails to meet specifications, undertake costly remediation efforts, or seek more costly manufacturing alternatives. Inability to meet the demand for our product and product candidates could damage our reputation and the reputation of our products among physicians, healthcare payors, patients or the medical community that supports our product development efforts, including hospitals and outpatient clinics.

Delays in receiving regulatory approvals for product candidates produced at our CMOs’ facilities could delay our development plans and thereby limit our ability to generate revenues.

The research and development and process and analytical development labs within ARC and our facility in Aurora, Colorado, currently support our preclinical and mid/late development activities. Product-specific qualification to support clinical development is complete and commercial production qualification activities are ongoing at our CMOs’ facilities. If the appropriate regulatory approvals for manufacturing product candidates at our CMOs’ facilities are delayed, we may not be able to manufacture sufficient quantities of our product candidates, which would limit our development activities and our opportunities for growth.

In addition to the similar manufacturing risks described in “Risks Related to Our Dependence on Third Parties,” our facilities, and our CMOs’ facilities, will be subject to ongoing, periodic inspection by the FDA, EMA or other comparable regulatory agencies to ensure compliance with cGMP and GTP. Our, or our partner’s, failure to follow and document adherence to these regulations or other regulatory requirements may lead to significant delays in the availability of products for clinical or, in the future, commercial use, may result in the termination of or a hold on a clinical study, or may delay or prevent filing or approval of commercial marketing applications for our product candidates. We also may encounter problems with the following:


achieving adequate inventory of clinical-grade materials that meet regulatory agency standards or specifications with consistent and acceptable production yield and costs;
shortages of qualified personnel, raw materials or key contractors; and
achieving and maintaining ongoing compliance with cGMP regulations and other requirements of the FDA, EMA or other comparable regulatory agencies.

Failure to comply with applicable regulations could also result in sanctions being imposed on us, including fines, injunctions, civil penalties, a requirement to suspend or put on hold one or more of our clinical studies, failure of regulatory authorities to grant marketing approval of our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates, operating restrictions and criminal prosecutions, any of which could harm our business.

Developing advanced manufacturing techniques and process controls is costly, time consuming and is required to fully utilize our or our CMOs’ facilities. Failure to advance manufacturing techniques and process controls could lead to a delay in obtaining approval for our product candidates. Without further investment, advances in manufacturing techniques may render the facilities and equipment that manufacture our product candidates inadequate or obsolete.

A number of the product candidates in our portfolio, if approved by applicable regulatory authorities, may require significant commercial supply to meet market demand. In these cases, we may need to increase, or “scale up,” the production process by a significant factor over the initial level of production. If we are unable to do so, are delayed, or if the cost of this scale up is not economically feasible for us or we cannot find a third party supplier, we may not be able to produce our product candidates in sufficient quantities to meet future demand.

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If one or more of our CMO’s facilities is damaged or destroyed or production at these facilities is otherwise interrupted, our business would be negatively affected.

If any of our CMOs’ manufacturing facilities, or the equipment in any such facilities, is either damaged or destroyed, we may not be able to quickly or inexpensively replace such manufacturing capacity or replace it at all. In the event of a temporary or protracted disruption in operations or loss of a facility or its equipment, we may not be able to transfer manufacturing to another third party in the time required to maintain supply. Even if we could transfer manufacturing to another third party, the shift would likely be expensive and time-consuming, particularly since the new facility would need to comply with the necessary regulatory requirements or may require regulatory approval before selling any products manufactured at that facility. Such an event could delay our clinical studies or reduce our commercial product revenues.

Currently, we maintain insurance coverage against damage to our property and to cover business interruption and research and development restoration expenses. However, our insurance coverage may not reimburse us, or may not be sufficient to reimburse us, for any expenses or losses we may suffer. We may be unable to meet our requirements for our product candidates if there were a catastrophic event or failure of our current manufacturing facility or processes.

Risks Related to Our Dependence on Third Parties

Maintaining clinical and commercial timelines is dependent on our end-to-end supply chain network to support manufacturing; if we experience problems with our third party suppliers or CMOs we may delay development and/or commercialization of our product and product candidates.

We rely on our CMOs or our partners for the current production of our product and product candidates and the acquisition of materials incorporated in or used in the manufacturing or testing of our product and product candidates. Our CMOs or partners are not our employees, and except for remedies available to us under our agreements with our CMOs or partners, we cannot directly control whether or not they devote sufficient time and resources, including experienced staff, to the manufacturing of supply for our ongoing clinical, nonclinical and preclinical programs. Our CMOs for our product and product candidates will need to be prepared to undergo pre-approval inspection in connection with our regulatory filings, and we cannot be certain that we will be able to adequately support them through such inspection nor that they will successfully pass any such inspection.

To meet our projected supply needs for clinical and commercial materials to support our activities through regulatory approval and commercial manufacturing of tab-cel, ATA188, any product candidates resulting from our next-generation CAR T programs or any other product candidates, we will need to transition the manufacturing of these materials to a CMO. Regardless of where production occurs, we will need to develop relationships with suppliers of critical starting materials or reagents, increase the scale of production and demonstrate comparability of the material produced at these facilities to the material that was previously produced. Transferring manufacturing processes, analytical methods and know-how is complex and involves review and incorporation of both documented and undocumented processes that may have evolved over time.

In addition, transferring production to different facilities may require utilization of new or different processes to meet the specific requirements of a given facility. We would expect additional comparability work will also need to be conducted to support the transfer of certain manufacturing processes and process improvements. We cannot be certain that all relevant know-how and data has been adequately incorporated into the manufacturing process until the completion of studies (and the related evaluations) intended to demonstrate the comparability of material previously produced with that generated by us or our CMOs.

If we or our CMOs are not able to successfully transfer and produce comparable product and product candidates, our ability to further develop and manufacture our product and product candidates may be negatively impacted.

We still may need to identify additional CMOs for continued production of supply for some of our product and product candidates. Given the nature of our manufacturing processes, the number of CMOs who possess the requisite skill and capability to manufacture our T-cell immunotherapy product candidates, and the critical intermediates or reagents used to manufacture such products, are limited. We have not yet identified alternate suppliers in the event the current CMOs that we utilize are unable to scale production, or if we otherwise experience any problems with them.

We rely on our CMOs and manufacturing network for the production of our product and product candidates. Our supply of these products and product candidates depends on the uninterrupted and efficient operation of these facilities, which could be adversely affected by equipment failures, labor or raw material shortages, public health epidemics, natural disasters, power failures, cyber-attacks and many other factors. If we encounter any manufacturing or supply chain difficulties, we may be unable to meet the demand for our products and product candidates.

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Manufacturing cellular therapies is complicated and tightly regulated by the FDA and comparable regulatory authorities around the world, and although alternative third party suppliers with the necessary manufacturing and regulatory expertise and facilities exist, it could be expensive and take a significant amount of time to arrange for alternative suppliers, transfer manufacturing procedures and analytical methods to these alternative suppliers, and demonstrate comparability of material produced by such new suppliers. New manufacturers of any product, product candidate or intermediate would be required to qualify under applicable regulatory requirements. These manufacturers may not be able to manufacture our product and product candidates at costs, or in sufficient quantities, or in a timely manner necessary to complete development of our product candidates or make commercially successful products. If we are unable to arrange for alternative third party manufacturing sources, or to do so on commercially reasonable terms or in a timely manner, we may not be able to complete development of our product candidates, or market or distribute them. In addition, should the FDA or comparable regulatory authorities not agree with our product candidate specifications and comparability methodologies or assessments for these materials, regulatory authorities may require that we conduct additional studies, including bridging comparability testing, and further clinical development or commercial launch of our product candidates could be substantially delayed.

Reliance on third party manufacturers entails risks to which we would not be subject if we manufactured product and product candidates ourselves, including reliance on the third party for regulatory compliance and quality assurance, the possibility that the third party manufacturer does not maintain the financial resources to meet its obligations under the manufacturing agreement, the possibility of breach of the manufacturing agreement by the third party because of factors beyond our control, including a failure to manufacture our product candidates or any products we or our partners may eventually commercialize in accordance with our specifications, misappropriation of our proprietary information, including our trade secrets and know-how, the possibility that the third party does not devote sufficient time or resources to our product candidates or any products we or our partners may eventually commercialize based on its own business priorities, the possibility that the third party is acquired by another party and changes its business priorities, and the possibility of termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or damaging to us. If Fujifilm does not perform its obligations under the Fujifilm MSA adequately or does not devote sufficient time or resources to our product or product candidates, our operations, including the commercialization of our products, may be adversely impacted. Similarly, if CRL does not perform its obligations under the CRL MSA adequately or does not devote sufficient time or resources to our product or product candidates, our operations, including the commercialization of our products, may be adversely impacted. We also have non-cancellable minimum purchase commitments for products and services in certain of our agreements with our CMOs, if we do not fulfill such minimum purchase commitments, we will need to pay such CMOs the difference between the applicable minimum purchase commitment and our actual purchases of products and services for a given period. In addition, the FDA and other regulatory authorities require that our product candidates and any products that we or our partners may eventually commercialize be manufactured according to cGMP, cGTP and similar regulatory jurisdictional standards. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. The FDA or similar foreign regulatory agencies may also implement new standards at any time or change their interpretations and enforcement of existing standards for manufacture, packaging or testing of products. We have limited control over our manufacturers’ compliance with these regulations and standards and although we monitor our manufacturers, we depend on them to provide honest and accurate information. Any failure by our third party manufacturers to comply with cGMP or cGTP or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product candidates in a timely manner, could lead to a delay in, or failure to obtain, regulatory approval of any of our product candidates. In addition, such failure could be the basis for the FDA to issue a warning letter, withdraw approvals for product candidates previously granted to us, or take other regulatory or legal action, including recall or seizure of outside supplies of the product candidate, total or partial suspension of production, suspension of ongoing clinical studies, refusal to approve pending applications or supplemental applications, detention or product, refusal to permit the import or export of products, injunction or imposing civil and criminal penalties.

We depend on third party suppliers and testing laboratories for key materials used to produce or test our product and product candidates. Any significant disruption in our supplier relationships could harm our business. Any significant delay in the supply of a product candidate for an ongoing clinical study could considerably delay initiation or completion of our clinical studies, product testing and potential regulatory approval of our product candidates. If raw materials or components cannot be purchased or fail to meet approved specifications, the commercial launch of our product and product candidates could be delayed, or there could be a shortage in supply, which could impair our ability to generate revenues from the sale of our product and product candidates.

We are dependent on Pierre Fabre for the commercialization of Ebvallo in the EU and several countries outside the United States. The failure of Pierre Fabre to meet its contractual, regulatory or other obligations could adversely affect our business and our obligations under the HCRx Agreement.

We have entered into the Pierre Fabre Commercialization Agreement for Ebvallo in Europe and select emerging markets in the Middle East, Africa, Eastern Europe and Central Asia (Territory) for EBV-positive cancers. As a result, we are entirely dependent on Pierre Fabre for marketing and commercialization, including negotiation of pricing and reimbursement, of Ebvallo in the Territory. Except for certain milestone payments payable to us in connection with the approval and transfer of the Ebvallo marketing

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authorization, we will not receive any meaningful milestone or royalty payments from Pierre Fabre until the applicable royalty caps under the HCRx Agreement are met, if at all. Furthermore, the timing and amount of any milestone and royalty payments we may receive under thePierre Fabre Commercialization Agreement, as well as the commercial success of Ebvallo in the Territory, will depend on, among other things, the efforts, allocation of resources, negotiation of pricing and reimbursement and successful commercialization of Ebvallo by Pierre Fabre in the Territory.

Under the terms of the Pierre Fabre Commercialization Agreement, if we receive the EU marketing authorization for Ebvallo in patients with EBV+ PTLD, we are required to transfer the marketing authorization to Pierre Fabre. Pierre Fabre will be responsible for obtaining all other regulatory approvals in the Territory and maintaining all regulatory approvals in the Territory. We will depend on Pierre Fabre to comply with numerous and varying regulatory requirements governing, if and when applicable, the manufacture, quality control, further development, labeling, packaging, storage, distribution, adverse event reporting, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-marketing information. We do not control the individual efforts of Pierre Fabre and have limited ability to terminate the Pierre Fabre Commercialization Agreement if Pierre Fabre does not perform as expected. The failure of Pierre Fabre to devote sufficient time and effort to comply with regulatory requirements and maintain the EU marketing authorization and other regulatory approvals in the Territory and/or to meet their obligations to us, could have an adverse impact on our financial results and operations, and our obligations under the HCRx Agreement.

We also depend on Pierre Fabre to comply with all applicable laws relative to the commercialization of Ebvallo in the Territory. The failure of Pierre Fabre to devote sufficient time and effort to the commercialization of Ebvallo; to meet their obligations to us, including for future royalty and milestone payments; to adequately deploy business continuity plans in the event of a crisis; and/or to satisfactorily resolve significant disagreements with us or address other factors could have an adverse impact on our financial results and operations and our obligations under the HCRx Agreement. In addition, if Pierre Fabre violates, or are alleged to have violated, any laws or regulations during the performance of their obligations for us, it is possible that we could suffer financial and reputational harm or other negative outcomes, including possible legal consequences.

Any termination, breach or expiration of the Pierre Fabre Commercialization Agreement or ancillary agreements, once entered into, could have a material adverse effect on our financial position and our obligations under the HCRx Agreement by reducing or eliminating our right to receive fees, milestones and royalties. In such an event, we may be required to devote additional efforts and to incur additional costs associated with the transfer of regulatory approvals and commercialization of Ebvallo in the Territory. Alternatively, we may attempt to identify and transact with a new commercialization partner, but there can be no assurance that we would be able to identify a suitable partner or transact on terms similar to the Pierre Fabre Commercialization Agreement or that are favorable to us.

We may not realize the benefits of strategic alliances that we may form in the future or of potential future product acquisitions or licenses.

We may desire to form additional strategic alliances, commercialization partnerships, create joint ventures or collaborations, enter into licensing arrangements with third parties or acquire products or business, in each case that we believe will complement or augment our existing business. These relationships or transactions, or those like them, may require us to incur nonrecurring and other charges, increase our near- and long-term expenditures, issue securities that dilute our existing stockholders, reduce the potential profitability of the products that are the subject of the relationship or disrupt our management and business. In addition, we face significant competition in seeking appropriate strategic alliances and transactions and the negotiation process is time-consuming and complex and there can be no assurance that we can enter into any of these transactions even if we desire to do so. Moreover, we may not be successful in our efforts to establish a strategic alliance or other alternative arrangements for any future product candidates and programs because our research and development pipeline may be insufficient, our product candidates and programs may be deemed to be at too early a stage of development for collaborative effort and third parties may not view our product candidates and programs as having the requisite potential to demonstrate a positive benefit/risk profile. Any delays in entering into new strategic alliances agreements related to our product candidates could also delay the development and commercialization of our product candidates and reduce their competitiveness even if they reach the market. In addition, any termination of established strategic alliance agreements will terminate any potential future funding we may receive under the relevant agreements, and we would have to seek a new partner for development or commercialization, curtail or abandon that development or commercialization, or undertake and fund the development and commercialization of the relevant product. If we seek a new partner but are unable to do so on acceptable terms, or at all, or do not have sufficient funds to conduct the development or commercialization of products ourselves, we would have to explore other strategic options, including curtailing or abandoning that development or commercialization, which could harm our business. For example, effective July 31, 2022, we terminated the Bayer Agreements pursuant to the Bayer Termination Agreement. As a result, we have assumed responsibility for the further development of ATA2271 and ATA3271 and commercialization of the resulting product, if approved, until we enter into a new strategic collaboration with a new partner for ATA2271 and/or ATA3271.

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If we license products or acquire businesses, we may not be able to realize the benefit of these transactions if we are unable to successfully integrate them with our existing operations and company culture. We cannot be certain that, following an acquisition or license, we will achieve the financial or strategic results that would justify the transaction.

Risks Related to Manufacturing

We are subject to a multitude of manufacturing risks, any of which could substantially increase our costs and limit supply of our product candidates.

Concurrently with the license of our existing product candidates, we acquired manufacturing process know-how and, in some cases, inventory of process intermediates and clinical materials from our partners. Transferring manufacturing processes, testing and associated know-how is complex and involves review and incorporation of both documented and undocumented processes that may have evolved over time. In addition, transferring production to different facilities may require utilization of new or different processes to meet the specific requirements of a given facility. Each stage is retroactively and concurrently verified to be compliant with appropriate regulations. As a result, there is a risk that all relevant know-how was not adequately transferred to us from our partners or that previous execution was not compliant with applicable regulations.

In addition, we need to conduct significant development and scale-up work to transfer these processes and manufacture each of our product candidates for various studies, clinical studies and commercial launch readiness. To the extent we elect to transfer manufacturing within our network, we are required to demonstrate that the product manufactured in the new or “receiving” facility is comparable to the product manufactured in the original or “sending” facility. The inability to demonstrate to each of the applicable regulatory authorities that comparable drug product was manufactured could delay the development of our product candidates.

The processes by which our product candidates are manufactured were initially developed by our partners for clinical purposes. We intend to evolve the existing processes with our partners to support advanced clinical studies and commercialization requirements. Developing commercially viable manufacturing processes is a difficult and uncertain task, and there are risks associated with scaling to the level required for advanced clinical studies or commercialization, including cost overruns, potential problems with process scale-up, process reproducibility, stability issues, consistency and timely availability of reagents or raw materials. The manufacturing facilities in which our product candidates will be made could be adversely affected by earthquakes and other natural disasters, equipment failures, labor shortages, power failures, and numerous other factors.

The process of manufacturing cellular therapies is susceptible to product loss due to contamination, equipment failure or improper installation or operation of equipment, or vendor or operator error. Even minor deviations from normal manufacturing and distribution processes for any of our product candidates could result in reduced production yields, impact to key product quality attributes, and other supply disruptions. Product defects can also occur unexpectedly. If microbial, viral or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, these manufacturing facilities may need to be closed for an extended period of time to allow us to investigate and remedy the contamination. Because our T-cell immunotherapy product candidates are manufactured from the blood of third-party donors, the process of manufacturing is susceptible to the availability of the third-party donor material. The process of developing products that can be commercialized may be particularly challenging, even if they otherwise prove to be safe and effective. The manufacture of these product candidates involves complex processes. Some of these processes require specialized equipment and highly skilled and trained personnel. The process of manufacturing these product candidates will be susceptible to additional risks, given the need to maintain aseptic conditions throughout the manufacturing process. Contamination with viruses or other pathogens in either the donor material or materials utilized


in the manufacturing process or ingress of microbiological material at any point in the process may result in contaminated or unusable product. This type of contaminations could result in delays in the manufacture of products which could result in delays in the development of our product candidates. These contaminations could also increase the risk of adverse side effects. Furthermore, our allogeneic products ultimately consist of many individual cell lines, each with a different HLA profile. As a result, the selection and distribution of the appropriate cell line for therapeutic use in a patient requires close coordination between clinical operations, supply chain and quality assurance personnel.

Any adverse developments affecting manufacturing operations for our product candidates may result in lot failures, inventory shortages, shipment delays, product withdrawals or recalls or other interruptions in the supply of our drug product which could delay the development of our product candidates. We may also have to write off inventory, incur other charges and expenses for supply of drug product that fails to meet specifications, undertake costly remediation efforts, or seek more costly manufacturing alternatives. Inability to meet the demand for our product candidates could damage our reputation and the reputation of our products among physicians, healthcare payors, patients or the medical community that supports our product development efforts, including hospitals and outpatient clinics.

We intend to manufacture at least a portion of our product candidates ourselves. Delays in commissioning and receiving regulatory approvals for our manufacturing facility could delay our development plans and thereby limit our ability to generate revenues.

The research and development and process and analytical development labs within our manufacturing facility in Thousand Oaks, California are currently supporting preclinical development activities. The facility commissioning and qualification activities required to support production at our facility were completed in 2018. Product-specific qualification to support clinical development is complete and commercial production qualification activities are ongoing. If the appropriate regulatory approvals for our facility are delayed, we may not be able to manufacture sufficient quantities of our drug candidates, which would limit our development activities and our opportunities for growth.

In addition to the similar manufacturing risks described in “Risks Related to Our Dependence on Third Parties,” our manufacturing facility will be subject to ongoing, periodic inspection by the FDA, EMA or other comparable regulatory agencies to ensure compliance with cGMP and GTP. Our failure to follow and document our adherence to these regulations or other regulatory requirements may lead to significant delays in the availability of products for clinical or, in the future, commercial use, may result in the termination of or a hold on a clinical study, or may delay or prevent filing or approval of commercial marketing applications for our product candidates. We also may encounter problems with the following:

achieving adequate or clinical-grade materials that meet regulatory agency standards or specifications with consistent and acceptable production yield and costs; 

shortages of qualified personnel, raw materials or key contractors; and

ongoing compliance with cGMP regulations and other requirements of the FDA, EMA or other comparable regulatory agencies.

Failure to comply with applicable regulations could also result in sanctions being imposed on us, including fines, injunctions, civil penalties, a requirement to suspend or put on hold one or more of our clinical studies, failure of regulatory authorities to grant marketing approval of our drug candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of drug candidates, operating restrictions and criminal prosecutions, any of which could harm our business.

Developing advanced manufacturing techniques and process controls is required to fully utilize our facility. Without further investment, advances in manufacturing techniques may render our facility and equipment inadequate or obsolete.

A number of the product candidates in our portfolio, if approved by applicable regulatory authorities, may require significant commercial supply to meet market demand. In these cases, we may need to increase, or “scale up,” the production process by a significant factor over the initial level of production. If we are unable to do so, are delayed, or if the cost of this scale up is not economically feasible for us or we cannot find a third-party supplier, we may not be able to produce our product candidates in a sufficient quantity to meet future demand.


If our sole clinical or commercial manufacturing facility or our CMO is damaged or destroyed or production at these facilities is otherwise interrupted, our business would be negatively affected.

If any manufacturing facility in our manufacturing network, or the equipment in these facilities, is either damaged or destroyed, we may not be able to quickly or inexpensively replace our manufacturing capacity or replace it at all. In the event of a temporary or protracted loss of a facility or its equipment, we may not be able to transfer manufacturing to a third party in the time required to maintain supply. Even if we could transfer manufacturing to a third party, the shift would likely be expensive and time-consuming, particularly since the new facility would need to comply with the necessary regulatory requirements or may require regulatory approval before selling any products manufactured at that facility. Such an event could delay our clinical studies or reduce our commercial product sales.

Currently, we maintain insurance coverage against damage to our property and to cover business interruption and research and development restoration expenses. However, our insurance coverage may not reimburse us, or may not be sufficient to reimburse us, for any expenses or losses we may suffer. We may be unable to meet our requirements for our product candidates if there were a catastrophic event or failure of our current manufacturing facility or processes.

Risks Related to Our Dependence on Third Parties

Maintaining clinical and commercial timelines is dependent on our end-to-end supply chain network to support manufacturing; if we experience problems with our third party suppliers we may delay development and/or commercialization of our product candidates.

We rely in part on our CMOs or our partners for the production of our product candidates and the acquisition of materials incorporated in or used in the manufacturing or testing of our product candidates. Our CMOs or partners are not our employees, and except for remedies available to us under our agreements with our CMOs or partners, we cannot directly control whether or not they devote sufficient time and resources, including experienced staff, to the manufacturing of supply for our ongoing clinical, nonclinical and preclinical programs.

To meet our projected supply needs for clinical and commercial materials to support our activities through regulatory approval and commercial manufacturing of tab-cel®, ATA188, any product candidates resulting from our next-generation CAR T programs or any other product candidates, we will need to transition the manufacturing of these materials to a CMO or our own facility. Regardless of where production occurs, we will need to develop relationships with suppliers of critical starting materials or reagents, increase the scale of production and demonstrate comparability of the material produced at these facilities to the material that was previously produced. Transferring manufacturing processes and know-how is complex and involves review and incorporation of both documented and undocumented processes that may have evolved over time.

In addition, transferring production to different facilities may require utilization of new or different processes to meet the specific requirements of a given facility. We would expect additional comparability work will also need to be conducted to support the transfer of certain manufacturing processes and process improvements. We cannot be certain that all relevant know-how and data has been adequately incorporated into the manufacturing process until the completion of studies (and the related evaluations) intended to demonstrate the comparability of material previously produced with that generated by our CMO.

If we are not able to successfully transfer and produce comparable product candidates, our ability to further develop and manufacture our product candidates may be negatively impacted.

While our manufacturing facility in Thousand Oaks, California provides us with flexibility within our manufacturing network, we still may need to identify additional CMOs for continued production of supply for some of our product candidates. Given the nature of our manufacturing processes, the number of CMOs who possess the requisite skill and capability to manufacture our T-cell immunotherapy product candidates is limited. We have not yet identified alternate suppliers in the event the current CMOs that we utilize are unable to scale production, or if we otherwise experience any problems with them.

Manufacturing cellular therapies is complicated and tightly regulated by the FDA and comparable regulatory authorities around the world, and although alternative third-party suppliers with the necessary manufacturing and regulatory expertise and facilities exist, it could be expensive and take a significant amount of time to arrange for alternative suppliers, transfer manufacturing procedures to these alternative suppliers, and demonstrate comparability of material produced by such new suppliers. New manufacturers of any product candidate or intermediate would be required to qualify under applicable regulatory requirements. These manufacturers may not be able to manufacture our product candidates at costs, or in sufficient quantities, or in a timely manner necessary to complete development of our product candidates or make commercially successful products. If we are unable to arrange for alternative third-party manufacturing sources, or to do so on commercially reasonable terms or in a timely manner, we may not be able to complete development of our product candidates, or market or distribute them. In addition, should the FDA or comparable regulatory authorities not agree with our product candidate specifications and comparability assessments for these materials, further clinical development of our product candidate could be substantially delayed and we would incur substantial additional expenses.


Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including reliance on the third party for regulatory compliance and quality assurance, the possibility that the third-party manufacturer does not maintain the financial resources to meet its obligations under the manufacturing agreement, the possibility of breach of the manufacturing agreement by the third party because of factors beyond our control, including a failure to manufacture our product candidates or any products we may eventually commercialize in accordance with our specifications, misappropriation of our proprietary information, including our trade secrets and know-how, and the possibility of termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or damaging to us. In addition, the FDA and other regulatory authorities require that our product candidates and any products that we may eventually commercialize be manufactured according to cGMP, cGTP and similar regulatory jurisdictional standards. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. The FDA or similar foreign regulatory agencies may also implement new standards at any time or change their interpretations and enforcement of existing standards for manufacture, packaging or testing of products. We have limited control over our manufacturers’ compliance with these regulations and standards and although we monitor our manufacturers, we depend on them to provide honest and accurate information. Any failure by our third-party manufacturers to comply with cGMP or cGTP or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product candidates in a timely manner, could lead to a delay in, or failure to obtain, regulatory approval of any of our product candidates. In addition, such failure could be the basis for the FDA to issue a warning letter, withdraw approvals for product candidates previously granted to us, or take other regulatory or legal action, including recall or seizure of outside supplies of the product candidate, total or partial suspension of production, suspension of ongoing clinical studies, refusal to approve pending applications or supplemental applications, detention or product, refusal to permit the import or export of products, injunction or imposing civil and criminal penalties.

We depend on third party suppliers for key materials used to produce our product candidates. Any significant disruption in our supplier relationships could harm our business. Any significant delay in the supply of a product candidate for an ongoing clinical study could considerably delay initiation or completion of our clinical studies, product testing and potential regulatory approval of our product candidates. If raw materials or components cannot be purchased or fail to meet approved specifications, the commercial launch of our product candidates could be delayed, or there could be a shortage in supply, which could impair our ability to generate revenues from the sale of our product candidates.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain sufficient intellectual property protection for our product candidates, or if the scope of the intellectual property protection is not sufficiently broad, our ability to commercialize our product candidates successfully and to compete effectively may be adversely affected.

We rely upon a combination of patents, trademarks, trade secrets and confidentiality agreements – both that we own or possess or that are owned or possessed by our partners that are in-licensed to us – to protect the intellectual property related to our technology, product and product candidates. When we refer to “our” technologies, inventions, patents, patent applications or other intellectual property rights, we are referring to both the rights that we own or possess as well as those that we in-license, many of which are critical to our intellectual property protection and our business. For example, the product, product candidates and platform technology we have licensed from our partners are protected primarily by patent or patent applications of our partners that we have licensed and as confidential know-how and trade secrets. If the intellectual property that we rely on is not adequately protected, competitors may be able to use our technologies and erode or negate any competitive advantage we may have.

The patentability of inventions and the validity, enforceability and scope of patents in the biotechnology field is uncertain because it involves complex legal, scientific and factual considerations, and it has in recent years been the subject of significant litigation. Moreover, the standards applied by the U.S. Patent and Trademark Office or USPTO,(USPTO) and non-U.S. patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in biotechnology patents.


There is no assurance that all potentially relevant prior art relating to our patents and patent applications is known to us or has been found in the instances where searching was done. We may be unaware of prior art that could be used to invalidate an issued patent or prevent a pending patent application from issuing as a patent. There also may be prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim of one of our patents or patent applications, which may, nonetheless, ultimately be found to affect the validity or enforceability of such claim. As a consequence of these and other factors, our patent applications may fail to result in issued patents with claims that cover our product and product candidates in the U.S. or in other countries.

Even if patents have issued or do successfully issue from patent applications, and even if these patents cover our product and product candidates, third parties may challenge the validity, enforceability or scope thereof, which may result in these patents being narrowed, invalidated or held to be unenforceable. No assurance can be given that if challenged, our patents would be declared by a court to be valid or enforceable.

Even if unchallenged, our patents and patent applications or other intellectual property rights may not adequately protect our intellectual property, provide exclusivity for our product and product candidates or prevent others from designing around our claims. The possibility exists that others will develop products on an independent basis which have the same effect as our product and product candidates and which do not infringe our patents or other intellectual property rights, or that others will design around the claims of patents that we have had issued that cover our product and product candidates. If the breadth or strength of protection provided by our patents and patent applications with respect to our product and product candidates isare threatened, it could jeopardize our ability to commercialize our product and product candidates and dissuade companies from collaborating with us.

We may also desire to seek a license from a third party who owns intellectual property that may be useful for providing exclusivity for our product and product candidates, or for providing the ability to develop and commercialize a product candidate in an unrestricted manner. There is no guarantee that we will be able to obtain a license from such a third party on commercially reasonable terms, or at all.

In addition, the USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

We and our partners have filed a number of patent applications covering our product and product candidates or methods of using or making those product candidates. We cannot offer any assurances about which, if any, patents will be issued with respect to these

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pending patent applications, the breadth of any such patents that are ultimately issued or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Because patent applications in the U.S. and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we or our partners were the first to file any patent application related to a product or product candidate. We or our partners may also become involved in proceedings regarding our patents, including patent infringement lawsuits, interference or derivation proceedings, oppositions, and inter partes and post-grant review proceedings before the USPTO the European Patent Office and other non-U.S. patent offices.

Even if granted, patents have a limited lifespan. In the U.S., the natural expiration of a patent generally occurs 20 years after it is filed. Although various extensions may be available if certain conditions are met, the life of a patent and the protection it affords is limited. If we encounter delays in our clinical studies or in obtaining regulatory approvals, the period of time during which we could exclusively market any of our product and product candidates under patent protection, if approved, could be reduced. Even if patents covering our product and product candidates are obtained, once the patent life has expired for a product, we may be vulnerable to competition from biosimilar products, as we may be unable to prevent competitors from entering the market with a product that is similar or identical to our product candidates.

Furthermore, the research resulting in certain of our licensed patent rights and technology was funded by the U.S. government. As a result, the government has certain rights to these patent rights and technology. When new technologies are developed with government funding, the government generally obtains certain rights in any resulting patents, including a non-exclusive license authorizing the government to practice the invention for or on behalf of the U.S. These rights may permit the government to disclose confidential information on which we rely to third parties and to exercise march-in rights to use or allow third parties to use our licensed technology. The government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations or to give preference to U.S. industry. In addition, our rights in any inventions that result from government-funded research may be subject to certain requirements to manufacture products embodying these inventions in the U.S.


If we are sued for infringing the intellectual property rights of third parties, the resulting litigation could be costly and time-consuming and could prevent or delay our or our partners’ development and commercialization efforts.

Our commercial success depends, in part, on us and our partners not infringing the patents and proprietary rights of third parties. There is a substantial amount of litigation and other adversarial proceedings, both within and outside the U.S., involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interference or derivation proceedings, oppositions, and inter partes and post-grant review proceedings before the USPTO and non-U.S. patent offices. Numerous U.S. and non-U.S. issued patents and pending patent applications owned by third parties exist in the fields in which we are developing and may develop our product and product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product and product candidates may be subject to claims of infringement of third parties’ patent rights, as it may not always be clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform or predictable.

Third parties may assert infringement claims against us based on existing or future intellectual property rights, alleging that we are employing their proprietary technology without authorization. There may be third-partythird party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacturing of our product and product candidates that we failed to identify. For example, patent applications covering our product and product candidates could have been filed by others without our knowledge, since these applications generally remain confidential for some period of time after their filing date. Even pending patent applications that have been published, including some of which we are aware, could be later amended in a manner that could cover our product and product candidates or their use or manufacture. In addition, we may have analyzed patents or patent applications of third parties that we believe are relevant to our activities and believe that we are free to operate in relation to any of our product and product candidates, but our competitors may obtain issued claims, including in patents we consider to be unrelated, which may block our efforts or potentially result in any of our product, product candidates or our activities infringing their claims.

If we or our partners are sued for patent infringement, we would need to demonstrate that our product candidates, products and methods either do not infringe the patent claims of the relevant patent or that the patent claims are invalid, and we may not be able to do this. Proving that a patent is invalid is difficult and even if we are successful in the relevant proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted from other activities. If any issued third-partythird party patents were held by a court of competent jurisdiction to cover aspects of our materials, formulations, methods of manufacture or methods for treatment, we could be forced, including by court order, to cease developing, manufacturing or commercializing the relevant product or product candidate until the relevant patent expired. Alternatively, we may desire or be required to obtain a license

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from such third party in order to use the infringing technology and to continue developing, manufacturing or marketing the infringing product or product candidate. However, we may not be able to obtain any required license on commercially reasonably terms, or at all. Even if we were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property licensed to us.

We may face claims that we misappropriated the confidential information or trade secrets of a third party. If we are found to have misappropriated a third party’s trade secrets, we may be prevented from further using these trade secrets, which could limit our ability to develop our product candidates.

Defending against intellectual property claims could be costly and time consuming, regardless of the outcome. Thus, even if we were to ultimately prevail, or to settle before a final judgment, any litigation could burden us with substantial unanticipated costs. In addition, litigation or threatened litigation could result in significant demands on the time and attention of our management team, distracting them from the pursuit of other company business. During the course of any intellectual property litigation, there could be public announcements of the results of hearings, rulings on motions, and other interim proceedings in the litigation and these announcements may have negative impact on the perceived value of our product, product candidates, programs or intellectual property. In the event of a successful intellectual property claim against us, we may have to pay substantial damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent, or to redesign our infringing product and product candidates, which may be impossible or require substantial time and monetary expenditure. In addition to paying monetary damages, we may lose valuable intellectual property rights or personnel and the parties making claims against us may obtain injunctive or other equitable relief, which could impose limitations on the conduct of our business. We may also elect to enter into license agreements in order to settle patent infringement claims prior to litigation, and any of these license agreements may require us to pay royalties and other fees that could be significant. As a result of all of the foregoing, any actual or threatened intellectual property claim could prevent us or our partners from developing or commercializing a product or product candidate or force us to cease some aspect of our business operations.


We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting, enforcing and defending patents on all of our product and product candidates in all countries throughout the world would be prohibitively expensive. Our intellectual property rights in certain countries outside the U.S. may be less extensive than those in the U.S. In addition, the laws of certain foreign countries do not protect intellectual property rights to the same extent as laws in the U.S. Consequently, we and our partners may not be able to prevent third parties from practicing our inventions in countries outside the U.S., or from selling or importing infringing products made using our inventions in and into the U.S. or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection or where we do not have exclusive rights under the relevant patents to develop their own products and, further, may export otherwise-infringing products to territories where we and our partners have patent protection but where enforcement is not as strong as that in the U.S. These infringing products may compete with our product and product candidates in jurisdictions where we or our partners have no issued patents or where we do not have exclusive rights under the relevant patents, or our patent claims and other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us and our partners to stop the infringement of our patents or marketing of competing products in violation of our intellectual property rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing, and could provoke third parties to assert claims against us or our partners. We or our partners may not prevail in any lawsuits that we or our licensors initiate, and even if we or our licensors are successful the damages or other remedies awarded, if any, may not be commercially meaningful.

We have in-licensed a significant portion of our intellectual property from our partners. If we breach any of our license agreements with these partners, we could lose the ability to continue the development and potential commercialization of one or more of our product and product candidates.

We hold rights under license agreements with our partners, including MSK, QIMR Berghofer and Moffitt that are important to our business. Our discovery and development platform is built, in part, around patent rights in-licensed from our partners. Under our existing license agreements, we are subject to various obligations, including diligence obligations with respect to development and commercialization activities, payment obligations upon achievement of certain milestones and royalties on product sales. If there is any conflict, dispute, disagreement or issue of nonperformance between us and our counterparties regarding our rights or obligations under these license agreements, including any conflict, dispute or disagreement arising from our failure to satisfy diligence or payment

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obligations, we may be liable to pay damages and our counterparties may have a right to terminate the affected license. The termination of any license agreement with one of our partners couldwould materially adversely affect our ability to utilize the intellectual property that is subject to that license agreement in our drug discovery and development efforts, our ability to enter into future collaboration, licensing and/or marketing agreements for one or more affected product and product candidates and our, or our partners’ ability to commercialize the affected product and product candidates. Furthermore, a disagreement under any of these license agreements may harm our relationship with the partner, which could have negative impacts on other aspects of our business.

We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful and have a material adverse effect on the success of our business.

Third parties may infringe our patents or misappropriate or otherwise violate our intellectual property rights. Our patent applications cannot be enforced against third parties practicing the technology claimed in these applications unless and until a patent issues from the applications, and then only to the extent the issued claims cover the technology. In the future, we or our partners may elect to initiate legal proceedings to enforce or defend our or our partners’ intellectual property rights, to protect our or our partners’ trade secrets or to determine the validity or scope of our intellectual property rights. Any claims that we or our partners assert against perceived infringers could also provoke these parties to assert counterclaims against us or our partners alleging that we or our partners infringe their intellectual property rights or that our intellectual property rights are invalid.

Interference or derivation proceedings provoked by third parties, brought by us or our partners, or brought by the USPTO or any non-U.S. patent authority may be necessary to determine the priority of inventions or matters of inventorship with respect to our patents or patent applications. We or our partners may also become involved in other proceedings, such as reexamination or opposition proceedings, inter partesreview, post-grant review or other pre-issuance or post-grant proceedings in the USPTO or its foreign counterparts relating to our intellectual property or the intellectual property of others. An unfavorable outcome in any of these proceedings could require us or our partners to cease using the related technology and commercializing our product and product candidates, or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us or our partners a license on commercially reasonable terms if any license is offered at all. Even if we or our licensors obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us or our licensors. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product and product candidates.


Any intellectual property proceedings can be expensive and time-consuming. Our or our partners’ adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than we or our partners can. Accordingly, despite our or our partners’ efforts, we or our partners may not be able to prevent third parties from infringing upon or misappropriating our intellectual property rights, particularly in countries where the laws may not protect our rights as fully as in the U.S. Even if we are successful in the relevant proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted from other activities. We could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent. In addition, in an infringement proceeding, a court may decide that one or more of our patents is invalid or unenforceable, in whole or in part, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments.

If we are unable to protect the confidentiality of our trade secrets and other proprietary information, the value of our technology could be materially adversely affected and our business could be harmed.

In addition to seeking the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce, and other elements of our technology, discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. The T-cell immunotherapy product candidates and platform technology we have licensed from our partners are protected primarily as confidential know-how and trade secrets. Any disclosure to or misappropriation by third parties of our confidential proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, including by enabling them to develop and commercialize products substantially similar to or competitive with our product candidates, thus eroding our competitive position in the market.

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Trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements and invention assignment agreements with our employees, consultants, CMOs, and outside scientific advisors, contractors and collaborators. These agreements are designed to protect our proprietary information. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, or outside scientific advisors might intentionally or inadvertently disclose our trade secrets or confidential, proprietary information to competitors. In addition, competitors may otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. If any of our confidential proprietary information were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position.

Enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, the laws of certain foreign countries do not protect proprietary rights such as trade secrets to the same extent or in the same manner as the laws of the U.S. Misappropriation or unauthorized disclosure of our trade secrets to third parties could impair our competitive advantage in the market and could materially adversely affect our business, results of operations and financial condition.

Risks Related to Commercialization of Our Product and Product Candidates

Our commercial success depends upon attaining significant market acceptance of our product and product candidates, if approved, among physicians, patients, healthcare payors and the medical community, including hospitals and outpatient clinics.

Even if we obtain regulatory approval for any of our product candidates that we may develop or acquire in the future, the product may not gain market acceptance among physicians, healthcare payors, patients or the medical community that supports our product development efforts, including hospitals and outpatient clinics. Market acceptance of any of our product and product candidates for which we receive approval depends on a number of factors, including:

the efficacy and safety of the product or product candidates as demonstrated in clinical studies;
the clinical indications and patient populations for which the product or product candidate is approved;
acceptance by physicians and patients of the drug as a safe and effective treatment;
the administrative and logistical burden of treating patients;
the ability to identify in a timely manner the appropriate patients who will benefit from specific therapy;
the consideration of novel cellular therapies by physicians, hospitals and third party payors;
the potential and perceived advantages of product or product candidates over alternative treatments;
the safety of product or product candidates seen in a broader patient group, including its use outside the approved indications;
any restrictions on use together with other medications;
the prevalence and severity of any side effects;
product labeling or product insert requirements of the FDA or other regulatory authorities;
the timing of market introduction of our products as well as competitive products;
the development of manufacturing and distribution processes for our product and product candidates;
the cost of treatment in relation to alternative treatments;
the availability of coverage and adequate reimbursement from, and our ability to negotiate pricing with, third party payors and government authorities;
relative convenience and ease of administration;
the ability to achieve a pricing and reimbursement recommendation or commercial agreement with national payors; and
the effectiveness of our sales and marketing efforts and those of our collaborators.

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the efficacy and safety of the product candidates as demonstrated in clinical studies;

the clinical indications and patient populations for which the product candidate is approved;

acceptance by physicians and patients of the drug as a safe and effective treatment;


the administrative and logistical burden of treating patients;

the adoption of novel cellular therapies by physicians, hospitals and third-party payors;

the potential and perceived advantages of product candidates over alternative treatments;

the safety of product candidates seen in a broader patient group, including its use outside the approved indications;

any restrictions on use together with other medications;

the prevalence and severity of any side effects;

product labeling or product insert requirements of the FDA or other regulatory authorities;

the timing of market introduction of our products as well as competitive products;

the development of manufacturing and distribution processes for our product candidates;

the cost of treatment in relation to alternative treatments;

the availability of coverage and adequate reimbursement from, and our ability to negotiate pricing with, third-party payors and government authorities;

relative convenience and ease of administration; and

the effectiveness of our sales and marketing efforts and those of our collaborators.

Even if we are able to commercialize our product and product candidates, the products may not receive coverage and adequate reimbursement from third-partythird party payors in the U.S. and in other countries in which weour partners seek to commercialize our products, which could harm our business.

Our ability to commercialize any product successfully will depend, in part, on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations.

Government authorities and third-partythird party payors, such as private health insurers and health maintenance organizations, determine which medications they will cover and establish reimbursement levels. A primary trend in the healthcare industry is cost containment. Government authorities and third-partythird party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-partythird party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Third-partyThird party payors may also seek additional clinical evidence, beyond the data required to obtain regulatory approval, demonstrating clinical benefits and value in specific patient populations before covering our products for those patients. We cannot be sure that coverage and adequate reimbursement will be available for any product that weour partners commercialize and, if reimbursement is available, what the level of reimbursement will be. In some countries such as the U.S., greater cost-shifting from the payor to the patient is also a trend, and higher patient copayments or other administrative burdens could lead to reduced demand from patients or healthcare professionals. This could particularly be the case in a challenging economic climate. Coverage and reimbursement may impact the demand for, or the price of, any product or product candidate for which we obtain regulatory approval, and ultimately our partners’ ability to successfully commercialize any product or product candidate for which we obtain regulatory approval.

There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may only be temporary. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the U.S. Third-partyCoverage and reimbursement policies for drug products can differ significantly from payor to payor as there is no uniform policy of coverage and reimbursement for drug products among third party payors in the U.S. Third party payors in the U.S. often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. There may be significant delays in obtaining coverage and reimbursement as the process of determining coverage and reimbursement is often time consuming and costly which will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage or adequate reimbursement will be obtained. It is difficult to predict at this time what government authorities and third party payors will decide with respect to coverage and reimbursement for our drug products. Our partners’ inability to promptly obtain coverage and profitable reimbursement rates from both government-funded and private payors for any approved products that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.


Current and future legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, may increase the difficulty and cost for us to obtain regulatory approval of and commercialize our product candidates and affect the prices we may obtain.for our product and product candidates.

The regulations that govern, among other things, regulatory approvals, coverage, pricing and reimbursement for new drug products vary widely from country to country. In the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay regulatory approval of our product candidates, restrict or regulate post-approval activities and affect our ability to successfully sell any product and product candidates for which we obtain regulatory approval. In particular, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively, the Affordable Care Act, was enacted, which substantially changeschanged the way health carehealthcare is financed by both governmental and private insurers, and continues to significantly impactsimpact the U.S. pharmaceutical industry. The Affordable Care Act and its implementing regulations, among other things, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for certain drugs and biologics, including our product candidates, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjected manufacturers to new annual fees and taxes for certain branded prescription drugs, provided

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incentives to programs that increase the federal government’s comparative effectiveness research and established a new Medicare Part D coverage gap discount program.

Other legislative changes have been proposed and adopted in the U.S. since the Affordable Care Act was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by the U.S. Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013, and, due to subsequent legislative amendments, will remain in effect through 2027into 2031 unless additional Congressional action is taken.taken (with the exception of a temporary suspension instituted during the COVID-19 pandemic that expired on July 1, 2022). To offset the temporary suspension during the COVID-19 pandemic, in 2030, reductions in Medicare payments will be 2.25% for the first half of the year, and 3% in the second half of the year. In January 2013, the American Taxpayer Relief Act of 2012 or the ATRA, was enacted which, among other things, further reduced Medicare payments to several providers, including hospitals and outpatient clinics, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Since its enactment, thereThere have been judicial and Congressional challenges to numerous elements of the Affordable Care Act, as well as efforts by both the executive and legislative branches of the federal government to repeal or replace certain aspects of the Affordable Care Act. For example, the President signed Executive Orders designed to delay the implementation of certain provisions of the Affordable Care Act or otherwise circumvent some of the requirements for health insurance mandated by the Affordable Care Act. In addition, the U.S. Congress has considered legislation that would repeal or repeal and replace all or part of the Affordable Care Act. While the U.S. Congress has not passed comprehensive repeal legislation, it has enacted laws that modify certain provisions of the Affordable Care Act, such as removing penalties, starting January 1, 2019, for not complying with the Affordable Care Act’s individual mandate to carry health insurance, delayingeliminating the implementation of certain mandated fees, and increasing the point-of-sale coverage gap discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D. On December 18, 2019,June 17, 2021, the U.S. Supreme Court of Appeals fordismissed a legal challenge to the 5th Circuit upheld a District Court rulinglaw brought by several states arguing that, without the individual mandate, the entire Affordable Care Act was unconstitutional and remandedunconstitutional. The Supreme Court dismissed the case backlawsuit without ruling on the merits of the states’ constitutionality arguments. While the legal challenge to the Texas District Court to determine whether the remaining provisions of the Affordable Care Act are invalid as well.

It is unclear how this decision, subsequent appeals, and other effortswas pending, on January 28, 2021, President Biden issued an executive order to repeal and replaceinitiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the Affordable Care Act marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the Affordable Care Act. Most recently, the Inflation Reduction Act extended the provision of enhanced subsidies for individuals purchasing health coverage through the Affordable Care Act marketplace. The enhanced subsidies, which were originally passed as part of the American Rescue Plan and scheduled to expire in 2022, are now extended until 2025. In the future, there may be additional challenges and/or amendments to the Affordable Care Act. It is unclear how the United States Supreme Court ruling, other such litigation, and the healthcare form measures of the Biden administration will impact the Affordable Care Act and our business. The U.S. Congress may consider and adopt other legislation to repeal and replace all or certain elements of the Affordable Care Act. Any other executive, legislative or judicial action to “repeal and replace” all or part of the Affordable Care Act may have the effect of limiting the amounts that government agencies will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressure, or may lead to significant deregulation, which could make the introduction of competing products and technologies much easier. Policy changes, including potential modification or repeal of all or parts of the Affordable Care Act or the implementation of new health care legislation, could result in significant changes to the health care system which may adversely affect our business in unpredictable ways.

There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. We cannot predict the initiatives that may be adopted in the future. The continuing efforts of governments, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare, including by imposing price controls, may adversely affect the demand for our product and product candidates for which we obtain regulatory approval and our ability to set a price that we believe is fair for our products. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.


Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDAU.S. or foreign regulations, guidance or interpretations will be changed, or what the impact of these changes on the regulatory approvals of our product and product candidates, if any, may be. In the U.S., the European UnionEU and other potentially significant markets for our product and product candidates, government authorities and third-partythird party payors are increasingly attempting to limit or regulate the price of medical products and services, particularly for new and innovative products and therapies, which has resulted in lower average selling prices for certain products in certain markets. For example, inIn the U.S., there have been several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. Additionally,For example, the Consolidated Appropriations Act of 2021 included several drug price reporting and transparency measures, such as a new requirement for certain Medicare plans to develop tools to display Medicare Part D prescription drug benefit information in May 2018,real time and for group and health insurance issuers to report information on pharmacy benefit and drug costs to the U.S. presidential administration laid out a “Blueprint” to lower drug pricesSecretaries of Health and reduce outHuman Services, Labor, and the Treasury. Most recently, on August 16, 2022, President Biden signed into law the Inflation Reduction Act of pocket costs of drugs that contains additional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out of pocket costs of drug products paid by consumers. HHS has started the process of soliciting feedback on some of these measures and, at the same time, is immediately implementing others under its existing authority. In January 2019, the HHS Office of Inspector General proposed modifications to U.S. federal healthcare Anti-Kickback Statute safe harbors2022, which, among other things, will affect rebates paid byreforms, allows Medicare to: beginning in 2026, establish a “maximum fair price” for certain pharmaceutical and biological products covered under Medicare Parts B and D; beginning in 2023, penalize drug companies that raise

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prices for products covered under Medicare Parts B and D faster than inflation; and beginning in 2025 impose new discounts obligations on pharmaceutical and biological manufacturers tofor products covered under Medicare Part D plans,D.

There have also been administrative developments in the purposeU.S. related to drug pricing. For example, in response to a July 9, 2021 Executive Order from President Biden that included several prescription drug initiatives, on September 9, 2021, the Department of which is to further reduce the cost of drug products to consumers. Although some of theseHealth and other proposals may require additional authorization to become effective, members ofHuman Services issued a Comprehensive Plan for Addressing High Drug Prices that identified potential legislative policies and administrative tools that Congress and the presidentialagency can pursue in order to make drug prices more affordable and equitable, improve and promote competition throughout the prescription drug industry, and foster scientific innovation. Additionally, on February 2, 2022, the Biden Administration signaled its continued commitment to the Cancer Moonshot initiative, which was initially launched in 2016. In its announcement, the administration have indicatednoted that they will continueits new goals under the initiative include addressing inequities in order to seekensure broader access to cutting-edge cancer therapeutics and investing in a robust pipeline for new legislative or administrative measurestreatments. On September 12, 2022, President Biden issued an Executive Order to controlpromote biotechnology and biomanufacturing innovation. The Order noted several methods through which the Biden Administration would support the advancement of biotechnology and biomanufacturing in healthcare, and instructed the Department of Health and Human Service to submit, within 180 days of the Order, a report assessing how to use biotechnology and biomanufacturing to achieve medical breakthroughs, reduce the overall burden of disease, and improve health outcomes. Most recently, on October 14, 2022 President Biden issued an Executive Order on Lowering Prescription Drug Costs for Americans, which instructed the Secretary of the Department of Health and Human Services to consider whether to select for testing by the CMS Innovation Center new health care payment and delivery models that would lower drug costs. costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid programs. The Executive Order further directed the Secretary of the Department of Health and Human Services to submit, within 90 days of the date of the Executive Order, a report regarding any models that may lead to lower cost-sharing for commonly used drugs and support value-based payment that promotes high-quality care. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, to encourage importation from other countries and bulk purchasing. Furthermore, the increased emphasis on managed healthcare in the U.S. and on country and regional pricing and reimbursement controls in the European UnionEU will put additional pressure on product pricing, reimbursement and usage, which may adversely affect our future product sales. These pressures can arise from rules and practices of managed care groups, other insurers, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical reimbursement policies and pricing in general.

In addition, there is significant uncertainty regarding the reimbursement status of newly approved healthcare products. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the cost-effectiveness of our products.product and product candidates. If third-partythird party payors do not consider our productsproduct and product candidates to be cost-effective compared to other therapies, the payors may not cover our productsproduct and product candidates after approvedapproval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.

Price controls may be imposed in foreign markets, which may adversely affect our future profitability.

In some countries, particularly member statesMember States of the European Union,EU and the UK, the pricing of prescription drugs is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after receipt of regulatory approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various European Union member statesEU Member States and parallel distribution, or arbitrage between low-priced and high-priced member states,Member States, can further reduce prices. In some countries, we, or our collaborators, may be required to conduct a clinical study or other studies that compare the cost-effectiveness of our product and product candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval. Publication of discounts by third-partythird party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.


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We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

We face competition from numerous pharmaceutical and biotechnology enterprises, as well as from academic institutions, government agencies and private and public research institutions for our current product and product candidates. Our commercial opportunities will be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer side effects or are less expensive than any products that we may develop. Additionally, our commercial opportunities will be reduced or eliminated if novel upstream products or changes in treatment protocols reduce the overall incidence or prevalence of our current or future target diseases. Competition could result in reduced sales and pricing pressure on our product and product candidates, if approved by applicable regulatory authorities. In addition, significant delays in the development of our product candidates could allow our competitors to bring products to market before us and impair any ability to commercialize our product and product candidates.

There are currently no FDA- or EMA-approvedFDA-approved products for the treatment of EBV+ PTLD,. and there are no EC-approved products for this indication except for Ebvallo. However, we are aware some marketed products and therapies are used off-label in the treatment of EBV+ PTLD, by some healthcare professionals and institutions, such as rituximab and combination chemotherapy regimens. In addition, a number of companies and academic institutions are developing drugproduct candidates for EBV+ PTLD and other EBV-associatedEBV-driven diseases including: Viracta Therapeutics, Inc., which is conducting a pivotal, Phase 1b/2 clinical study for nanatinostat (formerly named tractinostat, or VRx-3996) in combination with antiviral drug valganciclovir in relapsed/refractory EBV+lymphomas,EBV+ lymphomas; AlloVir (formerly known as ViraCyte), which has completed a Phase 2 clinical study for Viralym-Mposoleucel (ALVR105), an allogeneic, multi-virus T-cell product that targets six viruses in allogeneic HSCT recipients with ≥1 treatment-refractory infection, including EBV, and is planning to initiate severalconducting two Phase 3 studiestrials for Virus-Associated Hemorrhagic-Cystitis, as well as initiated a Phase 3 trial for the prevention of BKV, CMV, AdV, EBV, HHV06 and JCV in the next yearpost-allogeneic HSCT patients and Tessa Therapeutics Pte Ltd., or Tessa, which hasis conducting a preclinicalPhase 1 study with an allogeneic CD30-CAR EBVST product candidate that is an allogeneic CD30-targeted CAR EBV-specific T-cell therapy.in relapsed refractory CD30 positive lymphoma.

Competition in the MS market is high with at least seventeen20 therapies, including threefour generics or bioequivalents, approved in the U.S. and EU for the treatment of various forms of MS, including clinically isolated syndrome, relapsing-remitting multiple sclerosis, or RRMS, in the U.S.MS (RRMS), secondary progressive MS (SPMS) and EU.primary progressive MS (PPMS). There are many competitors in the RRMSMS market, including major multi-national fully-integrated pharmaceutical companies and established biotechnology companies. Most recently, Vumerity™ (diroximel fumarate)Briumvi (ublituximab), marketed by Biogen wasTG Therapeutics, Ponvory (S1P modulator), marketed by Johnson & Johnson, and Kesimpta® (anti-CD20 monoclonal antibody), marketed by Novartis, were approved in the U.S. and/or EU for the treatment of relapsing forms of MS and Mayzent® (siponimod), marketed by Novartis, was approved in the EU for the same indication. MS.

There are numerous development candidates in Phase 3 studies for RRMS including TG Therapeutics’ anti-CD20 monoclonal antibody ublituximab and EMD Serono’s BTK inhibitor, evobrutinib. Novartis has completed a Phase 3 study for its anti-CD20 monoclonal antibody, ofatumumab, and has sought regulatory approval for this candidate. In addition, J&J/Janssen has completed a Phase 3 study for its sphingosine-1-phosphate receptor 1 (S1P1) modulator, ponesimod, and plans to file for regulatory approval in the future. Celgene’s ozanimod, an S1PR1 and S1PR5 agonist, is awaiting FDA and EMA regulatory approval with a PDUFA date in March 2020, and EMA in the first halfboth relapsing and/or progressive forms of 2020.

Six therapies have been approved for the treatment of progressive MS. Ocrevus® is approved in the U.S. and EU for the treatment of PPMS. Extavia® (marketed by Novartis) and Betaferon® (marketed by Bayer AG) are approved in the European Union for the treatment of secondary progressive MS when disease is active, or active SPMS. Mayzent® (siponimod), marketed by Novartis and Mavenclad® (cladribine), marketed by EMD Serono, were most recently approved for the treatment of active SPMS in the U.S. and EU (Mayzent) Prior to the approvals of Mayzent and Mavenclad in 2019, there was only one drug (mitoxantrone) approved to treat SPMS in the U.S., which is now generic.

The SPMS and PPMS markets have active development pipelines and additional novel agents could be approved in either or both indications in the future. Several development candidates are being evaluated in Phase 3 studies for progressive forms of MSfuture including primary and secondary progressive MS. These are MedDay’s MD-1003, a concentrated form of biotin,Merck KgaA’s Bruton’s tyrosine kinase (BTK) inhibitor, evobrutinib, Roche’s BTK inhibitor, fenebrutinib, Sanofi’s BTK inhibitor, tolebrutinib and AB Science’s masitinib, a tyrosine kinase inhibitor.inhibitor, masitinib. Medicinova is planning to initiate a Phase 3 study of its PDE inhibitor, ibudilast (MN166) in patients with non-relapsing secondary progressive MS.non-active SPMS.

There are currently twosix autologous CAR T therapies approved in the U.S. and EU,and/or EU: Novartis’ Kymriah® (tisagenlecleucel) and, Gilead/Kite’s Yescarta® (axicabtagene ciloleucel). and TecartusTM(brexucabtagene autoleucel) and Bristol-Myers Squibb filed its BLA to the US FDA for Squibb’s Breyanzi®(lisocabtagene maraleucel (liso-cel) in December 2019.maraleucel) and Abecma (idecabtagene vicleucel) with 2seventy bio and Johnson & Johnson and Legend Biotech’s Carykti™ (ciltacabtagene autoleucel). There are more than 100 CAR Tmany CAR-mediated cell therapies in development, including at least 35 whichand, although the majority are autologous, they also include allogeneic and off-the-shelf cell therapies. There are multiple allogeneic CAR platforms being developed with differences in approaches to minimize instances of donor cells recognizing the patient’s body as foreign or rejection of the donor cells by the patient’s body. These approaches include the use of gene-editing to remove or inhibit the TCR and the use of cell types without a TCR. The majority of clinical stage allogeneic CAR programs utilize alpha beta T cells as the cell type and gene editing of the T-cell receptor and HLA as the preferred technology approach, however, other strategies are also in development. It is possible that some of these other approaches will have more favorable characteristics than the approach we utilize, which would result in them being favored by potential partners or customers over our products. Depending on the diseases that we target in the future, we may face competition from both autologous and allogeneic CAR T therapies and other modalities (e.g., small molecules, antibodies)antibodies, bispecifics) in the indication of interest.


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Many of the approved or commonly used drugs and therapies for our current or future target diseases, including EBV+ PTLD and MS, are well established and are widely accepted by physicians, patients and third-partythird party payors. Some of these drugs are branded and subject to patent protection, and other drugs and nutritional supplements are available on a generic basis. Insurers and other third-partythird party payors may encourage the use of generic products or specific branded products. We expect that if any ofour product and our product candidates, areif approved, they will be priced at a significant premium over competitive generic products. Absent differentiated and compelling clinical evidence, pricing premiums may impede the adoption of our products over currently approved or commonly used therapies, which may adversely impact our business. In addition, many companies are developing new therapeutics, and we cannot predict what the standard of care will become as our products continue in clinical development.

Many of our competitors or potential competitors have significantly greater established presence in the market, financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical studies, obtaining regulatory approvals and marketing approved products than we do, and as a result may have a competitive advantage over us. Smaller or early-stage companies may also prove to be significant competitors, including through collaborative arrangements with large and established companies or if they are acquired by larger companies. These third parties compete with us in recruiting and retaining qualified scientific commercial and management personnel, establishing clinical study sites and patient registration for clinical studies, as well as in acquiring technologies and technology licenses complementary to our programs or advantageous to our business.

As a result of these factors, these competitors may obtain regulatory approval of their products before we are able to obtain patent protection or other intellectual property rights, which will limit our ability to develop or commercialize our product candidates. Our competitors may also develop drugs that are safer, more effective, more widely used and cheaper than ours, and may also be more successful than us in manufacturing and marketing their products. These appreciable advantages could render our product candidates obsolete or noncompetitive before we can recover the expenses of development and commercialization.other expenses.

We are subject to certain contractual obligations under our royalty financing agreement with HealthCare Royalty Partners and may be subject to claims for damages if we fail to fulfill these obligations.

In December 2022, we entered into a purchase and sale agreement (the HCRx Agreement) with HCR Molag Fund, L.P. (HCRx). Under the terms of the HCRx Agreement, we received $31.0 million in cash in consideration for our right to receive a portion of future royalty payments and certain milestones for Ebvallo in the EU due to us from Pierre Fabre under the Pierre Fabre Commercialization Agreement. The HCRx Agreement contains certain customary terms and conditions, including representations and warranties, covenants, and indemnification obligations in favor of each party. Among these terms, there are certain covenants regarding our compliance with the Pierre Fabre Commercialization Agreement. In the event of actual or alleged breaches of the Pierre Fabre Commercialization Agreement or the HCRx Agreement, we could be subject to claims for damages from HCRx and could be subject to costly litigation.

We expect the product candidates we develop will be regulated as biological products or biologics,(biologics) and therefore they may be subject to competition sooner than anticipated.

The Biologics Price Competition and Innovation Act of 2009 or BPCIA,(BPCIA) was enacted as part of the Affordable Care Act to establish an abbreviated pathway for the approval of biosimilar and interchangeable biological products. The regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an approved biologic. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the reference product was approved under a BLA. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when processes intended to implement BPCIA may be fully adopted by the FDA, any of these processes could have a material adverse effect on the future commercial prospects for our biological products.

We believe that our product and any of the product candidates we develop that isare approved in the U.S. as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that thisexclusivity could be shortened due to congressionalCongressional action or otherwise, or that the FDA will not consider the subject product candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developingdeveloping..

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In addition, the approval of a biologic product biosimilar to one of our products could have a material adverse impact on our business as it may be significantly less costly to bring to market and may be priced significantly lower than our products.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product and product candidates, we may be unable to generate any revenue.

We are at any early stage of establishing an organization that will be responsible forrevenue from the sale marketing and distribution of pharmaceutical products and the cost of establishing and maintaining such an organization may exceed the cost-effectiveness of doing so. our products.

In order to market any products that may be approved by the FDA and comparable foreign regulatory authorities, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangementsenter into agreements with third parties to perform these services.market and sell our product. There are significant risks involvedis no guarantee that we will be able to enter into such agreements with third parties or to do so on commercially reasonable terms or in building and managing a sales organization, including our ability to hire, retain and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel and effectively manage a geographically dispersed sales and marketing team.timely manner. Any failure or delay in the development ofentering into agreements with third parties to market and sell our internal sales, marketing and distribution capabilitiesproducts, would adversely impact the commercialization of these products. There can be no assurance that we would be able to identify a suitable third party to market and sell our product or agree upon terms with third parties that are favorable or acceptable to us, or at all. If we are unable to identify and reach agreement with a third party to market and commercialize our product, we may need to explore other strategic options, including commercializing products ourselves, and there is no guarantee we can successfully commercialize products ourselves. We may be competing with many companies that currently have extensive and well-funded sales and marketing operations. Without a sufficiently scaled, appropriately timed and trained internal commercial organization or the support of a third party to perform sales and marketing functions, we may be unable to compete successfully against these more established companies.


We may needencounter difficulties in managing our growth, including with respect to growour employee base, and managing our operations successfully.

As of December 31, 2022, we had 334 employees after excluding those terminated in October 2022 as part of the reduction in force announced in August 2022. We may encounter difficulties in managing the size of our organization, and we may experience difficulties in managing this growth.

As of December 31, 2019, we had 393 employees. We have made the decision to grow the size of our organization in orderoperations to support our continuedcontinuing development activities and potential commercialization of our product candidates. In particular, we may need to add substantial numbers of additional personnel and other resources to supportproduct candidates by our development and potential commercialization of our product candidates.partners. As our development and commercialization plans and strategies continue to develop,evolve, or as a result of any future acquisitions, we must continue to improve our need for additional managerial, operational, manufacturing, sales, marketing, financial and other resources will increase.procedures and processes to manage the size our of operations. Our management, personnel and systems currently in place may not be adequate to support thisany future growth. Future growth would impose significant added responsibilities on members of management, including:

managing our preclinical and clinical studies effectively;
identifying, recruiting, maintaining, motivating and integrating additional employees, including the additional personnel needed to support continued development and of our product candidates;
managing our internal development efforts effectively while complying with our contractual obligations to licensors, licensees, contractors and other third parties;
improving our managerial, development, operational, information technology, and finance systems; and
expanding our facilities.

managing our preclinical and clinical studies effectively;

identifying, recruiting, maintaining, motivating and integrating additional employees;

managing our internal development efforts effectively while complying with our contractual obligations to licensors, licensees, contractors and other third parties;

improving our managerial, development, operational, information technology, and finance systems; and

expanding our facilities.

As our operations expand, we will also need to manage additional relationships with various strategic partners, suppliers and other third parties. Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to manage our development efforts and preclinical and clinical studies effectively and hire, train and integrate additional management, research and development, manufacturing administrative and sales and marketingadministrative personnel. Our failure to accomplish any of these tasks could prevent us from successfully growing our company.

Risks Related to Our Business Generally

Our future success depends on our ability to retain our executive officers and to attract, retain and motivate qualified personnel.

We are highly dependent upon our executive officers and other key employees and the loss of the services of any of our executive officers or other key employees, including scientific, technical or management personnel, could impede the achievement of our corporate objectives.

Our success depends on our ability to recruit, retain, manage and motivate our employees. Although we enter into employment agreements or offer letters with our employees, these documents provide for “at-will” employment, which means that any of our employees could leave our employment at any time, with or without notice. Competition for skilled personnel in our industry and geographic regions is intense and may limit our ability to hire and retain qualified personnel on acceptable terms or at all. To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have provided equity awards that vest over time. The value to employees of equity awards may be significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract more lucrative offers from other companies.


Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse, privacy and other laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain regulatory approval. Our current and future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we conduct research and would market, sell and distribute our products. As a pharmaceutical company, even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business. Restrictions under applicable federal and state healthcare laws and regulations that may affect our ability to operate include the following:

the federal healthcare Anti-Kickback Statute will constrain our marketing practices, educational programs, pricing policies, and relationships with healthcare providers or other entities, by prohibiting, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid;

federal civil and criminal false claims laws and civil monetary penalty laws impose criminal and civil penalties, including through civil whistleblower or qui tam actions available under the federal civil False Claims Act, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment or approval that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates;

the federal physician sunshine requirements under the Affordable Care Act requires manufacturers of drugs, devices, biologics and medical supplies to report annually to CMS information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations;

state and foreign laws and regulations that are analogous to the federal laws and regulations described in the preceding subsections of this risk factor, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; and

some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; some state laws require drug manufacturers to report information regarding pricing and marketing information related to payments and other transfers of value to physicians and other healthcare providers; some state and local laws require the registration of pharmaceutical sales representatives; and other state laws require the protection of the privacy and security of health information, which may differ from each other in significant ways and often are not preempted by HIPAA.

Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government-funded healthcare programs, such as Medicare and Medicaid, disgorgement, additional reporting requirements or oversight if we become subject to a corporate integrity agreement or similar agreement, and the curtailment or restructuring of our operations. If any physicians or other healthcare providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs.


Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.

We are exposed to the risk of employee fraud or other misconduct, including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, provide accurate information to the FDA or comparable foreign regulatory authorities, comply with manufacturing standards we have established, comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, report financial information or data accurately or disclose unauthorized activities to us. Employee misconduct could also involve the improper use of information obtained in the course of clinical studies, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.

Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.

We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical studies and will face an even greater risk if we commercially sell any products that we may develop. Product liability claims may be brought against us by subjects enrolled in our clinical studies, patients, healthcare providers or others using, administering or selling our products. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

decreased demand for any product candidates or products that we may develop;

termination of clinical study sites or entire study programs;

injury to our reputation and significant negative media attention;

withdrawal of clinical study participants;

significant costs to defend the related litigation;

substantial monetary awards to study subjects or patients;

loss of revenue;

diversion of management and scientific resources from our business operations; and

the inability to commercialize any products that we may develop.

We currently hold product liability insurance coverage at a level that we believe is customary for similarly situated companies and adequate to provide us with insurance coverage for foreseeable risks, but which may not be adequate to cover all liabilities that we may incur. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. We intend to expand our insurance coverage for products to include the sale of commercial products if we obtain regulatory approval for our product candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products that receive regulatory approval. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.

If we and our third-party manufacturers fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We and our third-party manufacturers are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our or our third-party manufacturers’ use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.


Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials with a policy limit that we believe is customary for similarly situated companies and adequate to provide us with insurance coverage for foreseeable risks, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological or hazardous materials.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions, which could adversely affect our business, financial condition, results of operations and prospects.

Our business and operations would suffer in the event of computer system failures or security breaches.

Our internal computer systems, and those of our partners, our CROs, our CMOs, and other business vendors on which we rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism, war and telecommunication and electrical failures. We exercise little or no control over these third parties, which increases our vulnerability to problems with their systems. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical study data from completed, ongoing or planned clinical studies could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, the further development of our product candidates could be delayed and our business could be otherwise adversely affected.

Legislation or other changes in tax law could adversely affect our business and financial condition.

Legislation or other changes in tax laws could lead to or increase our tax liability and adversely affect our after-tax profitability. For example, The Tax Act was enacted in the U.S. on December 22, 2017. Given our valuation allowance position, The Tax Act is not expected to have a significant impact on our effective tax rate, cash tax expenses or net deferred tax assets. The Tax Act among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%; limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses); limitation of the deduction of net operating losses generated in tax years beginning after December 31, 2017 to 80% of taxable income, indefinite carryforward of net operating losses generated in tax years after 2018 and elimination of net operating loss carrybacks; changes in the treatment of offshore earnings regardless of whether they are repatriated; current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations, mandatory capitalization of research and development expenses beginning in 2022; immediate deductions for certain new investments instead of deductions for depreciation expense over time; further deduction limits on executive compensation; and modifying, repealing and creating many other business deductions and credits, including the reduction in the orphan drug credit from 50% to 25% of qualifying expenditures. We completed an evaluation of the overall impact of The Tax Act on our effective tax rate and balance sheet through December 31, 2019 and have reflected the amounts in our financial statements. The U.S. Department of Treasury has issued and will continue to issue additional regulations and interpretive guidance that may impact how we will apply the law. The Tax Act or any future legislation may have a significant impact in future periods and our business and financial condition could be adversely affected. The future impact of the Tax Act or any future legislation on holders of our common stock is also uncertain and could be adverse.

Our ability to use net operating loss carryforwards to offset future taxable income, and our ability to use tax credit carryforwards, may be subject to certain limitations.

Our ability to use our federal and state net operating losses, or NOLs, to offset potential future taxable income and related income taxes that would otherwise be due is dependent upon our generation of future taxable income, and we cannot predict with certainty when, or whether, we will generate sufficient taxable income to use all of our NOLs.

As of December 31, 2019, we reported U.S. federal and state NOLs of approximately $547.7 million and $695.4 million, respectively. Our federal NOLs generated prior to 2018 aggregating to $77.1 million will continue to be governed by the NOL tax rules as they existed prior to the adoption of the Tax Act, which means that generally they will expire 20 years after they were generated if not used prior thereto. Many states have similar laws, and our state NOLs will begin to expire in 2032. Accordingly, these federal and state NOLs could expire unused and be unavailable to offset future income tax liabilities. Under the newly enacted Tax Act, federal NOLs incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such federal NOL’s is limited to 80% of current year taxable income. Not all states conform to the Tax Act and other states have varying conformity to the Tax Act.


In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, our ability to utilize these NOLs and other tax attributes, such as federal tax credits, in any taxable year may be limited if we have experienced an “ownership change.” Generally, a Section 382 ownership change occurs if one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a three-year testing period. Similar rules may apply under state tax laws. We completed a Section 382 study of transactions in our stock through December 31, 2019 and concluded that we have experienced ownership changes since inception that we believe under Section 382 of the Code will result in limitations in our ability to use certain of our NOLs and credits. In addition, we may experience subsequent ownership changes as a result of future equity offerings or other changes in the ownership of our stock, some of which are beyond our control. As a result, the amount of the NOLs and tax credit carryforwards presented in our financial statements could be limited and, in the case of NOLs generated in 2017 and before, may expire unused. Any such material limitation or expiration of our NOLs may harm our future operating results by effectively increasing our future tax obligations.

Business disruptions could seriously harm our future revenues and financial condition and increase our costs and expenses.

Our operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters or business interruptions, for which we are predominantly self-insured. Two of our corporate locations are located in California, an area prone to earthquakes and fires. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. We rely on third-party manufacturers to produce our product candidates. Our ability to obtain clinical supplies of product candidates could be disrupted, if the operations of these suppliers are affected by a man-made or natural disaster or other business interruption.

Risks Related to Ownership of Our Common Stock

Our stock price has been and will likely continue to be volatile and may decline regardless of our operating performance.

Our stock price has fluctuated in the past and can be expected to be volatile in the future. From January 1, 20172020 through December 31, 2019,2022, the reported sale price of our common stock has fluctuated between $10.38$2.83 and $54.45$28.20 per share. The stock market in general and the market for biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may experience losses on their investment in our common stock. The market price of our common stock may be influenced by many factors, including the following:

the success of competitive products or technologies;
regulatory actions with respect to our product candidates or products or our competitors’ product candidates or products;
actual or anticipated changes in our growth rate relative to our competitors;

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announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;
announcements of the results, including safety and efficacy of our product candidates, or progress of our clinical studies;
results of clinical studies, including safety and efficacy, of our product candidates or those of our competitors;
regulatory or legal developments in the U.S. and other countries;
developments or disputes concerning patent applications, issued patents or other proprietary rights;
the recruitment or departure of key personnel;
the level of expenses related to any of our product candidates or clinical development programs;
the results of our efforts to in-license or acquire additional product candidates or products;
actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
variations in our financial results or those of companies that are perceived to be similar to us;
fluctuations in the valuation of companies perceived by investors to be comparable to us;
inconsistent or unusual trading volume levels of our shares or derivatives thereof;
announcement or expectation of additional financing efforts;
sales of our common stock by us, our insiders or our other stockholders;
changes in the structure of healthcare payment systems;
market conditions in the pharmaceutical and biotechnology sectors;
general economic, industry and market conditions; and
the other risks described in this “Risk Factors” section.

the success of competitive products or technologies;

regulatory actions with respect to our product candidates or products or our competitors’ product candidates or products;

actual or anticipated changes in our growth rate relative to our competitors;

announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;

results of clinical studies of our product candidates or those of our competitors;

regulatory or legal developments in the U.S. and other countries;

developments or disputes concerning patent applications, issued patents or other proprietary rights;

the recruitment or departure of key personnel;

the level of expenses related to any of our product candidates or clinical development programs;

the results of our efforts to in-license or acquire additional product candidates or products;

actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

variations in our financial results or those of companies that are perceived to be similar to us;

fluctuations in the valuation of companies perceived by investors to be comparable to us;

inconsistent trading volume levels of our shares;

announcement or expectation of additional financing efforts;


sales of our common stock by us, our insiders or our other stockholders;

changes in the structure of healthcare payment systems;

market conditions in the pharmaceutical and biotechnology sectors;

general economic, industry and market conditions; and

the other risks described in this “Risk Factors” section.

In addition, the stock markets in general, and the markets for biotechnology and pharmaceutical stocks in particular, have experienced significant volatility that has often been unrelated to the operating performance of particular companies, which has resulted in decreased stock prices for many companies. For example, negative publicity regarding drug pricing and price increases by pharmaceutical companies has negatively impacted, and may continue to negatively impact, the markets for biotechnology and pharmaceutical stocks. Likewise, as a result of significant changes in U.S. social, political, regulatory and economic conditions or in laws and policies governing foreign trade and health carehealthcare spending and delivery, including the possible repeal and/or replacement of all or portions of the Affordable Care Act or changes in tariffs and other restrictions on free trade stemming from U.S. and foreign government policies, or for other reasons, the financial markets could experience significant volatility that could also negatively impact the markets for biotechnology and pharmaceutical stocks. These market fluctuations may adversely affect the trading price of our common stock.

In the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price. Any such litigation brought against us could result in substantial costs and divert management’s attention and resources, which could result in delays of our clinical studies or our partners’ commercialization efforts.

Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

Our executive officers, directors and principal stockholders own a significant portion of our outstanding common stock. These stockholders may be able to determine the outcome of all matters requiring stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock. The interests of our significant stockholders may not always coincide with the interests of other stockholders and they may act in a manner that advances their best interests and not necessarily those of other stockholders, including seeking a premium value for their common stock, and might affect the market price for our common stock.

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Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. Moreover, certain holders of shares of our common stock will have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We have registered and intend to continue to register all shares of common stock that we may issue under our equity compensation plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates.


We have incurred and will continue to incur increased costs as a result of being a public company and our management expects to devote substantial time to public company compliance programs.

As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses. We are subject to the reporting requirements of the Exchange Act, which require, among other things, that we file with the SEC annual, quarterly and current reports with respect to our business and financial condition. In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and The Nasdaq Stock Market to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC has adopted and will adopt additional rules and regulations, such as mandatory “say on pay” voting requirements, that now apply to us. Stockholder activism, the current political environment and the potential for future regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.

The rules and regulations applicable to public companies have substantially increased our legal and financial compliance costs and make some activities more time-consuming and costly. To the extent these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. The increased costs will decrease our net income or increase our net loss and may require us to reduce costs in other areas of our business or increase the prices of our products or services.

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be the sole source of potential gain for our stockholders.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for our stockholders for the foreseeable future.

Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

We expect that significant additional capital will be needed in the future to continue our planned operations. To raise capital, we may sell substantial amounts of common stock or securities convertible into or exchangeable for common stock in one or more transactions at prices and in a manner we determine from time to time. These future issuances of common stock or common stock-related securities, together with the exercise of outstanding options or warrants, and any additional shares issued in connection with acquisitions or in-licenses, if any, may result in material dilution to our investors. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to those of holders of our common stock. To the extent equity valuations, including the trading price of our common stock, are depressed as a result of economic disruptions or other factors, the potential magnitude of this dilution will increase. Pursuant to our equity incentive plans, our compensation committee is authorized to grant equity-based incentive awards to our employees, non-employee directors and consultants. Future grants of RSUs, options and other equity awards and issuances of common stock under our equity incentive plans will result in dilution and may have an adverse effect on the market price of our common stock.

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Some terms of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders and may prevent attempts by our stockholders to replace or remove our current management.

Our amended and restated certificate of incorporation or Certificate(Certificate of Incorporation,Incorporation) and amended and restated bylaws or Bylaws,(Bylaws), as well as Delaware law, could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, or remove our current management. These include terms that:

permit our board of directors to issue up to 20,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate;
provide that all vacancies on our board of directors, including as a result of newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;
establish that our board of directors is divided into three classes, with each class serving three-year staggered terms, which makes it more difficult to replace a majority of our directors in a short period of time;
require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and not be taken by written consent;
provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide advance notice in writing, and also specify requirements as to the form and content of a stockholder’s notice;
not provide for cumulative voting rights, thereby allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election; and
provide that special meetings of our stockholders may be called only by our board of directors, the chairperson of our board of directors or our chief executive officer.

permit our board of directors to issue up to 20,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate;

provide that all vacancies on our board of directors, including as a result of newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;


establish that our board of directors is divided into three classes, with each class serving three-year staggered terms, which makes it more difficult to replace a majority of our directors in a short period of time;

require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and not be taken by written consent;

provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide advance notice in writing, and also specify requirements as to the form and content of a stockholder’s notice;

not provide for cumulative voting rights, thereby allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election; and

provide that special meetings of our stockholders may be called only by our board of directors, the chairperson of our board of directors or our chief executive officer.

Any of the factors listed above may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, who are responsible for appointing the members of our management.

In addition, because we are incorporated in Delaware, we are governed by Section 203 of the Delaware General Corporation Law, which may discourage, delay or prevent someone from acquiring us or merging with us whether or not it is desired by or beneficial to our stockholders. Under Delaware law, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction. Any term of our Certificate of Incorporation or Bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

Our Bylaws designate a state or federal court located within the State of Delaware as the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our current or former directors, officers, stockholders, or other employees.

Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us under Delaware law, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, or other employee of the Company to us or our stockholders, (iii) any action asserting a claim against us or any of our directors, officers, or other employees arising pursuant to any provision of the DGCL or our Certificate of Incorporation or Bylaws (as either may be amended from time to time), (iv) any action asserting a claim against us governed by the internal affairs doctrine, or (v) any other action asserting an “internal corporate claim,” as defined under Section 115 of the DGCL. The forgoing provisions do not apply to any claims arising under the Securities Act and, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the sole and exclusive forum for resolving any action asserting a claim arising under the Securities Act.

These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our current or former directors, officers, or other employees, which may discourage lawsuits with respect to such claims. There is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings. It is possible that a court could find

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these types of provisions to be inapplicable or unenforceable, and if a court were to find the choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us and our business. In the event securities or industry analysts who cover us downgrade our stock or publish unfavorable research about us or our business, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

General Risk Factors

Our future success depends on our ability to retain our executive officers and to attract, retain and motivate qualified personnel.

We are highly dependent upon our executive officers and other key employees and the loss of the services of any of our executive officers or other key employees, including scientific, technical or management personnel, could impede the achievement of our corporate objectives. In August 2022, we announced a reduction of our workforce by approximately 20% across all areas of our company, including members of management. Losing members of management and other key personnel subjects us to a number of risks, including the failure to coordinate responsibilities and tasks, the necessity to create new management systems and processes, the impact on corporate culture, and the retention of historical knowledge.

Our success depends on our ability to recruit, retain, manage and motivate our employees. Although we enter into employment agreements or offer letters with our employees, these documents provide for “at-will” employment, which means that any of our employees could leave our employment at any time, with or without notice. Competition for skilled personnel in our industry and geographic regions is intense and may limit our ability to hire and retain qualified personnel on acceptable terms or at all. To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have provided equity awards that vest over time. The value to employees of equity awards may be significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract more lucrative offers from other companies.

Our relationships with customers and third party payors will be subject to applicable anti-kickback, fraud and abuse, privacy and other laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers, including physicians, and third party payors will play a primary role in the recommendation and prescription of our product and any product candidates for which we obtain regulatory approval. Our current and future arrangements with third party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we conduct research and would market, sell and distribute our products. As a biopharmaceutical company, even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business. If we obtain FDA approval of any of our product candidates and our partners begin commercializing those products in the United States, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase. These laws may impact, among other things, our current activities with principal investigators and research patients, as well as proposed and future sales, marketing and education programs, distribution agreements, discounting, commission compensation, certain patient support offerings, and other business arrangements generally. In addition, the approval and commercialization of our product and any of our product candidates outside the United States will also likely subject us to foreign equivalents of the healthcare laws mentioned here, among other foreign laws. Restrictions under applicable federal and state healthcare laws and regulations that may affect certain business arrangements and our ability to operate include, but are not limited to, the following:

the federal healthcare Anti-Kickback Statute, a criminal law that governs, for example, our marketing practices, educational programs, pricing policies, and relationships with healthcare providers or other entities, by prohibiting, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual

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for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid;
the FDCA and PHSA, which prohibit the misbranding and adulteration of biological products that are regulated as drugs, and which regulate the marketing of biological products;
federal civil and criminal false claims laws, including the civil False Claims Act, which can be enforced through civil whistleblower or qui tam actions, and civil monetary penalty laws impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment or approval that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
provisions enacted under the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) impose criminal and civil liability for knowingly and willfully executing or attempting to execute, a scheme or artifice to defraud any healthcare benefit program and also impose criminal liability for, among other things, knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services;
HIPAA, as amended by HITECH also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates and their subcontractors that use, disclose or otherwise process individually identifiable health information;
the federal Physician Payments Sunshine Act, implemented as the Open Payments Program, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to CMS information related to payments and other transfers of value to U.S.-licensed physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives and U.S. teaching hospitals, and ownership and investment interests held by physicians and their immediate family members and applicable group purchasing organizations;
state and foreign laws and regulations that are analogous to, and may be broader in scope than, the federal laws and regulations described in this risk factor, such as state anti-kickback and false claims laws, may apply to sales or marketing or other arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers; and
state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; some state laws require drug manufacturers to report information regarding pricing and marketing information related to payments and other transfers of value to physicians and other healthcare providers as well as those that require the registration of pharmaceutical sales representatives; and some other state laws require the protection of the privacy and security of health information, which may differ from each other in significant ways and often are not preempted by HIPAA.

Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government-funded healthcare programs, such as Medicare and Medicaid, disgorgement, additional reporting requirements or oversight if we become subject to a corporate integrity agreement or similar agreement, and the curtailment or restructuring of our operations, reputational harm, contractual damages, and diminished profits and future earnings, any of which could adversely affect our ability to operate our business and our results of operations. If any physicians or other healthcare providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs.

Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.

We are exposed to the risk of employee fraud or other misconduct, including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, provide accurate information to the FDA or comparable foreign regulatory authorities, comply with manufacturing standards we have established, comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign

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regulatory authorities, report financial information or data accurately or disclose unauthorized activities to us. Employee misconduct could also involve the improper use of information obtained in the course of clinical studies, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.

Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.

We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical studies and will face an even greater risk if we commercially sell any products that we may develop. Product liability claims may be brought against us by subjects enrolled in our clinical studies, patients, healthcare providers or others using, administering or selling our products. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

decreased demand for any product candidates or products that we may develop;
clinical holds or termination of clinical study sites or entire study programs;
injury to our reputation and significant negative media attention;
withdrawal of clinical study participants;
significant costs to defend the related litigation;
substantial monetary awards to study subjects or patients;
loss of revenue;
diversion of management and scientific resources from our business operations; and
the inability to commercialize any products that we may develop.

We currently hold product liability insurance coverage at a level that we believe is customary for similarly situated companies and adequate to provide us with insurance coverage for foreseeable risks, but which may not be adequate to cover all liabilities that we may incur. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. As deemed necessary, we may expand our insurance coverage for products to include the sale of commercial products if we obtain regulatory approval for our product candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products that receive regulatory approval. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.

If we and our third party manufacturers fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We and our third party manufacturers are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our or our third party manufacturers’ use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

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Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials with a policy limit that we believe is customary for similarly situated companies and adequate to provide us with insurance coverage for foreseeable risks, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological or hazardous materials.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions, which could adversely affect our business, financial condition, results of operations and prospects.

The actual or perceived failure by us, our customers, or vendors to comply with increasingly stringent laws, regulations and contractual obligations relating to privacy, data protection, and data security could harm our reputation, and subject us to significant fines and liability.

We are or may become subject to numerous domestic and foreign laws and regulations regarding privacy, data protection, and data security, the scope of which is changing, subject to differing applications and interpretations and may be inconsistent among countries, or conflict with other rules. We are also subject to the terms of our contractual obligations to customers and third parties related to privacy, data protection, and data security. The actual or perceived failure by us, our customers, our vendors, or other relevant third parties to address or comply with these laws, regulations, and obligations could increase our compliance and operational costs, expose us to regulatory scrutiny, actions, fines and penalties, cause regulators to reject, limit or disrupt our clinical trial activities, result in reputational harm, lead to a loss of customers, reduce the use of our products, result in litigation and liability, and could otherwise cause a material adverse effect on our business, financial condition, and results of operations.

For example, the EU adopted the General Data Protection Regulation (EU) 2016/679 (EU GDPR), in May 2018 which introduced strict requirements for the processing of personal information of individuals (or data subjects). The EU GDPR governs the collection, use, disclosure, transfer and other processing of personal information and has direct effect in all EU Member States and extraterritorial effect where organizations outside of the European Economic Area (EEA)process personal information of individuals in the EEA in relation to the offering of goods or services to those individuals (the “targeting test”) or monitoring of their behavior (the “monitoring test”). As such, the EU GDPR applies to us to the extent we are established in an EU Member State, we are processing personal information in the context of an establishment in an EU Member State or we meet the requirements of either the targeting test or the monitoring test.

The EU GDPR imposes onerous and comprehensive privacy, data protection, and data security obligations onto controllers and processors, including, as applicable: (i) contractual privacy, data protection, and data security commitments, including the requirement to implement appropriate technical and organizational measures to safeguard personal information processed; (ii) establishing means for individuals to exercise their data protection rights (e.g., the right to erasure of personal information); (iii) limitations on retention and the amount of personal information processed; (iv) additional requirements pertaining to sensitive information (such as health data); (v) data breach notification requirements to supervisory authorities without undue delay (and no later than 72 hours where feasible) and/or concerned individuals; (vi) enhanced requirements for obtaining valid consent from data subjects; (vii) obligations to consider data protection as any new products or services are developed; and (viii) the provisions of more detailed privacy notices for clinical trial subjects and investigators. The EU GDPR also provides that EU Member States may introduce further laws and regulations limiting the processing of genetic, biometric, or health data, which could limit our ability to collect, use and share EU personal information, cause our compliance costs to increase, require us to change our practices, adversely impact our business, and harm our financial condition.

The EU GDPR also restricts the transfer of personal information from the EEA to the United States and other countries that the European Commission does not recognize as having “adequate” data protection laws unless the parties to the transfer have implemented specific safeguards to protect the transferred personal information. Data protection laws in the UK (as discussed below) and Switzerland impose similar restrictions. One of the primary safeguards allowing U.S. companies to import personal information from the EU and Switzerland has historically been certification to the EU-U.S. Privacy Shield framework, which is administered by the U.S. Department of Commerce, and Swiss-U.S. Privacy Shield framework respectively. However, the EU-U.S. Privacy Shield framework was invalidated as a mechanism to legitimize international transfers in July 2020 in the “Schrems II” decision handed down by the Court of Justice of the EU (CJEU). Similarly, the Swiss-U.S. Privacy Shield framework was declared as inadequate by the Swiss Federal Data Protection and Information Commissioner in light of the Schrems II decision. Moreover, new versions of the European Commission’s Standard Contractual Clauses (new EU SCCs), now the primary safeguard available for the lawful transfer of personal information from the EU to the U.S., were adopted in June 2021, which impose onerous obligations on the contracting parties. These new EU SCCs must be used in all new contracts going forward (where there are restricted transfers of personal information), with existing contracts entered into before September 27, 2021 required to be updated by December 27, 2022. As such,

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any transfers by us or our vendors of personal information from the EU may not comply with European data protection law, may increase our exposure to the EU GDPR’s heighted sanctions for violations of its cross-border data transfer restrictions, and may reduce demand from companies subject to European data protection laws.

Assisting our customers, partners, and vendors in complying with the EU GDPR, or complying with the EU GDPR ourselves, may cause us to incur substantial operational costs or require us to change our business practices. There may also be a risk that the measures will not be implemented correctly or that individuals within the business will not be fully compliant with the required procedures.

On October 7, 2022, the U.S. President introduced an executive order to facilitate a new Trans-Atlantic Data Privacy Framework, which is the new EU-US adequacy mechanism following Privacy Shield. On December 13, 2022, the European Commission also published its draft adequacy decision which stated that the new executive order and Trans-Atlantic Data Privacy Framework is able to meet the concerns raised in Schrems II. If the draft adequacy decision is approved by the European Commission and implemented, the agreement will facilitate the transatlantic flow of personal information and provide additional safeguards to data transfer mechanisms (including EU SCCs and Binding Corporate Rules) for companies transferring personal information from the EU to the U.S. However, before parties rely on the new Trans-Atlantic Data Privacy Framework there are still legislative and regulatory steps that must be undertaken in both the EU and the U.S. The Schrems II decision also led to a requirement for companies to carry out a transfer privacy impact assessment which, among other things, assesses laws governing access to personal information in the recipient country and considers whether supplementary measures that provide privacy protections additional to those under the SCCs will need to be implemented to ensure an “essentially equivalent” level of data protection to that afforded in the EU. Therefore, at present the new EU SCCs are still the primary safeguard available for personal information transfers from the EU to the U.S. As such, the current legal position may have implications for our cross-border data flows and may result in compliance costs.

Complying with the EU GDPR involves rigorous and time-intensive processes that may cause us to incur certain operational costs and/or require us to change our business practices. There may also be a risk that the measures will not be implemented correctly or that individuals within the business will not be fully compliant with the required procedures.

Companies that must comply with the EU GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements, potential significant fines for non-compliance of up to the greater of €20 million or 4% of consolidated global turnover and restrictions or prohibitions on data processing. The EU GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations of the EU GDPR.

Further, following the United Kingdom’s exit from the EU, known as Brexit, the EU GDPR’s obligations continue to apply to the United Kingdom in substantially unvaried form under the so called “UK GDPR” by virtue of section 3 of the European Union (Withdrawal) Act 2018. The UK GDPR exists alongside the UK Data Protection Act 2018 which implements certain derogations in the UK GDPR into English law. Under the UK GDPR, companies established in the United Kingdom and companies not established in the United Kingdom but who process personal information in relation to the offering of goods or services to individuals in the United Kingdom, or to the monitoring of their behavior will be subject to the UK GDPR – the requirements of which are (at this time) largely aligned with those under the EU GDPR and as such, may lead to similar compliance and operational costs with potential fines of up to the greater of £17.5 million or 4% of consolidated global turnover. As a result, we are potentially exposed to two parallel data protection regimes, each of which authorizes fines and the potential for divergent enforcement actions. It should also be noted that the UK Information Commissioner’s Office (ICO) has published its own form of EU SCCs known as the UK International Data Transfer Agreement together with an International Data Transfer Addendum to the new EU SCCs. The ICO has also published its version of the transfer impact assessment and information guidance on international transfers, although entities may choose to adopt either the EU or UK style transfer impact assessment. In terms of international data transfers between the UK and the U.S., it is understood that the UK and the U.S. are negotiating an adequacy agreement.

Other countries outside of Europe and the UK continue to enact or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our services and operating our business. For example, Brazil recently enacted the General Data Protection Law (Lei Geral de Proteção de Dados Pessoais or LGPD) (Law No. 13,709/2018), which broadly regulates the processing of personal information and imposes compliance obligations and penalties comparable to those of the EU GDPR and the UK GDPR.

Regulation of privacy, data protection and data security has also become more stringent in the United States. For example, the California Consumer Privacy Act (CCPA), which took effect on January 1, 2020, give California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA may increase our compliance costs and potential liability. The CCPA

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was substantially expanded on January 1, 2023, when the California Privacy Rights Act (CPRA) amendments to the CCPA became fully operative. The CPRA amendments, among other things, give California residents the ability to limit use of certain sensitive personal information, further restrict the use of cross-contextual advertising, establish restrictions on the retention of personal information, expand the types of data breaches subject to the CCPA’s private right of action, provide for increased penalties for CCPA violations concerning California residents under the age of 16, and establish a new California Privacy Protection Agency to implement and enforce the new law. Other states, such as Colorado, Connecticut, Utah, and Virginia, have already passed similar comprehensive privacy laws that have or will also go into effect in 2023, and several more are considering their own versions of privacy legislation, demonstrating a strong trend towards more stringent state privacy, data protection and data security legislation in the U.S., which could increase our potential liability and adversely affect our business.

Compliance with applicable U.S. and foreign privacy, data protection, and data security laws and regulations may result in government investigations or cause us to incur substantial costs or require us to change our business practices and compliance procedures in a manner adverse to our business. Moreover, complying with these various laws could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions. Failure to comply with U.S. and foreign privacy, data protection, and data security laws and regulations could result in government investigations or enforcement actions (which could include civil or criminal penalties), private litigation, claims, or public statements against us and/or adverse publicity and could negatively affect our operating results and business. Claims that we have violated individuals’ privacy rights, failed to comply with privacy, data protection, and data security laws, or breached our contractual obligations, even if we are not found liable, could be expensive and time consuming to defend, could result in adverse publicity and could have a material adverse effect on our business, reputation, financial performance and business, and operations. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations and policies that are applicable to the business of our customers may limit the adoption and use of, and reduce the overall demand for, our products and services.

If our security measures are compromised, or our information technology systems or those of our vendors, and other relevant third parties fail or suffer security breaches, loss or leakage of data, and other disruptions, this could result in a material disruption of our services, compromise sensitive information related to our business, harm our reputation, trigger our breach notification obligations, prevent us from accessing critical information, and expose us to liability or other adverse effects to our business.

In the ordinary course of our business, we may collect, process, and store proprietary, confidential, and sensitive information, including personal information (including health information), intellectual property, trade secrets, and proprietary business information owned or controlled by ourselves or other parties. It is critical that we do so in a secure manner to maintain the confidentiality, integrity, and availability of such information. We face several risks relative to protecting this critical information, including loss of access risk, inappropriate use or disclosure, inappropriate modification, and the risk of our being unable to adequately monitor, audit and modify our controls over our critical information. This risk extends to the third party service providers who handle elements of our operations.

We, our partners, our CROs, our CMOs, and other business vendors on which we rely depend on information technology and telecommunication systems for significant elements of our operations, including, for example, systems handling human resources, financial reporting and controls, regulatory compliance and other infrastructure operations. Notwithstanding the implementation of security measures, given the size and complexity of our information technology systems and those of our third party vendors and other contractors and consultants, and the increasing amounts of proprietary, confidential and sensitive information that they maintain, such information technology systems are potentially vulnerable to breakdown, service interruptions, system malfunction, natural disasters, terrorism, war and telecommunication and electrical failures, as well as security breaches from inadvertent or intentional actions by our personnel, third party vendors, contractors, consultants, business partners, and/or other third parties, or from cyber-attacks by malicious third parties (including the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering, and other means to affect service reliability and threaten the confidentiality, integrity, and availability of information), which may compromise our system infrastructure, or that of our third party vendors and other contractors and consultants, or lead to data leakage. The risk of a security breach or disruption, particularly through accidental actions or omissions by trusted insiders, cyber attacks or cyber intrusions, including by computer hackers, viruses, foreign governments, and cyber terrorists, has generally increased as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased. Additionally, the increased usage of computers operated on home networks due to the shelter-in-place or similar restrictions related to the COVID-19 pandemic may make our systems more susceptible to security breaches. For example, in March 2021, MSK provided notice that MSK was one of many customers impacted by a data breach at Accellion, Inc., which provides a document-sharing system. MSK subsequently notified us that certain documents related to one of our discontinued programs were subject to the breach, which compromise we deemed immaterial. Although we take measures to protect sensitive data from unauthorized access, use or disclosure, we and our third party service providers frequently defend against and respond to cyber attacks, and our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to personnel error, malfeasance, or other malicious or inadvertent disruptions. Any such breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, manipulated, publicly disclosed, lost, or stolen.

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Failures or significant downtime of our information technology or telecommunication systems or those used by our third party service providers could cause significant interruptions to our operations, including preventing us from conducting tests or research and development activities and preventing us from managing the administrative aspects of our business. For example, the loss of clinical study data from completed, ongoing or planned clinical studies could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. In addition, sophisticated operating system software and applications that we procure from third parties may contain defects in design or manufacture, including vulnerabilities, “bugs” and other problems that could unexpectedly interfere with the operation of our networks, system, or our processing of personal information or other data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, the further development of our product candidates could be delayed and our business could be otherwise adversely affected.

We may not be able to anticipate all types of security threats, and we may not be able to implement preventative measures effective against all such security threats. We also may not be effective in responding to, containing or mitigating the risks of an attack. The techniques used by cyber criminals change frequently, may not be recognized until launched, and can originate from a wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations, hostile foreign governments or agencies, or cybersecurity researchers. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or those of our third party vendors and other contractors and consultants, or inappropriate disclosure of confidential or proprietary information, we could incur liability and reputational damage and the further development and commercialization of our products and services could be delayed.

The costs related to significant security breaches or disruptions could be material and could exceed the limits of the cybersecurity insurance we maintain, if any, against such risks. If the information technology systems of our third party vendors and other contractors and consultants become subject to disruptions or security breaches, we may have insufficient recourse against such third parties and may have to expend significant resources to mitigate the impact of such an event, and to develop and implement protections to prevent future events of this nature from occurring.

We cannot assure you that our data protection efforts and our investment in information technology will prevent significant breakdowns, data leakages, breaches in our systems, or those of our third party vendors and other contractors and consultants, or other cyber incidents that could have a material adverse effect upon our reputation, business, operations, or financial condition. For example, if such an event were to occur and cause interruptions in our operations, or those of our third party vendors and other contractors and consultants, it could result in a material disruption of our programs and the development of our services and technologies could be delayed. Furthermore, significant disruptions of our internal information technology systems or those of our third party vendors and other contractors and consultants, or security breaches could result in the loss, misappropriation, and/or unauthorized access, use, or disclosure of, or the prevention of access to, confidential information (including trade secrets or other intellectual property, proprietary business information, and personal information), which could result in financial, legal, business, and reputational harm to us. For example, any such event that leads to unauthorized access, use, or disclosure of personal information, including personal information regarding our customers or employees, could harm our reputation directly, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information, which could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business.

Although we take measures to protect sensitive data from unauthorized access, use or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to personnel error, malfeasance, or other malicious or inadvertent disruptions. Any such breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, manipulated, publicly disclosed, lost, or stolen.

Any such access, breach, or other loss of information could result in legal claims or proceedings, liability under domestic or foreign privacy, data protection and data security laws such as HIPAA and HITECH, and penalties. Notice of certain security breaches must be made to affected individuals, the Secretary of HHS, and for extensive breaches, notice may need to be made to the media or state attorneys general. Such notice could harm our reputation and our ability to compete. Although we have implemented security measures, such data is currently accessible through multiple channels, and there is no guarantee we can protect our data from breach. Unauthorized access, loss or dissemination could also damage our reputation or disrupt our operations, including our ability to conduct our analyses, conduct research and development activities, collect, process and prepare company financial information, and manage the administrative aspects of our business.

Penalties for violations of these laws vary. For instance, penalties for failure to comply with a requirement of HIPAA and HITECH vary significantly, and include significant civil monetary penalties and, in certain circumstances, criminal penalties with fines up to $250,000 per violation and/or imprisonment. A person who knowingly obtains or discloses individually identifiable health information in violation of HIPAA may face a criminal penalty of up to $50,000 and up to one-year imprisonment. The criminal

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penalties increase if the wrongful conduct involves false pretenses or the intent to sell, transfer or use identifiable health information for commercial advantage, personal gain or malicious harm.

Further, various states, such as California and Massachusetts, have implemented similar privacy laws and regulations, such as the California Confidentiality of Medical Information Act, that impose restrictive requirements regulating the use and disclosure of health information and other personally identifiable information. These laws and regulations are not necessarily preempted by HIPAA, particularly if a state afford greater protection to individuals than HIPAA. Where state laws are more protective, we have to comply with the stricter provisions. In addition to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to individuals who believe their personal information has been misused. California’s patient privacy laws, for example, provide for penalties of up to $250,000 and permit injured parties to sue for damages. Similarly, the CCPA allows consumers a private right of action when certain personal information is subject to unauthorized access and exfiltration, theft or disclosure due to a business’ failure to implement and maintain reasonable security procedures. The interplay of federal and state laws may be subject to varying interpretations by courts and government agencies, creating complex compliance issues for us and data we receive, use and share, potentially exposing us to additional expense, adverse publicity and liability. Further, as regulatory focus on privacy issues continues to increase and laws and regulations concerning the protection of personal information expand and become more complex, these potential risks to our business could intensify. Changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, for the treatment of genetic data, along with increased customer demands for enhanced data security infrastructure, could greatly increase our cost of providing our products, decrease demand for our products, reduce our revenues and/or subject us to additional liabilities.

Changes in tax laws or regulations that are applied adversely to us or our customers may have an adverse effect on our business, cash flows, financial condition or results of operations.

We are subject to income and non-income based taxes in the U.S. and various jurisdictions outside the U.S. Our business and financial condition could be adversely affected by changes in federal, state, local or international tax laws, changes in taxing jurisdictions’ administrative interpretations, decisions, policies and positions, changes in accounting principles, applicability of withholding taxes, and changes to our business operations. For example, U.S. legislations such as the Tax Act, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and the American Rescue Act, made significant changes to the corporate tax rate, the potential realization of net deferred tax assets relating to our operations, taxation of foreign earnings, and deductibility of expenses, and could have a material impact on our financial position or results of operations.

Our ability to use net operating loss carryforwards and certain tax assets to offset future taxable income or taxes may be subject to certain limitations.

Our ability to use our federal and state net operating losses (NOLs) and certain other tax attributes to offset potential future taxable income and related income taxes that would otherwise be due is dependent upon our generation of future taxable income, and we cannot predict with certainty when, or whether, we will generate sufficient taxable income to use all of our NOLs or other tax attributes.

As of December 31, 2022, we had significant U.S. federal and state NOLs due to prior period losses. Under the Tax Cuts and Jobs Act (Tax Act), federal NOLs generated in tax years beginning on or after January 1, 2018 may be carried forward indefinitely, but the utilization of such federal NOLs is limited to 80% of current year taxable income. The CARES Act temporarily suspended this 80% taxable income limitation, allowing an NOL carryforward to fully offset taxable income in tax years beginning before January 1, 2021 which had no impact on our financial statements. It remains uncertain if, and to what extent, various states will conform to the Tax Act or the CARES Act. Neither the Tax Act nor the CARES Act had a material impact to our financial statements.

In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the Code), our ability to utilize these NOLs and other tax attributes, such as federal tax credits, in any taxable year may be limited if we have experienced an “ownership change”. Generally, a Section 382 ownership change occurs if one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a three-year testing period. Similar rules may apply under state tax laws. We performed a Section 382 analysis of transactions in our stock through December 31, 2022 and concluded that we have experienced ownership changes since inception that we believe under Section 382 of the Code will result in limitations on our ability to use certain pre-change NOLs and credits. In addition, we may experience subsequent ownership changes as a result of future equity offerings or other changes in the ownership of our stock, some of which are beyond our control. As a result, the amount of the NOLs and tax credit carryforwards presented in our financial statements could be limited and, in the case of NOLs generated before January 1, 2018 may expire unused. Any such material limitation or expiration of our NOLs may harm our future operating results by effectively increasing our future tax obligations. Similar provisions of state tax law may also apply to limit the use of accumulated state tax attributes. Regulatory changes, such as suspensions on the use of NOLs,

75


or other unforeseen reasons, may cause our existing tax attributes to expire, decrease in value or otherwise be unavailable to offset future income tax liabilities.

Business disruptions could seriously harm our future revenues and financial condition and increase our costs and expenses.

Our operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured. Two of our corporate locations are located in Thousand Oaks, California, an area prone to earthquakes and fires. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. We rely on third party manufacturers to produce our product and product candidates. Our ability to obtain clinical supplies of our product and product candidates could be disrupted, if the operations of these suppliers are affected by a man-made or natural disaster or other business interruption, including, for example, the ongoing COVID-19 pandemic.

76


Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our corporate headquarters are located in South San Francisco,Thousand Oaks, California and consists of approximately 13,67051,160 square feet of office space under a lease agreement that expires in AprilFebruary 2026.

In March 2021, we entered into a new lease agreement for approximately 33,659 square feet of office, lab and warehouse space in Thousand Oaks, California. The initial 10.5-year term of this lease commenced in August 2021. We alsohave the option to extend this lease for two additional five-year periods after the initial term. Additionally, in 2021, we entered into an amended lease agreement for our office and lab space in Aurora, Colorado, to add additional lab space.

In April 2022, we assigned our lease of approximately 90,580 square feet of office, lab and cellular therapy manufacturing space in Thousand Oaks, California, which expires in April 2033, to FDB as part of the Fujifilm Transaction. We remain joint and severally liable for obligations related to the assigned lease.

We lease office space in South San Francisco, California, under a non-cancellable lease for which the initial 15-year term commenced in February 2018. Additionally, in November 2018,agreement through May 2025. In October 2022, we entered into a leasesub-lease agreement with a third party for approximately 51,160 square feet ofthis office spacespace. The sub-lease term commenced in November 2022 and expires in May 2025, with no option to extend the sub-lease term.

We use our leased spaces in Thousand Oaks, California that expiresand Aurora, Colorado for our translational and pre-clinical sciences, analytical development and process science functions. These facilities support our product pipeline and process development and leverage our allogeneic cell therapy platform to drive innovation. We believe our existing facilities are in February 2026.good operating condition and suitable for the conduct of our business.

Item 3. Legal Proceedings

None.

Item 4. Mine Safety Disclosures

Not applicable.


77


PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock has been listed on The Nasdaq Global Select Market under the symbol “ATRA” since October 16, 2014. Prior to that time, there was no public market for our common stock.

On February 18, 2020,January 31, 2023, there were 95 stockholders of record of our common stock. We are unable to estimate the total number of stockholders represented by these record holders, as many of our shares are held by brokers and other institutions on behalf of our stockholders.

Dividend Policy

We have never declared or paid cash dividends on our capital stock. We currently intend to retain anyall of our future earnings, for use inif any, to finance the operationgrowth and development of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any further determination to pay dividends on our capital stock will be at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors considers relevant.

Securities Authorized for Issuance under Equity Compensation Plans

Information about our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K.


Stock Performance Graph

The following graph compares the cumulative total return on an indexed basis of a $100 investment, made at the beginning of the five-year period ended December 31, 2019,2022, in the Company’s common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index.

This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing of Atara Biotherapeutics, Inc. under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such filing. The past performance of our common stock is not an indication of future performance.

78


COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN

img120008200_1.jpg 

As of December 31,

 

Atara Biotherapeutics, Inc.

 

 

Nasdaq Composite

 

 

Nasdaq Biotechnology

 

2017

 

 

100.00

 

 

 

100.00

 

 

 

100.00

 

2018

 

 

191.93

 

 

 

96.12

 

 

 

90.68

 

2019

 

 

90.99

 

 

 

129.97

 

 

 

112.81

 

2020

 

 

108.45

 

 

 

186.69

 

 

 

141.78

 

2021

 

 

87.07

 

 

 

226.63

 

 

 

140.88

 

2022

 

 

18.12

 

 

 

151.61

 

 

 

125.52

 

As of December 31,

 

Atara Biotherapeutics, Inc.

 

 

Nasdaq Composite

 

 

Nasdaq Biotechnology

 

2014

 

$

100.00

 

 

$

100.00

 

 

$

100.00

 

2015

 

 

98.73

 

 

 

105.73

 

 

 

111.42

 

2016

 

 

53.08

 

 

 

113.66

 

 

 

87.26

 

2017

 

 

67.66

 

 

 

145.76

 

 

 

105.64

 

2018

 

 

129.87

 

 

 

140.10

 

 

 

95.79

 

2019

 

 

61.57

 

 

 

189.45

 

 

 

119.17

 


Item 6. Selected Consolidated Financial Data[Reserved]

The following selected consolidated financial data of the Company for each of the periods indicated are derived from the Company’s audited consolidated financial statements. The consolidated financial statements of the Company as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017, and the related reports of the independent registered public accounting firm are included elsewhere in this Annual Report on Form 10-K. The data presented below should be read in conjunction with the Company’s financial statements, the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this report.

Consolidated Statements of Operations and

 

Year ended December 31,

 

Comprehensive Loss Data:

 

2019

 

 

2018

 

 

2017

 

 

2016

 

 

2015

 

 

 

(In thousands, except per share amounts)

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

216,097

 

 

$

167,457

 

 

$

81,206

 

 

$

56,514

 

 

$

41,618

 

General and administrative

 

 

79,584

 

 

 

69,654

 

 

 

40,326

 

 

 

24,728

 

 

 

16,830

 

Total operating expenses

 

 

295,681

 

 

 

237,111

 

 

 

121,532

 

 

 

81,242

 

 

 

58,448

 

Loss from operations

 

 

(295,681

)

 

 

(237,111

)

 

 

(121,532

)

 

 

(81,242

)

 

 

(58,448

)

Interest and other income, net

 

 

4,717

 

 

 

6,368

 

 

 

2,027

 

 

 

2,203

 

 

 

1,218

 

Loss before provision for income taxes

 

 

(290,964

)

 

 

(230,743

)

 

 

(119,505

)

 

 

(79,039

)

 

 

(57,230

)

Provision for (benefit from) income taxes

 

 

12

 

 

 

(44

)

 

 

(14

)

 

 

10

 

 

 

(9

)

Net loss

 

$

(290,976

)

 

$

(230,699

)

 

$

(119,491

)

 

$

(79,049

)

 

$

(57,221

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

 

560

 

 

 

(189

)

 

 

32

 

 

 

335

 

 

 

(418

)

Comprehensive loss

 

$

(290,416

)

 

$

(230,888

)

 

$

(119,459

)

 

$

(78,714

)

 

$

(57,639

)

Basic and diluted net loss per common share

 

$

(5.67

)

 

$

(5.27

)

 

$

(4.00

)

 

$

(2.75

)

 

$

(2.24

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

Consolidated Balance Sheet Data:

 

2019

 

 

2018

 

 

2017

 

 

2016

 

 

2015

 

 

 

(In thousands)

 

Cash, cash equivalents and short-term investments

 

$

259,109

 

 

$

309,631

 

 

$

166,096

 

 

$

255,682

 

 

$

320,482

 

Working capital

 

$

236,249

 

 

$

281,510

 

 

$

144,544

 

 

$

250,878

 

 

$

314,888

 

Total assets

 

$

342,942

 

 

$

391,839

 

 

$

217,779

 

 

$

263,914

 

 

$

324,975

 

Long-term liabilities

 

$

15,418

 

 

$

13,003

 

 

$

12,269

 

 

$

503

 

 

$

166

 

Total stockholders' equity

 

$

290,781

 

 

$

338,857

 

 

$

177,864

 

 

$

253,736

 

 

$

315,100

 

Not Required.

79



Item 7. 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 audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion and other parts of this Annual 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 Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

Atara Biotherapeutics is a leading off-the-shelf,leader in T-cell immunotherapy, leveraging its novel allogeneic Epstein-Barr virus (EBV) T-cell platform to develop transformative therapies for patients with cancer and autoimmune disease. Tab-cel (tabelecleucel), our lead program in Phase 3 clinical development in the U.S., has received marketing authorization approval (MAA) for commercial sale in the European Union (EU) by the European Commission (EC) under the proprietary name Ebvallo™. We are the most advanced allogeneic T-cell immunotherapy company that is developing noveland intend to rapidly deliver off-the-shelf treatments forto patients with cancer, autoimmunehigh unmet medical need. Our platform leverages the unique biology of EBV T cells and viral diseases. We have several T-cell immunotherapies in clinical development and are progressinghas the capability to treat a next-generation allogeneicwide range of EBV-driven diseases or other serious diseases through incorporation of engineered chimeric antigen receptorreceptors (CARs) or T-cell receptors (TCRs). Atara is applying this one platform, that does not require TCR or CAR T program.HLA gene editing, to create a robust pipeline. Our strategic priorities are:

Tab-cel®: Atara’s most advanced T-cell immunotherapy program, tab-cel, has received MAA for commercial sale in the EU under the proprietary name Ebvallo and is partnered with Pierre Fabre Medicament (Pierre Fabre) for commercialization in Europe and potential commercialization, if approved, in select emerging markets. Tab-cel (tabelecleucel) is currently in Phase 3 development in the U.S. 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, and is currently in Phase 2 development; and
ATA3219: Allogeneic CAR T targeting CD19, currently in preclinical development, and being developed as a potential best-in-class product intended to target B-cell malignancies, 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.

In addition to the aforementioned strategic priorities, we also have a number of clinical and preclinical programs, including ATA2271, an autologous CAR T immunotherapy currently in Phase 1 development targeting solid tumors expressing the tumor antigen mesothelin; and ATA3271, an allogeneic CAR T immunotherapy currently in preclinical development targeting mesothelin.

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

ATA188: T-cell immunotherapy targeting EBV antigens believed to be important for the potential treatment of multiple sclerosis;

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

ATA3219: Allogeneic CAR T targeting CD19 as proof-of-concept for our next generation technologies and EBV T-cell CAR T platform.

Our T-cell immunotherapy platform includes the capability to progress both allogeneic and autologous programs and is potentially applicable to a broad array of targets and diseases. Our off-the-shelf, allogeneic T-cell platform allows for rapid delivery of a T-cell immunotherapy product that has been manufactured in advance 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.patient, requiring a complex logistics network. For tab-cel®,our allogeneic programs, we utilize a proprietary cell selection algorithm to select the appropriate set of cells for use based on a patient’s unique immune profile. This matchingOne of our contract manufacturing organizations (CMOs) has completed commercial production qualification activities for tab-cel and our other CMOs are currently in the process is designedof completing commercial production qualification activities for tab-cel while we build inventory according to allow our cellscommercial product supply strategy.

In October 2021, we entered into the Commercialization Agreement with Pierre Fabre (Pierre Fabre Commercialization Agreement), pursuant to be administered withoutwhich we granted to Pierre Fabre an exclusive, field-limited license to commercialize and distribute Ebvallo in Europe and select emerging markets in the pre-treatmentMiddle East, Africa, Eastern Europe and Central Asia following regulatory approval. We retain full rights to tab-cel in other major markets, including North America, Asia Pacific and Latin America. As contemplated by the Pierre Fabre Commercialization Agreement, we entered into (i) a Manufacturing and Supply Agreement (ii) a Pharmacovigilance Agreement (iii) and a Quality Agreement, in each case, with Pierre Fabre to further advance our partnership with Pierre Fabre. In September 2022, we amended the Pierre Fabre Commercialization Agreement to receive an additional $30 million milestone payment from Pierre Fabre following European Commission (EC) approval of Ebvallo for EBV+ PTLD and subsequent filing of the MAA transfer to Pierre Fabre, in exchange for, among other things, a reduction in: (i) royalties we are eligible to receive as a percentage of net sales of Ebvallo in the Territory, and (ii) the supply price mark up on Ebvallo purchased by Pierre Fabre. Additionally, we also agreed to extend the time period for provision of certain services to Pierre Fabre under the Pierre Fabre Commercialization Agreement. In December 2022, we sold a portion of our right to receive royalties and certain milestones in Ebvallo under the Pierre

80


Fabre Commercialization Agreement to HCR Molag Fund L.P (HCRx) for a total investment amount of $31.0 million, subject to a cap between 185% and 250% of the total investment amount by HCRx.

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. Collectively, the Bayer License Agreement, the Manufacturing and Supply Agreement and the Technology Transfer Agreement are referred to as the Bayer Agreements. In May 2022, Bayer notified us of its decision to terminate the Bayer Agreements, and on August 2, 2022, we entered into the Termination, Amendment and Program Transfer Agreement (Bayer Termination Agreement) with Bayer that is requiredterminated the Bayer Agreements and returned full product development rights for some therapiesATA2271 and ATA3271 to reduce monitoring following administration. In addition, our manufacturing facility is capableAtara effective as of producing multiple types of therapies and Atara MatchMe™, our proprietary T-cell order management platform, is being developed to provide patient care teams with access to therapy.July 31, 2022.

We have also entered into research collaborations with leading academic institutions such as Memorial Sloan Kettering Cancer Center or MSK,(MSK), the Council of the Queensland Institute of Medical Research or QIMR Berghofer,(QIMR Berghofer) and H. Lee Moffitt Cancer Center and Research Institute or Moffitt,(Moffitt) pursuant to acquirewhich we acquired rights to novel and proprietary technologies and programs.

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

Our manufacturing facilityresearch facilities in Thousand Oaks, California has the flexibility to manufacture multiple T-cell(ARC) and CAR T immunotherapies while integrating researchAurora, Colorado contain our translational and pre-clinical sciences, analytical development and process science functions to enable increased collaboration for rapidfunctions. These facilities support our product development. Our research andpipeline, process development and process and analytical development labs are currently supporting preclinical development activities. Our facility is designedleverage our allogeneic cell therapy platform to global regulatory standards, and the required facility commissioning and qualification activities to support clinical manufacturing are complete. Commercial production qualification activities for our facility are progressing well and, together with our contracted manufacturing partner, are aligned with our planned commercial product supply strategy.drive innovation.


In December 2019,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 ten 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 and product candidates exclusively from FDB. Based on our expectations of patients and demand for product in the EU, we believe our current inventory of Ebvallo is sufficient to supply commercial demand in the EU until the end of 2023.

We also work with Charles River Laboratories (CRL) pursuant to the Commercial Manufacturing Services Agreement or the Manufacturing Agreement, with Cognate, effective as of January 2020. The Manufacturing Agreement supersedes the DMSA Agreement with Cognate and governs similar manufacturing services provided for under the DMSA Agreement with similar terms. Specifically, pursuantthat we entered into in December 2019 (CRL MSA). Pursuant to the Manufacturing Agreement, CognateCRL MSA, CRL provides manufacturing services for our product and certain of our product candidates. The initialIn February 2023, we amended the CRL MSA to extend the term until the earlier of September 30, 2023 or receipt of certain batches of our product and product candidates.

We have non-cancellable minimum commitments for products and services, subject to agreements with a term of greater than one year, with clinical research organizations and CMOs.

In August 2022, we announced a reduction in workforce of approximately 20% of total workforce to focus our activities as a leaner organization centered on research and development to further advance our innovative pipeline, while reducing cash burn. The workforce reduction is expected to include total restructuring charges of approximately $6.0 million, comprised primarily of severance payments, wages for the Manufacturing Agreement runs until December 31, 202160-day notice period in accordance with the California Worker Adjustment and is renewable with Cognate’s approvalRetraining Notification Act and continuing health care coverage over a period of time after separation. In most cases, the severance payments were paid as a lump sum in October 2022. Certain of the notified employees had employment agreements which provided for an additional one-year period. We may terminateseparation benefits in the Manufacturing Agreement for convenience on six months’ written notice to Cognate, or immediately if Cognate is unable to performform of salary continuation; these benefits will be paid between October 2022 and November 2023. All of the services under the Manufacturing Agreement or fails to obtain or maintain certain necessary approvals. The Manufacturing Agreement includes standard mutual termination rights for uncured breach or insolvency, or a force majeure event preventing the performance of services for at least ninety days.severance costs represent cash expenditures. In connection with the entry into the Manufacturing Agreement,reduction in workforce, we and Cognate alsoexpect to realize reductions in annualized operating expenses of approximately $25.0 million by fiscal 2023 due to lower compensation-related costs.

In December 2022, we entered into a Fifth Amendmentpurchase and sale agreement (HCRx Agreement) with HCR Molag Fund, L.P. (HCRx), a Delaware limited partnership. Pursuant to the DMSA Agreement, which amended the expiration dateterms of the DMSAHCRx Agreement, we received a total investment amount of $31.0 million in exchange for HCRx being entitled to December 31, 2019.receive a portion of the tiered, sales-based royalties for Ebvallo, in amounts ranging from the mid-single digits to significant double digits, as well as certain milestone payments, both otherwise payable by Pierre Fabre to us under the Pierre Fabre Commercialization Agreement. The total royalties and milestones payable to HCRx under the HCRx Agreement are capped between 185% and 250% of the total investment amount by HCRx, dependent upon the timing of such royalties and milestones.

81


Financial Overview

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

Our net losses were $291.0$228.3 million, $230.7$340.1 million and $119.5$306.6 million for the years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively. As of December 31, 2019,2022, we had an accumulated deficit of $818.0 million.$1.7 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 December 31, 2019,2022, our cash, cash equivalents and short-term investments totaled $259.1$242.8 million, which we intend to use to fund our operations.

Financial OverviewRevenues

Revenues

We have never generated revenues from the commercial sale of products and have incurred losses since inception. We do not expectOur revenues to receive any revenuesdate are derived solely from any product candidates that we develop until we obtain regulatory approval and commercialize our products or enter into collaborative agreements with third parties.Bayer and Pierre Fabre, primarily related to upfront license fees, fees for research, process development and translational activities and technology transfer fees.

We expect that any revenue we generate from 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 and regulatory support 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;supplies, including expenses incurred under agreements with CMOs; 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;

continuing to enroll patients in our Phase 3 clinical study of tab-cel for the treatment of patients with EBV+ PTLD after HCT and SOT who have failed rituximab;

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

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

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

continuing development of ATA188 in PMS;

continuing development of ATA188 in progressive MS;

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 NPC and EBV+ cancers;

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

continuing to develop other preclinical product candidates; and

continuing to develop other preclinical 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 yearsyears..

82


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, includingincluding::

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 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;

future clinical study results;

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

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; 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; outside professional serviceservices costs, including legal, patent, human resources, audit and accounting services; other outside services and consulting costs, including those related to pre-commercial activities;costs; and information technology and facilities costs. We anticipate that our general and administrative expenses will continue to increase inoverhead expenses.

Gain on sale of ATOM Facility

The gain on sale of the future to support our continued research and developmentATOM Facility consists of the consideration received from FDB, less transaction costs and the potential commercializationcarrying value of one or more of our product candidates.assets sold.

Interest and Other Income, net

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


Provision for Income Taxes

Provision for income taxes consists primarily of income taxes in U.S. states and foreign jurisdictions. Our effective tax rate was 0% for the years ended December 31, 2022, 2021, and 2020.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses. On an on-going basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable in the circumstances, the results of which form

83


the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. Our significant judgments and estimates are detailed below, and our significant accounting policies are more fully described in Note 2 of the accompanying consolidated financial statements.statements.

Description

Judgments and Uncertainties

Effect if Actual Results Differ from Assumptions

Accrued Research and Development Expenses

As part of the process of preparing our financial statements, we are required to estimate and accrue expenses, the largest of which is related to research and development expenses, including those related to clinical studies and drug manufacturing. This process involves reviewing contracts and purchase orders, identifying and evaluating the services that have been performed on our behalf, and estimating the associated cost incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs.

Costs for preclinical studies, clinical studies and manufacturing activities are recognized based on an evaluation of our vendors’ progress towards completion of specific tasks, using data such as patient enrollment, clinical site activations or information provided to us by our vendors regarding their actual costs incurred. Payments for these activities are based on the terms of individual contracts and payment timing may differ significantly from the period in which the services were performed. We determine accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or state of completion of studies, or the services completed. Our estimates of accrued expenses as of each balance sheet date are based on the facts and circumstances known at the time. Costs that are paid in advance of performance are deferred as a prepaid expense and amortized over the service period as the services are provided.

For the years ended December 31, 2019 and 2018, there were no material changes from our estimates of accrued research and development expenses.

We do not believe there is a reasonable likelihood that there will be a material change in the future estimates of accrued research and development expenses. However, if actual results are not consistent with our estimates, we may be exposed to changes in accrued research and development expenses that could be material or the accrued research and development expenses reported in our financial statements may not be representative of the actual economic cost of accrued research and development.


Stock-based Compensation

We have stock-based compensation programs, which include restricted stock agreements, or RSAs; restricted stock units, or RSUs; stock options’ and an employee stock purchase plan. See Note 2– “Summary of Significant Accounting Policies” and Note 9 – “Stockholders' Equity” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of this report for a complete discussion of our stock-based compensation programs. We account for stock-based compensation expense, including the expense for RSAs, grants of RSUs and stock options that may be settled in shares of our common stock, based on the fair values of the equity instruments issued. The fair value is determined on the measurement date, which is generally the date of grant. The fair value for our RSAs is their intrinsic value, which is the difference between the fair value of the underlying stock at the measurement date and the purchase price. The fair value of our RSUs is the fair value of the underlying stock at the measurement date. The fair value for our stock option awards is determined at the grant date using the Black-Scholes valuation model.

Assumptions for the Black-Scholes valuation model used for employee stock awards include:

Expected term – We derived the expected term for employee stock awards using the “simplified” method (the expected term is determined as the average of the time-to-vesting and the contractual life of the options), as we have limited historical information to develop expectations about future exercise patterns and post vesting employment termination behavior. Expected term for non-employee awards is based on the remaining contractual term of an option on each measurement date.

Expected volatility – Expected volatility is estimated using comparable public companies’ volatility for similar terms.

Expected dividend rate – We have not historically declared or paid dividends to our stockholders and have no plans to pay dividends; therefore, we have assumed an expected dividend yield of 0%.

Risk-free interest rate – The risk-free interest rate is based on the yields of U.S. Treasury securities with expected terms similar to that of the associated award.

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

We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine stock-based compensation expense. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to changes in stock-based compensation expense that could be material or the stock-based compensation expense reported in our financial statements may not be representative of the actual economic cost of the stock-based compensation.

Accounting for Income Taxes

See Note 10 – “Income Taxes” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of this report for a complete discussion of the components of Atara's income tax expense, as well as the temporary differences that exist as of December 31, 2019.

Our consolidated effective income tax rate is influenced by tax planning opportunities available to us in the various jurisdictions in which we conduct business. Significant judgment is required in evaluating our tax positions, including those that may be uncertain.

Atara is also required to exercise judgment with respect to the realization of our net deferred tax assets. Management evaluates all positive and negative evidence and exercises judgment regarding past and future events to determine if it is more likely than not that all or some portion of the deferred tax assets may not be realized. If appropriate, a valuation allowance is recorded against deferred tax assets to offset future tax benefits that may not be realized.

We do not believe that there is a reasonable likelihood that there will be a material change in our liability for uncertain income tax positions or our effective income tax rate. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses that could be material. Atara recorded a valuation allowance of approximately $205.2 million as of December 31, 2019 related primarily to net operating losses, capitalized expenses and stock-based compensation.


Income TaxesRevenue Recognition

Revenue from out-license agreements is recognized as we satisfy performance obligations and when a customer obtains control of the promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. Revenue generated from our out-license agreements is not subject to repayment and typically includes upfront fees, development, regulatory and commercial milestone payments and royalties on the licensee’s future product sales.

Our provisionout-license agreements may include the transfer of intellectual property rights in the form of licenses, promises to provide research and development services and promises to participate on certain development committees with the collaboration party. We assess whether the promises in these agreements are considered distinct performance obligations that should be accounted for (benefit from) income taxesseparately. Judgment is required to determine whether these promises are distinct.

The transaction price in each agreement is allocated to the identified performance obligations based on the standalone selling price (SSP) of each distinct performance obligation. Due to the early stage of our licensed technology, the license of such technology is typically combined with the additional promises in these agreements as one combined performance obligation.

Revenue associated with nonrefundable upfront license fees where the license fees and other promises cannot be accounted for as separate performance obligations is deferred and recognized as revenue over the expected period of performance using an appropriate recognition method based on the nature of the performance obligations. We utilize judgment to assess the pattern of delivery of the performance obligation. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. A significant change in the assumptions and estimates, such as forecasted costs or the extent and timing of patient demand, could have a material impact on the timing and amount of revenue recognized in future periods or adjustments to cumulative revenue recognized in the period of change.

At the inception of each agreement that includes development, regulatory or commercial milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price by using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. The transaction price is allocated to each performance obligation in the agreement based on relative SSP. We typically determine SSPs using a cost plus margin approach model. Milestone payments that are not within our or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. At the end of each reporting period, we re-evaluate the probability of achievement of each such milestone and any related constraint, and if necessary, adjust our estimates of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

Certain judgments affect the application of our revenue recognition policy. For example, we record short-term and long-term deferred revenue based on our best estimate of when such revenue will be recognized. Short-term deferred revenue consists primarily of income taxesamounts that are expected to be recognized as revenue in U.S.the next 12 months, and long-term deferred revenue consists of amounts that we do not expect will be recognized in the next 12 months. This estimate is based on our forecasted patient demand and current operating plan and, if patient demand or our operating plan should change in the future, we may recognize a different amount of deferred revenue over the next 12-month period.

Accrued Research and Development Expenses

As part of the process of preparing our financial statements, we are required to estimate and accrue expenses, the largest of which is related to research and development expenses, including those related to clinical studies and clinical product candidate manufacturing. This process involves reviewing contracts and purchase orders, identifying and evaluating the services that have been performed on our behalf, and estimating the associated cost incurred for the services which we have not yet been invoiced or otherwise notified of the actual costs incurred.

Costs for preclinical studies, clinical studies and manufacturing activities are recognized based on an evaluation of our vendors’ progress towards completion of specific tasks, using data such as patient enrollment, clinical site activations or information provided to us by our vendors regarding their actual costs incurred. Payments for these activities are based on the terms of individual contracts and payment timing may differ significantly from the period in which the services were performed. We determine accrual estimates

84


through reports from and discussions with applicable personnel and outside service providers as to the progress or state of completion of studies, or the goods and foreign jurisdictions.services delivered. Our effective tax rate was 0% forestimates of accrued expenses as of each balance sheet date are based on the facts and circumstances known at the time. Costs that are paid in advance of performance are deferred as a prepaid expense and amortized over the service period as the services are provided.

For the years ended December 31, 2019, 2018,2022 and 2017.2021, there were no material changes from our estimates of accrued research and development expenses. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates of accrued research and development expenses. However, if actual results are not consistent with our estimates, we may be exposed to changes in accrued research and development expenses that could be material or the accrued research and development expenses reported in our financial statements may not be representative of the actual economic cost of accrued research and development.

Stock-based Compensation

We have stock-based compensation programs, which include restricted stock units (RSUs); stock options and an employee stock purchase plan. See Note 2 – “Summary of Significant Accounting Policies” and Note 11 – “Stockholders' Equity” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of this report for a complete discussion of our stock-based compensation programs. We account for stock-based compensation expense, including the expense for grants of RSUs and stock options that may be settled in shares of our common stock, based on the fair values of the equity instruments issued. The fair value is determined on the measurement date, which is generally the date of grant. The fair value of our RSUs is measured at the market price of our common stock on the measurement date. The fair value for our stock option awards is determined at the grant date using the Black-Scholes valuation model.

Assumptions for the Black-Scholes valuation model used for employee stock awards include:

Expected term – We derived the expected term for employee stock awards using the “simplified” method (the expected term is determined as the average of the time-to-vesting and the contractual life of the options), as we have limited historical information to develop expectations about future exercise patterns and post vesting employment termination behavior. Expected term for non-employee awards is based on the remaining contractual term of an option on each measurement date.
Expected volatility – Prior to 2021, expected volatility was estimated using comparable public companies’ volatility for similar terms. Beginning in 2021, volatility is estimated using an average of Atara’s historical volatility and comparable public companies’ volatility for similar terms.
Expected dividend rate – We have not historically declared or paid dividends to our stockholders and have no plans to pay dividends; therefore, we have assumed an expected dividend yield of 0%.
Risk-free interest rate – The risk-free interest rate is based on the yields of U.S. Treasury securities with expected terms similar to that of the associated award.
The fair value of our common stock is measured at the market price on the measurement date.

For awards with performance-based vesting criteria, we assess the probability of the achievement of the performance conditions at the end of each reporting period and begin to recognize the share-based compensation costs when it becomes probable that the performance conditions will be met. For awards that are subject to both service and performance conditions, no expense is recognized until it is probable that performance conditions will be met. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine stock-based compensation expense. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to changes in stock-based compensation expense that could be material or the stock-based compensation expense reported in our financial statements may not be representative of the actual economic cost of the stock-based compensation.

Accounting for Income Taxes

See Note 12 – “Income Taxes” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of this report for a complete discussion of the components of Atara's income tax expense, as well as the temporary differences that exist as of December 31, 2022.

Our consolidated effective income tax rate is influenced by tax planning opportunities available to us in the various jurisdictions in which we conduct business. Significant judgment is required in evaluating our tax positions, including those that may be uncertain. Atara is also required to exercise judgment with respect to the realization of our net deferred tax assets. Management evaluates all positive and negative evidence and exercises judgment regarding past and future events to determine if it is more likely than not that

85


all or some portion of the deferred tax assets may not be realized. If appropriate, a valuation allowance is recorded against deferred tax assets to offset future tax benefits that may not be realized.

We do not believe that there is a reasonable likelihood that there will be a material change in our liability for uncertain income tax positions or our effective income tax rate. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses that could be material. Atara recorded a valuation allowance of approximately $422.5 million as of December 31, 2022 related primarily to net operating loss carryforwards, capitalized research expenses, tax credit carryforwards and stock-based compensation.

Results of Operations

Comparison of the Years Ended December 31, 2019, 20182022, 2021 and 20172020

License and collaboration revenue

License and collaboration revenues for the periods indicated were as follows:

 

 

Year ended December 31,

 

 

Increase (Decrease)

 

 

 

2022

 

 

2021

 

 

2020

 

 

2022 compared to 2021

 

 

2021 compared to 2020

 

 

 

(in thousands)

 

License and collaboration revenues

 

$

63,573

 

 

$

20,340

 

 

$

 

 

$

43,233

 

 

$

20,340

 

License and collaboration revenues were $63.6 million in 2022 as compared to $20.3 million in 2021 and no revenue in 2020. The increase in 2022 was primarily due to the termination of the Bayer Agreements, which resulted in the recognition of the remaining deferred revenue related to the Bayer Agreements in the second quarter of 2022.We anticipate that license and collaboration revenues will decrease substantially in future quarters due to the termination of the Bayer Agreements.

Research and development expenses

Research and development expenses consisted of the following costs, by program, in the periods presented:

 

 

Year ended December 31,

 

 

(Decrease) Increase

 

 

 

2019

 

 

2018

 

 

2017

 

 

2019 compared to 2018

 

 

2018 compared to 2017

 

 

 

(in thousands)

 

Tab-cel® expenses

 

$

49,179

 

 

$

50,822

 

 

$

33,653

 

 

$

(1,643

)

 

$

17,169

 

ATA188, CAR T and other program expenses

 

 

34,869

 

 

 

30,155

 

 

 

9,243

 

 

 

4,714

 

 

 

20,912

 

Employee and overhead expenses

 

 

132,049

 

 

 

86,480

 

 

 

38,310

 

 

 

45,569

 

 

 

48,170

 

Total research and development expenses

 

$

216,097

 

 

$

167,457

 

 

$

81,206

 

 

$

48,640

 

 

$

86,251

 

 

 

Year ended December 31,

 

 

Increase (Decrease)

 

 

 

2022

 

 

2021

 

 

2020

 

 

2022 compared to 2021

 

 

2021 compared to 2020

 

 

 

(in thousands)

 

Tab-cel expenses

 

$

40,597

 

 

$

50,086

 

 

$

61,196

 

 

$

(9,489

)

 

$

(11,110

)

ATA188, CAR T and other program expenses

 

 

45,597

 

 

 

36,424

 

 

 

25,124

 

 

 

9,173

 

 

 

11,300

 

Employee and overhead expenses

 

 

186,339

 

 

 

195,491

 

 

 

158,330

 

 

 

(9,152

)

 

 

37,161

 

Total research and development expenses

 

$

272,533

 

 

$

282,001

 

 

$

244,650

 

 

$

(9,468

)

 

$

37,351

 

Tab-cel®expenses were $49.2$40.6 million in 20192022 as compared to $50.8$50.1 million in 20182021 and $33.7$61.2 million in 2017. Tab-cel® expenses decreased slightly2020. The decrease in 20192022 was due to highera decrease in clinical trial and manufacturing costsEU tab-cel filing and approval activities. The decrease in 2018 related to the ramp up of the MATCH and ALLELE Phase 3 clinical studies for patients with EBV+ PTLD. The increase in 20182021 was primarily due to clinical study, manufacturing and outside service costshigher production activities in 2020 related to the MATCH and ALLELE Phase 3 clinical studies, which were initiated in December 2017. We anticipate that tab-cel® expenses will increase in 2020 due to the addition of trial sites outside of the U.S., as well as the initiationbuild-up of our Phase 2 multi-cohort study.tab-cel and process performance qualification activities at our manufacturing facility.

ATA188, CAR T and other program expenses were $34.9$45.6 million in 20192022 as compared to $30.2$36.4 million in 20182021 and $9.2$25.1 million in 2017.2020. The increase in 20192022 was driven by higher ATA188 clinical trial and clinical supply cost and ATA3219 manufacturing activities for IND filing; partially offset by ATA188 Phase 2 initiation milestones for QIMR and CAR T-related license fees for MSK recorded in the 2021 period as well as decrease in ATA3271 IND-enabling activities after program pause. The increase in 2021 was primarily related to research, development, and manufacturing process development costs related to our CAR T programs; increased clinical study, manufacturing and other outside service costs related to the Phase 1 clinical study of ATA188 for patients with PMS; and the ATA190 program. The increase in 2018 was primarily related to (a) one-time license fees of $12.5 million incurred in the fourth quarter of 2018 for exclusive rights to a next-generation allogeneic CAR T program targeting mesothelin from MSK, which were paid in the first quarter of 2019, (b) an aggregate of $3.4 million of license fees paid to MSK and Moffitt during the year for other CAR T immunotherapy technology, (c) the exercise of the option to license ATA190 from QIMR Berghofer and (d) clinical study, manufacturing and other outside service costs related to the Phase 1 clinical study of ATA188 for patients with PMS. We anticipate that ATA188, CAR T and other program expenses will increase in 2020, primarily driven by higher costs associated with research and manufacturing process development costs related to our CAR T programs and increased clinical study, manufacturing and other outside servicetrial costs related to the enrollment in the Phase 1b portionand further advancement of our clinical study of ATA188 for patients with PMSPhase 2 EMBOLD study..

Employee and overhead expenses were $132.0$186.3 million in 20192022 as compared to $86.5$195.5 million in 20182021 and $38.3$158.3 million in 2017.2020. The increases in 20192022 decrease was primarily due to lower compensation-related costs and 2018 were primarily a resultlower facility-related costs driven by the sale of higherthe ATOM facility; partially offset by the cost of FDB’s manufacturing services. In 2022 as compared to 2021, payroll and related costs decreased by $9.3 million, facility-related costs decreased by $3.6 million, and outside service costs increased by $3.7 million. The 2021 increase was primarily due to higher compensation-related costs from increased headcount and higher facility-related expensescosts in support of our continuing expansion of research and development and manufacturing activities. PayrollIn 2021 as compared to 2020, payroll and related costs increased by $29.6$19.3 million, in 2019 as compared to 2018 and by $29.7 million in 2018 as compared to 2017, primarily due to increased headcount. Facility-related expensesfacility-related costs increased by $10.4$11.7 million, in 2019 as compared to 2018, and by $10.6 million in 2018 as compared to 2017, primarily due to higher rent, depreciation expense and IT costs to support the continued expansion of research and manufacturing process development. Professionaloutside service costs increased by $5.6 million in 2019 as compared to 2018, and by $7.9 million in 2018 as compared to 2017, due to our continued expansion of$6.2 million.

86


Total research and development activities. We anticipate that employee and overhead expenses will continue to increase in 2020for all periods presented were not significantly impacted as we continue to expand research and development and manufacturing activities and increase average headcount to supporta result of the expansion of such activities.COVID-19 pandemic.


General and administrative expenses

General and administrative expenses for the periods indicated were as follows:

 

 

Year ended December 31,

 

 

(Decrease) Increase

 

 

 

2022

 

 

2021

 

 

2020

 

 

2022 compared to 2021

 

 

2021 compared to 2020

 

 

 

(in thousands)

 

General and administrative expenses

 

$

71,553

 

 

$

78,801

 

 

$

64,402

 

 

$

(7,248

)

 

$

14,399

 

 

 

Year ended December 31,

 

 

Increase

 

 

 

2019

 

 

2018

 

 

2017

 

 

2019 compared to 2018

 

 

2018 compared to 2017

 

 

 

(in thousands)

 

General and administrative

 

$

79,584

 

 

$

69,654

 

 

$

40,326

 

 

$

9,930

 

 

$

29,328

 

General and administrative expenses were $79.6$71.6 million in 20192022 as compared to $69.7$78.8 million in 20182021 and $40.3$64.4 million in 2017.2020. The decrease in 2022 was primarily driven by a reduction in US tab-cel commercial activities. The increase of $9.9 million in 20192021 was primarily due to increases inhigher compensation-related costs driven by increased headcount. The increase of $29.3 million in 2018 was primarily due to a $13.2 million increase in compensation-related costs driven byfrom increased headcount and a $17.3 million increaseactivities to support our anticipated launch of Ebvallo in professionalthe EU and outside services costs. We expect thatthe commercialization of tab-cel in the U.S.

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


Quarterly Results of Operations Data (unaudited)

The following table sets forth our unaudited consolidated statement of operations dataexpenses for eachall periods presented were not significantly impacted as a result of the eight quarters in the period ended COVID-19 pandemic.December 31, 2019. The unaudited quarterly statement of operations data set forth below have been prepared on a basis consistent with our audited annual consolidated financial statements in this Annual Report on Form 10-K and include, in our opinion, all normal recurring adjustments necessary for a fair statement of the financial information contained in those statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following quarterly financial data should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.

 

 

Three months ended

 

 

 

March 31

 

 

June 30

 

 

September 30

 

 

December 31

 

2019

 

(In thousands, except per share amounts)

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

48,668

 

 

$

52,251

 

 

$

53,538

 

 

$

61,640

 

General and administrative

 

 

19,223

 

 

 

23,284

 

 

 

19,018

 

 

 

18,059

 

Total operating expenses

 

 

67,891

 

 

 

75,535

 

 

 

72,556

 

 

 

79,699

 

Loss from operations

 

 

(67,891

)

 

 

(75,535

)

 

 

(72,556

)

 

 

(79,699

)

Interest and other income, net

 

 

1,634

 

 

 

1,207

 

 

 

661

 

 

 

1,215

 

Loss before provision for income taxes

 

 

(66,257

)

 

 

(74,328

)

 

 

(71,895

)

 

 

(78,484

)

Provision for (benefit from) income taxes

 

 

 

 

 

 

 

 

 

 

 

12

 

Net loss

 

 

(66,257

)

 

 

(74,328

)

 

 

(71,895

)

 

 

(78,496

)

Other comprehensive (loss) gain:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on available-for-sale securities

 

 

378

 

 

 

135

 

 

 

60

 

 

 

(13

)

Comprehensive loss

 

$

(65,879

)

 

$

(74,193

)

 

$

(71,835

)

 

$

(78,509

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per common share

 

$

(1.44

)

 

$

(1.60

)

 

$

(1.31

)

 

$

(1.36

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31

 

 

June 30

 

 

September 30

 

 

December 31

 

2018

 

(In thousands, except per share amounts)

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

28,460

 

 

$

33,387

 

 

$

43,355

 

 

$

62,255

 

General and administrative

 

 

13,992

 

 

 

19,236

 

 

 

16,865

 

 

 

19,561

 

Total operating expenses

 

 

42,452

 

 

 

52,623

 

 

 

60,220

 

 

 

81,816

 

Loss from operations

 

 

(42,452

)

 

 

(52,623

)

 

 

(60,220

)

 

 

(81,816

)

Interest and other income, net

 

 

1,009

 

 

 

1,743

 

 

 

1,859

 

 

 

1,757

 

Loss before provision for income taxes

 

 

(41,443

)

 

 

(50,880

)

 

 

(58,361

)

 

 

(80,059

)

Provision for (benefit from) income taxes

 

 

 

 

 

3

 

 

 

 

 

 

(47

)

Net loss

 

 

(41,443

)

 

 

(50,883

)

 

 

(58,361

)

 

 

(80,012

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

 

(373

)

 

 

19

 

 

 

56

 

 

 

109

 

Comprehensive loss

 

$

(41,816

)

 

$

(50,864

)

 

$

(58,305

)

 

$

(79,903

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per common share

 

$

(1.05

)

 

$

(1.15

)

 

$

(1.29

)

 

$

(1.75

)

Liquidity and Capital Resources

Sources of Liquidity

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

In July 2019, we completed an underwritten public offeringstock, issuance of 6,871,727 shares of common stock at a public offering price of $15.28 per share and pre-funded warrants to purchase 2,945,026 shares of common stock, at a public offering priceupfront fees and milestone payments from the Bayer License Agreement and the Pierre Fabre Commercialization Agreement and the sale of $15.2799 per warrant. We received aggregate net proceeds of approximately $140.7 million after deducting underwriting discounts and commissions and estimated offering expenses payable by us.our ATOM Facility.


In February 2019,the past three years, we have entered into atwo separate sales agreement, or the 2019 ATM Facility,agreements with Cowen and Company, LLC (Cowen): in February 2020 (2020 ATM Facility) and in November 2021 (2021 ATM Facility). Each ATM facility provides or Cowen, which providesprovided for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0 million, through Cowen, as our sales agent. The issuance and sale of these shares by us pursuant to the 2019 ATM Facilityfacilities are deemed “at the market” offerings defined in Rule 415 under the Securities Act of 1933, as amended or the Securities Act,(Securities Act), and arewere registered under the Securities Act. We pay a commissionCommissions of up to 3.0% ofare due on the gross sales proceeds of anythe common stock sold under the 2019each ATM Facility. facility.

During the year ended December 31, 2019,2022, we sold an aggregate of 3,135,3471,618,672 shares of common stock under the 20192021 ATM Facility, at an average price of $16.09$13.84 per share, for gross proceeds of $50.5$22.4 million and net proceeds of $48.9$22.0 million, after deducting commissions and other offering expenses payable by us. During January

As of December 31, 2022, we have fully utilized the 2020 ATM Facility and we had $55.9 million of common stock remaining and available to be sold under the 2021 ATM Facility.

In December 2020, we soldcompleted an additional aggregateunderwritten public offering of 1,371,2165,102,041 shares of common stock under the 2019 ATM Facility, at an averagea public offering price of $15.77$24.50 per share for gross proceedsand pre-funded warrants to purchase 2,040,816 shares of $21.6 million andcommon stock at a public offering price of $24.4999 per warrant. We received net proceeds of $21.1approximately $164.3 million after deducting underwriting discounts and commissions and otherestimated offering expenses payable by us.

AsIn the second quarter of December 31, 2019,2020, we had approximately $49.5 millioncompleted an underwritten public offering of 14,958,039 shares, inclusive of the exercise of the full option granted to the underwriters, of common stock remainingat a public offering price of $11.32 per share and pre-funded warrants to be sold under the 2019 ATM Facility, and as of January 31, 2020, we had approximately $27.9 millionpurchase 2,866,961 shares of common stock remaining to be sold under the 2019 ATM Facility.

In February 2020, we entered intoat a new sales agreement, or the 2020 ATM Facility, with Cowen, which provides for the sale, in our sole discretion, of shares of our common stock having an aggregatepublic offering price of up to $100.0 million through Cowen, as our sales agent. The 2020 ATM Facility is separate from and does not replace the 2019 ATM Facility in any way. The issuance and sale of these shares by us pursuant to the 2020 ATM Facility are deemed “at the market” offerings and are registered under the Securities Act of 1933, as amended.$11.3199 per warrant. We will pay a commission of up to 3.0% of gross salesreceived net proceeds of any common stock sold under the 2020 ATM Facility.approximately $189.3 million after deducting underwriting discounts and commissions and offering expenses payable by us.

We have incurred losses and negative cash flows from operations in each year since inception. As of December 31, 2019, we had an accumulated deficit of $818.0 million. We doinception and have not expectyet begun to receive anygenerate commercialization revenues from any product candidates that we develop until we obtain regulatorythe December 2022 EU approval and commercialize our products. As such, we anticipate that we willof Ebvallo. We continue to incur significant research and development and other expenses related to our ongoing operations and expect to incur losses for 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-partythird 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

87


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 theadditional funds through additional public or private equity capital markets to support our development efforts and operations,offerings or debt financings including by utilizing ourthe 2021 ATM facilities.Facility, through potential commercialization, collaboration, 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 commercialization, collaboration or partnering arrangements, we may be required to relinquish some of our rights to our technologies or rights to market and sell our products in certain geographies, grant licenses or other rights on terms that are not favorable to us, or issue equity that may be substantially dilutive to our stockholders.

Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Currently, our cash, cash equivalents and short-term investments are held in bank and custodial accounts and consist of money market funds, U.S. Treasury, government agency and corporate debt obligations, commercial paper and asset-backed securities. We expect that existing cash, cash equivalents and short-term investments as of December 31, 2019, together with the net proceeds from our sale of common stock under the 2019 ATM Facility in January 2020, will be sufficient to fund our planned operations into the second quarter of 2021.

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

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Cash and cash equivalents

 

$

92,942

 

 

$

106,084

 

Short-term investments

 

 

149,877

 

 

 

264,984

 

Total cash, cash equivalents and short-term investments

 

$

242,819

 

 

$

371,068

 

Contractual Obligations and Commitments

We lease our corporate headquarters in Thousand Oaks, California, under a non-cancellable lease agreement for approximately 51,160 square feet of office space. 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.

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(in thousands)

 

Cash and cash equivalents

 

$

74,317

 

 

$

60,698

 

Short-term investments

 

 

184,792

 

 

 

248,933

 

Total cash, cash equivalents and short-term investments

 

$

259,109

 

 

$

309,631

 

We lease office space in South San Francisco, California under a non-cancellable lease agreement. In December 2021, we entered into a second amendment to extend the lease term through May 2025. The amended lease agreement does not include an option to extend the lease term. In October 2022, we entered into a sub-lease agreement with a third party for this office space. The sub-lease term commenced in November 2022 and expires in May 2025, with no option to extend the sub-lease term. Subsequently, we have moved our corporate headquarters to our office space in Thousand Oaks, California.


In May 2019, we entered into a lease agreement for approximately 8,800 square feet of office and lab space in Aurora, Colorado. The initial term of this lease expires in April 2024. In February 2021, we further amended this lease to add an additional 2,861 square feet of lab space. The contractual obligations during the lease term are not material. We have the option to extend this lease for two additional five-year periods after the initial term.

In March 2021, we entered into a lease agreement for approximately 33,659 square feet of office, lab and warehouse space in Thousand Oaks, California. The initial 10.5-year term of this lease commenced in August 2021 and the contractual obligations during the initial term are $21.0 million in aggregate. We have the option to extend this lease for two additional five-year periods after the initial term.

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 April 2022, we assigned the ATOM Lease to FDB in connection with the closing of the sale of the ATOM Facility to FDB. We remain joint and severally liable for obligations related to the ATOM Lease. See Note 8 – “Leases” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of this report for further information on our lease obligations.

We enter into contracts in the normal course of business with clinical research organizations for clinical studies, with CMOs for clinical and commercial materials, and with other vendors for preclinical studies and supplies and other services and products for operating purposes. These contracts generally provide for termination for convenience following a notice period. We have non-cancellable minimum commitments for products and services, subject to agreements with a term of greater than one year with clinical research organizations and CMOs. See Note 10 – “Commitments and Contingencies” in the Notes to Consolidated Financial

88


Statements, included in Item 8. Financial Statements and Supplementary Data of this report for further information on our contractual obligations and commitments.

Cash Flows

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

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Net cash (used in) provided by:

 

 

 

 

 

 

 

 

 

Operating activities

 

$

(270,430

)

 

$

(220,522

)

 

$

(180,759

)

Investing activities

 

 

202,956

 

 

 

22,258

 

 

 

(120,728

)

Financing activities

 

 

53,084

 

 

 

103,944

 

 

 

427,574

 

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

 

$

(14,390

)

 

$

(94,320

)

 

$

126,087

 

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

 

 

(in thousands)

 

Net cash (used in) provided by:

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

$

(235,626

)

 

$

(179,772

)

 

$

(87,502

)

Investing activities

 

 

60,459

 

 

 

(196,289

)

 

 

99,909

 

Financing activities

 

 

188,786

 

 

 

357,536

 

 

 

20,048

 

Net increase (decrease) in cash, cash equivalents and

   restricted cash

 

$

13,619

 

 

$

(18,525

)

 

$

32,455

 

Operating activities

Net cash used in operating activities was $235.6$270.4 million in 20192022 as compared to $179.8$220.5 million in 2018.2021. The increase of $55.8$49.9 million was primarily due to a $60.3the $45 million increaseupfront fee received from Pierre Fabre in 2021, with no similar cash flows received in 2022, with the remaining variance due toa reduction in net loss and a $19.2 million increase in net operating assets, partially offset by a $17.9 million increase in stock-based compensation, a $3.3 million increase in depreciation and amortization expense, and a $1.0 million increase in loss on disposals of property and equipment.working capital.

Net cash used in operating activities was $179.8$220.5 million in 20182021 as compared to $87.5$180.8 million in 2017.2020. The increase of $92.3$39.7 million was primarily due to a $111.2 millionan increase in net loss of $33.5 million and a $2.6 million increase in the accretionincreased usage of investment discounts,net working capital, partially offset by $45.0 million received as a $10.7 million increase stock-based compensation, a $2.8 million increase in depreciation expense, a $0.2 million increase in non-cash interest expense, and an increase in changes in operating assets and liabilitiesresult of $7.8 million.the Pierre Fabre Commercialization Agreement.

Investing activities

Net cash provided by investing activities in 20192022 consisted of $293.0 million received from maturities and sales of available-for-sale securities and $94.8 million in net proceeds received from the sale of the ATOM Facility, partially offset by $180.6 million used to purchase available-for-sale securities and $4.2 million in purchases of property and equipment.

Net cash provided by investing activities in 2021 consisted primarily of $336.3$334.0 million received from maturities and sales of available-for-sale securities, partially offset by $270.2$301.1 million used to purchase available-for-sale securities and $5.7$10.6 million in purchases of property and equipment.

Net cash used in investing activities in 20182020 consisted primarily of $466.5$425.9 million used to purchase available-for-sale securities and $35.9$4.5 million used to purchasein purchases of property and equipment, partially offset by $306.1$309.7 million received from maturities and sales of available-for-sale securities.

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

Financing activities

Net cash provided by financing activities in 20192022 consisted primarily of $140.9 million of net proceeds received from the underwritten public offering of common stock and pre-funded warrants in July 2019, $47.7$21.9 million of net proceeds from ourATM facilities, $30.6 million in net proceeds from the sale of future royalties and $1.9 million of net proceeds from employee stock award transactions.

Net cash provided by financing activities in 2021 consisted primarily of $98.7 million of net proceeds from ATM facilities and $7.4$6.8 million of net proceeds from employee stock award transactions, partially offset by $6.7$1.2 million of taxes paid related to the net share settlement of RSUs.

Net cash provided by financing activities in 20182020 consisted primarily of $293.3$353.8 million of aggregate net proceeds received from the two underwritten public offerings in Januaryof common stock and March 2018, $47.6pre-funded warrants, $69.2 million of net proceeds from the 2017 ATM Facilityfacilities and $24.7$6.7 million of net proceeds from employee stock award transactions, partially offset by $7.5$1.5 million of taxes paid related to the net share settlement of restricted stock and $0.5 million of principal payments on capital lease obligations.RSUs.

Net cash provided by financing activities in 2017 consisted of $19.2 million of net proceeds from our 2017 ATM Facility and $1.2 million of net proceeds from employee stock award transactions, partially offset by $0.4 million of taxes paid related to the net share settlement of restricted stock.89



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 anysufficient revenue from product sales. We do not expect to generate significant revenue fromcommercial product sales unless and until we obtain regulatory approval of and commercialize one ofto offset our current or future product candidates.operating expenses. 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 withto finance our continuing and expected expansion of ourplanned operations.

We expect that our existing cash, cash equivalents and short-term investments as of December 31, 2019,2022, together with net proceeds from our 2019 ATM Facilitythe $40.0 million received in January 2020,2023 for achievement of certain milestones under the Pierre Fabre Commercialization Agreement, will be sufficient to fund our planned operations into the second quarter of 2021.2024. 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,have not received approval, 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 commercialization, collaboration, partnering or other strategic arrangements, or a combination of the foregoing.

We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:

the timing, costs and results of our ongoing and planned clinical and preclinical studies for our product candidates;
our success in establishing and maintaining commercial manufacturing relationships with CMOs;
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 by our partners and costs 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 terms and timing of any future collaborations, licensing, consulting or other arrangements that we may establish;

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

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

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

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

Contractual Obligations and Commitments

We lease our corporate headquarters in South San Francisco, California under a non-cancellable lease agreement for approximately 13,670 square feet of office space. The lease expires in April 2021.

In February 2017, we entered into a lease agreement for approximately 90,580 square feet of office, lab and cellular therapy manufacturing space in Thousand Oaks, California. The initial 15-year term of this lease commenced in February 2018, and the contractual obligations during the initial term are $16.4 million in aggregate. We have the option to extend this lease for two additional periods of ten and nine years, respectively, after the initial term. In connection with this lease, we were required to issue a letter of credit in the amount of $1.2 millionrevenues received from commercial sales of our product candidates;

the timing of proceeds from the Pierre Fabre Commercialization Agreement, as well as the terms and timing of any future commercialization, collaboration, licensing, partnering 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 the qualification of our CMOs’ manufacturing facilities.

Until we are able to generate a sufficient amount of net cash inflows 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 landlord, which is recorded as long-term restricted cash inequity and debt capital markets to support our consolidated balance sheet.

In November 2018,development efforts and operations. To the extent that we entered into a lease agreement for approximately 51,160 square feetraise additional capital by issuing equity securities, our stockholders may experience substantial dilution. To the extent that we raise additional funds through commercialization, collaboration or partnering arrangements, we may be required to relinquish some 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 our approximately 8,400 square feet of office and lab space in Aurora, Colorado. The term of this lease expires in April 2024. The contractual obligations during the lease term are $1.1 million in aggregate.


The following table summarizes our contractual obligations as of December 31, 2019:

 

Payments Due by Period

 

 

 

 

 

 

 

 

Less than

 

 

 

 

 

 

 

 

More than

 

 

 

Total

 

 

 

1 Year

 

 

1-3 Years

 

 

3-5 Years

 

 

5 Years

 

 

(in thousands)

 

Operating lease obligations

$

 

25,380

 

 

$

 

2,867

 

 

$

 

5,350

 

 

$

 

5,276

 

 

$

 

11,887

 

Finance lease obligations

 

 

580

 

 

 

 

308

 

 

 

 

243

 

 

 

 

29

 

 

 

 

 

Purchase obligations (1)

 

 

29,980

 

 

 

 

17,260

 

 

 

 

12,720

 

 

 

 

 

 

 

 

 

Total contractual obligations

$

 

55,940

 

 

$

 

20,435

 

 

$

 

18,313

 

 

$

 

5,305

 

 

$

 

11,887

 

(1)

We enter into contracts 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. Payments in the table above represent our estimate of contractual minimum purchase obligations. Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure and approximate timing of the transaction. Payments in the table above do not include any termination penalties or fees.

The above amounts exclude potential milestone and royalty payments relatedrights to our licensetechnologies or rights to market and collaboration agreements, as the achievementsell 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 these milestones is currently not fixedeconomic conditions, general global economic uncertainty, political change and determinable.

Off-Balance Sheet Arrangements

We did not have, andother factors, we do not currently have, any off-balance sheet arrangements, as defined inknow 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 rules and regulationsvolatile 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 the SEC, during the periods presented.our product candidates.

90


Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate and Market Risk

We are exposed to market risk related to changes in interest rates. As of December 31, 2019,2022, we had total cash, cash equivalents and short-term investments of $259.1$242.8 million. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments are in short-term securities. Our available-for-sale securities are subject to interest rate risk and will fall in value if market interest rates increase, which could result in a realized loss if we are forced to sell an investment before its scheduled maturity. maturity. We currently do not hedge our interest rate risk exposure. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, an immediate change in interest rates of 10100 basis points would not result in a significantmaterial change in the fair market value of our portfolio.

The primary objectiveobjectives of our investment activities is to preserve principalare capital preservation and liquidity, while at the same time maximizing the income we receive from our investments without significantly increasing risk. To achieve this objective, we maintain our portfolio of cash equivalents and short-term and long-term investments in a variety of securities, including money market funds, U.S. Treasury, government agency and corporate debt obligations, commercial paper and asset-backed securities. These securities are all classified as available-for-sale and consequently are recorded on the balance sheet at fair value, with unrealized gains or losses reported as a separate component of accumulated other comprehensive income (loss). Our holdings of the securities of any one issuer, except for obligations of the U.S. Treasury, or U.S. Treasury-guaranteed securities or money market funds, do not exceed 5% of our portfolio.

91



Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Page

Report of Independent Registered Public Accounting Firm(PCAOB ID 34)

7293

Consolidated Balance Sheets

7496

Consolidated Statements of Operations and Comprehensive Loss

7597

Consolidated Statements of Stockholders’ Equity

7698

Consolidated Statements of Cash Flows

7799

Notes to Consolidated Financial Statements

78100


92



Report of Independent Registered Public Accounting Firm

To the stockholders and the Board of Directors of Atara Biotherapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Atara Biotherapeutics, Inc. and subsidiaries (the “Company”"Company" or “Atara”) as of December 31, 20192022 and 2018,2021, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2019,2022, and the related notes (collectively referred to as the “financial statements”"financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20192022 and 2018,2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019,2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sCompany's internal control over financial reporting as of December 31, 2019,2022, based on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 20208, 2023, expressed an unqualified opinion on the Company’sCompany's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for leases in 2019 due to adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842), using the optional transition method.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit MatterMatters

The critical audit mattermatters communicated below is a matterare matters arising from the current-period audit of the financial statements that waswere communicated or required to be communicated to the audit committee and that (1) relatesrelate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit mattermatters below, providing a separate opinionopinions on the critical audit mattermatters or on the accounts or disclosures to which it relates.they relate.

License and Collaboration Revenue and Deferred Revenue – Accounting for Out- License Agreement – Refer to Notes 2 and 5 to the Financial Statements

Critical Audit Matter Description

The Company has entered into certain out-license agreements with Bayer and Pierre Fabre.

During 2020 and 2021, the Company entered into a Research, Development and License agreement, a Technology Transfer Agreement, and a Manufacturing and Supply Agreement with Bayer AG (“Bayer”).

In 2022, the Company entered into a Termination Agreement with Bayer pursuant to which all existing agreements were terminated. Under the terms of this agreement, full product development and commercialization rights related to ATA2271 and ATA3271 reverted to Atara, and Bayer made an additional payment to Atara for certain activities performed by the Company prior to the termination effective date.

93


Additionally, during 2021, the Company entered into a Commercialization Agreement with Pierre Fabre Medicament (“Pierre Fabre”). Under the terms of the agreement, the Company granted Pierre Fabre a license to commercialize and distribute therapies and will be responsible for manufacturing and supplying the therapies to Pierre Fabre, along with related cell selection services.

In 2022, the Company entered into an Amendment Agreement to the Pierre Fabre Commercialization Agreement (the “PF Amendment”). Under the terms of the PF Amendment, Atara is entitled to an additional milestone payment in exchange for, among other things, a reduction in: (i) royalties Atara is eligible to receive, and (ii) the price mark up on supply purchased by Pierre Fabre. Additionally, Atara also agreed to extend the time period for provision of certain services to Pierre Fabre under the Pierre Fabre Commercialization Agreement.

The Company recognizes revenue on out-license agreements as they satisfy their performance obligations and when a customer obtains control of the promised goods or services. As of December 31, 2022, the Company recognized $63.6 million of revenue under the out-license agreements and deferred revenue amounted to $85.0 million, of which $8.0 million is included in current liabilities and $77.0 million is included in long-term liabilities.

We identified accounting for the out-license agreements, the revenue recognized, and the estimated deferred revenue to be recognized as revenue as a critical audit matter. Given the judgments necessary to determine the accounting literature to apply to an out-license agreement, the method to estimate and measure the progress toward the completion of the performance obligation and the estimated contractual term over which the performance obligation would be completed, auditing such judgments and estimates required extensive audit effort due to the complexity of the out-license agreements and the high degree of auditor judgment applied when performing audit procedures and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to determining the accounting literature to apply to the agreements and assessing management's method for measuring progress included the following, among others:

We tested the operating effectiveness of controls over out-license related revenue, including those related to the evaluation of contract modifications and the determination of the timing and amount of revenue recognized.
We reviewed and obtained an understanding of the Company’s revenue generating agreements and related transactions during and at the end of the year via review of internal and external presentations, news and publications, and discussions with management.
We evaluated the Company’s conclusions related to the accounting for contract modifications.
We evaluated management’s determination that the agreement is within the scope of ASC 606 - Revenue from Contracts with Customers.
We evaluated management's determination of the contractual term and the appropriateness of management's method to measure its progress over that term.
We evaluated the assumptions used in the estimates of total costs and the estimated measure of progress for recognizing revenues by:
o
Performing corroborating inquiries with the Company's project and business development managers, and comparing the assumptions used in the estimates to management's work plans, cost estimates and costs reported to date, and material rights allocated, accumulated and earned.
o
Comparing costs incurred for activities completed to date to the costs forecasted for those activities.
o
Comparing material rights accumulated and earned for activities completed to date to the fulfilment of performance obligations forecasted for those activities.
o
Testing the mathematical accuracy of management’s revenue and current and long-term deferred revenue balances based on the estimated revenue to be recognized over time.

94


Accrued Research and Development Expenses & Prepaid Research and Development Expenses (Clinical Trial Accrued and Prepaid Expenses) - Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company recognizes costs it incurs for preclinical studies, clinical trials, and manufacturing activities as research and development expenses based on itsan evaluation of its vendors’ progress toward completion of specific tasks. Payment timing may differ significantly from the period in which the costs are recognized as expense. Costs that are paid in advance are deferred as a prepaid expense and amortized over the service period as the services are provided. Costs for services incurred that have not yet been beinvoiced or paid are recognized as accrued expenses.


In estimating the vendors’ progress toward completion of specific tasks, the Company uses data such as patient enrollment, clinical site activations or vendor information of actual costs incurred. This data is obtained through reports from or discussions with Company personnel and outside service providers as to the progress or state of completion of trials,studies, or the completion of services.

Given the number of ongoing preclinical studyresearch and clinical trialdevelopment activities and the subjectivity involved in estimating clinical trialrelated accrued and prepaid expenses, auditing the clinical trial accrualsaccrued and prepaid research and development expenses involved especially subjective judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to clinical trial accrued and prepaid research and development expenses included the following, among others:

We tested the design and effectiveness of controls over the estimation of accrued and prepaid research and development expenses.
We obtained and read a sample of research and development agreements and contracts, as well as amendments thereto.
We evaluated publicly available information (such as press releases and investor presentations) and board of directors’ materials regarding the status of research and development activities.
We obtained the listing of all contracts related to research and development expenses to evaluate the completeness of accruals and prepaid expenses.
For a sample of agreements and contracts, we compared the amount of accrual or prepaid expenses at the end of the prior period to current year activity and evaluated the accuracy of the Company’s estimation methodology.
We made selections of specific amounts recognized as research and development expense as well as those recognized as accrued and prepaid expenses to evaluate management’s estimate of the vendor’s progress and performed the following procedures:
o
Read the related statement of work, purchase order, or other supporting documentation (such as communications between the Company and vendors).
o
Performed corroborating inquiries with Company research and development personnel.
o
Confirmed progress directly with the vendor and compared the reported amounts to the Company's estimate.
o
Evaluated management’s judgments compared to the evidence obtained.

We tested the design and effectiveness of controls over the estimation of clinical trial accrued and prepaid expenses.

We obtained and read a sample of research, collaboration, and manufacturing agreements and contracts, as well as amendments thereto.

We evaluated publicly available information (such as press releases and investor presentations) and board of directors’ materials regarding the status of clinical trial and manufacturing activities.

For a sample of agreements and contracts, we compared the amount of accrual or prepaid expenses at the end of the prior period to current year activity and evaluated the accuracy of the Company’s estimation methodology.

We obtained a written confirmation of the ending inventory balance held at the Company’s manufacturing vendor.

We made selections of specific amounts recognized as research and development expense as well as those recognized as accrued and prepaid expenses to evaluate management’s estimate of the vendor’s progress and performed the following procedures:

o

Performed corroborating inquiries with Company clinical operations and manufacturing operations personnel.

o

Read the related statement of work, purchase order, or other supporting documentation (such as communications between the Company and vendors).

o

Evaluated management’s judgments compared to the evidence obtained.

o

Obtained the listing of all contracts related to research and development expenses to evaluate the completeness of accruals and prepaid expenses.

/s/ DELOITTE & TOUCHE LLP

San Jose,Francisco, California

February 27, 20208, 2023

We have served as the Company’s auditor since 2013.

95



Atara Biotherapeutics, Inc.

Consolidated Balance Sheets

(In thousands, except per share amounts)

 

December 31,

 

 

December 31,

 

 

 

December 31,

 

 

December 31,

 

 

2019

 

 

2018

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

74,317

 

 

$

60,698

 

 

 

$

92,942

 

 

$

106,084

 

Short-term investments

 

 

184,792

 

 

 

248,933

 

 

 

 

149,877

 

 

 

264,984

 

Restricted cash - short-term

 

 

194

 

 

 

194

 

 

Prepaid expenses and other current assets

 

 

13,689

 

 

 

11,664

 

 

Restricted cash

 

 

146

 

 

 

194

 

Accounts receivable

 

 

40,221

 

 

 

986

 

Inventories

 

 

1,586

 

 

 

 

Other current assets

 

 

10,308

 

 

 

12,373

 

Total current assets

 

 

272,992

 

 

 

321,489

 

 

 

 

295,080

 

 

 

384,621

 

Property and equipment, net

 

 

54,176

 

 

 

68,576

 

 

 

 

6,300

 

 

 

53,780

 

Operating lease assets

 

 

14,007

 

 

 

 

 

 

 

68,022

 

 

 

26,159

 

Restricted cash - long-term

 

 

1,200

 

 

 

1,200

 

 

 

 

 

 

 

1,200

 

Other assets

 

 

567

 

 

 

574

 

 

 

 

7,018

 

 

 

2,367

 

Total assets

 

$

342,942

 

 

$

391,839

 

 

 

$

376,420

 

 

$

468,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,963

 

 

$

3,719

 

 

 

$

6,871

 

 

$

17,368

 

Accrued compensation

 

 

14,706

 

 

 

10,636

 

 

 

 

17,659

 

 

 

25,150

 

Accrued research and development expenses

 

 

8,341

 

 

 

19,210

 

 

 

 

24,992

 

 

 

13,451

 

Deferred revenue

 

 

8,000

 

 

 

40,760

 

Other current liabilities

 

 

5,733

 

 

 

6,414

 

 

 

 

21,394

 

 

 

9,057

 

Total current liabilities

 

 

36,743

 

 

 

39,979

 

 

 

 

78,916

 

 

 

105,786

 

Deferred revenue - long-term

 

 

77,000

 

 

 

55,708

 

Operating lease liabilities - long-term

 

 

14,136

 

 

 

 

 

 

 

58,064

 

 

 

25,518

 

Liability related to the sale of future revenues - long-term

 

 

30,236

 

 

 

 

Other long-term liabilities

 

 

1,282

 

 

 

13,003

 

 

 

 

5,564

 

 

 

1,501

 

Total liabilities

 

 

52,161

 

 

 

52,982

 

 

 

 

249,780

 

 

 

188,513

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock—$0.0001 par value, 500,000 shares authorized as of December 31,

2019 and 2018, respectively; 56,806 and 45,951 shares issued and outstanding

as of December 31, 2019 and 2018, respectively

 

 

6

 

 

 

5

 

 

Common stock—$0.0001 par value, 500,000 shares authorized as of December 31,
2022 and 2021, respectively;
95,927 and 91,671 shares issued and outstanding
as of December 31, 2022 and 2021, respectively

 

 

10

 

 

 

9

 

Additional paid-in capital

 

 

1,108,516

 

 

 

866,541

 

 

 

 

1,821,721

 

 

 

1,744,695

 

Accumulated other comprehensive income (loss)

 

 

220

 

 

 

(340

)

 

Accumulated other comprehensive (loss) income

 

 

(2,067

)

 

 

(368

)

Accumulated deficit

 

 

(817,961

)

 

 

(527,349

)

 

 

 

(1,693,024

)

 

 

(1,464,722

)

Total stockholders’ equity

 

 

290,781

 

 

 

338,857

 

 

 

 

126,640

 

 

 

279,614

 

Total liabilities and stockholders’ equity

 

$

342,942

 

 

$

391,839

 

 

 

$

376,420

 

 

$

468,127

 

See accompanying notes to the consolidated financial statements.


96



Atara Biotherapeutics, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share amounts)

 

Years Ended December 31,

 

 

2019

 

 

2018

 

 

2017

 

 

Years Ended December 31,

 

 

2022

 

 

2021

 

 

2020

 

License and collaboration revenue

 

$

63,573

 

 

$

20,340

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

216,097

 

 

$

167,457

 

 

$

81,206

 

 

 

272,533

 

 

 

282,001

 

 

 

244,650

 

General and administrative

 

 

79,584

 

 

 

69,654

 

 

 

40,326

 

 

 

71,553

 

 

 

78,801

 

 

 

64,402

 

Total operating expenses

 

 

295,681

 

 

 

237,111

 

 

 

121,532

 

 

 

344,086

 

 

 

360,802

 

 

 

309,052

 

Loss from operations

 

 

(295,681

)

 

 

(237,111

)

 

 

(121,532

)

 

 

(280,513

)

 

 

(340,462

)

 

 

(309,052

)

Interest and other income, net

 

 

4,717

 

 

 

6,368

 

 

 

2,027

 

Other income (expense), net:

 

 

 

 

 

 

 

Gain on sale of ATOM Facility (See Note 7)

 

 

50,237

 

 

 

 

 

 

 

Interest and other income (expense), net

 

 

1,986

 

 

 

367

 

 

 

2,447

 

Total other income (expense), net

 

 

52,223

 

 

 

367

 

 

 

2,447

 

Loss before provision for income taxes

 

 

(290,964

)

 

 

(230,743

)

 

 

(119,505

)

 

 

(228,290

)

 

 

(340,095

)

 

 

(306,605

)

Provision for (benefit from) income taxes

 

 

12

 

 

 

(44

)

 

 

(14

)

Provision for income taxes

 

 

12

 

 

 

46

 

 

 

15

 

Net loss

 

$

(290,976

)

 

$

(230,699

)

 

$

(119,491

)

 

$

(228,302

)

 

$

(340,141

)

 

$

(306,620

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

 

560

 

 

 

(189

)

 

 

32

 

Other comprehensive (loss) gain:

 

 

 

 

 

 

 

Unrealized (loss) gain on available-for-sale securities

 

 

(1,699

)

 

 

(664

)

 

 

76

 

Comprehensive loss

 

$

(290,416

)

 

$

(230,888

)

 

$

(119,459

)

 

$

(230,001

)

 

$

(340,805

)

 

$

(306,544

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per common share

 

$

(5.67

)

 

$

(5.27

)

 

$

(4.00

)

 

$

(2.24

)

 

 

(3.63

)

 

 

(4.15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding used to calculate

basic and diluted net loss per common share

 

 

51,308

 

 

 

43,811

 

 

 

29,863

 

Basic and diluted weighted-average shares outstanding

 

 

101,990

 

 

 

93,670

 

 

 

73,973

 

See accompanying notes to the consolidated financial statements.

97



Atara Biotherapeutics, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Common

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

Common

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

 

Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

Balance as of January 1, 2017

 

 

28,933

 

 

$

3

 

 

$

431,075

 

 

$

(183

)

 

$

(177,159

)

 

$

253,736

 

Issuance of common stock through ATM facilities, net of

commissions and offering costs of $844

 

 

1,350

 

 

 

 

 

 

19,156

 

 

 

 

 

 

 

 

 

19,156

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss) Income

 

 

Deficit

 

 

Equity

 

Balance as of January 1, 2020

 

 

56,806

 

 

$

6

 

 

$

1,108,516

 

 

$

220

 

 

$

(817,961

)

 

$

290,781

 

Issuance of common stock and pre-funded warrants through
underwritten offering, net of offering costs of $
583

 

 

20,060

 

 

 

2

 

 

 

353,586

 

 

 

 

 

 

 

 

 

353,588

 

Issuance of common stock through ATM facilities, net of
commissions and offering costs of $
1,887

 

 

4,786

 

 

 

 

 

 

68,004

 

 

 

 

 

 

 

 

 

68,004

 

Exercise of pre-funded warrants

 

 

57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSU settlements, net of shares withheld

 

 

305

 

 

 

 

 

 

(357

)

 

 

 

 

 

 

 

 

(357

)

 

 

1,112

 

 

 

 

 

 

(1,521

)

 

 

 

 

 

 

 

 

(1,521

)

Issuance of common stock pursuant to employee stock awards

 

 

142

 

 

 

 

 

 

1,688

 

 

 

 

 

 

 

 

 

1,688

 

 

 

551

 

 

 

 

 

 

6,680

 

 

 

 

 

 

 

 

 

6,680

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

23,100

 

 

 

 

 

 

 

 

 

23,100

 

 

 

 

 

 

 

 

 

51,351

 

 

 

 

 

 

 

 

 

51,351

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(119,491

)

 

 

(119,491

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(306,620

)

 

 

(306,620

)

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

32

 

 

 

 

 

 

 

 

 

 

 

 

76

 

 

 

 

 

 

76

 

Balance as of December 31, 2017

 

 

30,730

 

 

 

3

 

 

 

474,662

 

 

 

(151

)

 

 

(296,650

)

 

 

177,864

 

Issuance of common stock through underwritten offerings, net of

offering costs of $526

 

 

12,604

 

 

 

2

 

 

 

293,288

 

 

 

 

 

 

 

 

 

293,290

 

Issuance of common stock through ATM facilities, net of

commissions and offering costs of $1,310

 

 

1,008

 

 

 

 

 

 

47,586

 

 

 

 

 

 

 

 

 

47,586

 

Balance as of December 31, 2020

 

 

83,372

 

 

 

8

 

 

 

1,586,616

 

 

 

296

 

 

 

(1,124,581

)

 

 

462,339

 

Issuance of common stock through ATM facilities, net of
commissions and offering costs of $
2,501

 

 

6,241

 

 

 

1

 

 

 

98,696

 

 

 

 

 

 

 

 

 

98,697

 

RSU settlements, net of shares withheld

 

 

449

 

 

 

 

 

 

(7,503

)

 

 

 

 

 

 

 

 

(7,503

)

 

 

1,492

 

 

 

 

 

 

(1,244

)

 

 

 

 

 

 

 

 

(1,244

)

Issuance of common stock pursuant to employee stock awards

 

 

1,160

 

 

 

 

 

 

24,691

 

 

 

 

 

 

 

 

 

24,691

 

 

 

566

 

 

 

 

 

 

6,762

 

 

 

 

 

 

 

 

 

6,762

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

33,817

 

 

 

 

 

 

 

 

 

33,817

 

 

 

 

 

 

 

 

 

53,865

 

 

 

 

 

 

 

 

 

53,865

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(230,699

)

 

 

(230,699

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(340,141

)

 

 

(340,141

)

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

(189

)

 

 

 

 

 

(189

)

 

 

 

 

 

 

 

 

 

 

 

(664

)

 

 

 

 

 

(664

)

Balance as of December 31, 2018

 

 

45,951

 

 

 

5

 

 

 

866,541

 

 

 

(340

)

 

 

(527,349

)

 

 

338,857

 

Effect of the adoption of ASC topic 842 (Leases)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

364

 

 

 

364

 

Balance as of January 1, 2019

 

 

45,951

 

 

 

5

 

 

 

866,541

 

 

 

(340

)

 

 

(526,985

)

 

 

339,221

 

Issuance of common stock and pre-funded warrants through

underwritten offering, net of offering costs of $284

 

 

6,872

 

 

 

1

 

 

 

140,715

 

 

 

 

 

 

 

 

 

140,716

 

Issuance of common stock through ATM facilities, net of

commissions and offering costs of $1,553

 

 

3,135

 

 

 

 

 

 

48,909

 

 

 

 

 

 

 

 

 

48,909

 

Balance as of December 31, 2021

 

 

91,671

 

 

 

9

 

 

 

1,744,695

 

 

 

(368

)

 

 

(1,464,722

)

 

 

279,614

 

Issuance of common stock through ATM facilities, net of
commissions and offering costs of $
517

 

 

1,619

 

 

 

 

 

 

21,891

 

 

 

 

 

 

 

 

 

21,891

 

RSU settlements, net of shares withheld

 

 

361

 

 

 

 

 

 

(6,695

)

 

 

 

 

 

 

 

 

(6,695

)

 

 

2,204

 

 

 

1

 

 

 

(624

)

 

 

 

 

 

 

 

 

(623

)

Issuance of common stock pursuant to employee stock awards

 

 

487

 

 

 

 

 

 

7,350

 

 

 

 

 

 

 

 

 

7,350

 

 

 

433

 

 

 

 

 

 

1,921

 

 

 

 

 

 

 

 

 

1,921

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

51,696

 

 

 

 

 

 

 

 

 

51,696

 

 

 

 

 

 

 

 

 

53,838

 

 

 

 

 

 

 

 

 

53,838

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(290,976

)

 

 

(290,976

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(228,302

)

 

 

(228,302

)

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

560

 

 

 

 

 

 

560

 

Balance as of December 31, 2019

 

 

56,806

 

 

$

6

 

 

$

1,108,516

 

 

$

220

 

 

$

(817,961

)

 

$

290,781

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

(1,699

)

 

 

 

 

 

(1,699

)

Balance as of December 31, 2022

 

 

95,927

 

 

$

10

 

 

$

1,821,721

 

 

$

(2,067

)

 

$

(1,693,024

)

 

$

126,640

 


Atara Biotherapeutics, Inc.

Consolidated Statements of Cash Flows

(In thousands) 

See accompanying notes to the consolidated financial statements.

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(290,976

)

 

$

(230,699

)

 

$

(119,491

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

51,696

 

 

 

33,817

 

 

 

23,100

 

Depreciation and amortization expense

 

 

7,070

 

 

 

3,732

 

 

 

956

 

(Accretion) amortization of investment (discounts) premiums

 

 

(1,330

)

 

 

(1,885

)

 

 

732

 

Loss on disposals of property and equipment

 

 

1,027

 

 

 

 

 

 

 

Non-cash operating lease expense

 

 

964

 

 

 

 

 

 

 

Non-cash interest expense

 

 

 

 

 

211

 

 

 

 

Asset retirement obligation accretion expense

 

 

71

 

 

 

49

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(998

)

 

 

(5,764

)

 

 

(784

)

Operating lease assets

 

 

239

 

 

 

 

 

 

 

Other assets

 

 

322

 

 

 

(314

)

 

 

2

 

Accounts payable

 

 

4,213

 

 

 

(1,958

)

 

 

2,163

 

Accrued compensation

 

 

4,070

 

 

 

4,972

 

 

 

1,919

 

Accrued research and development expenses

 

 

(10,869

)

 

 

15,204

 

 

 

1,598

 

Other current liabilities

 

 

(394

)

 

 

2,491

 

 

 

1,896

 

Operating lease liabilities

 

 

(731

)

 

 

 

 

 

 

Other long-term liabilities

 

 

 

 

 

372

 

 

 

407

 

Net cash used in operating activities

 

 

(235,626

)

 

 

(179,772

)

 

 

(87,502

)

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(270,230

)

 

 

(466,489

)

 

 

(176,459

)

Proceeds from maturities and sales of short-term investments

 

 

336,261

 

 

 

306,125

 

 

 

296,600

 

Purchases of property and equipment

 

 

(5,733

)

 

 

(35,925

)

 

 

(20,232

)

Proceeds from sale of property and equipment

 

 

161

 

 

 

 

 

 

 

Net cash provided by (used in) investing activities

 

 

60,459

 

 

 

(196,289

)

 

 

99,909

 

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from sale of common stock in underwritten offerings, net

 

 

140,888

 

 

 

293,290

 

 

 

 

Proceeds from issuance of common stock through ATM facilities, net

 

 

47,729

 

 

 

47,586

 

 

 

19,156

 

Proceeds from employee stock awards

 

 

7,350

 

 

 

24,691

 

 

 

1,249

 

Taxes paid related to net share settlement of restricted stock units

 

 

(6,695

)

 

 

(7,503

)

 

 

(357

)

Principal payments on finance and capital lease obligations

 

 

(486

)

 

 

(528

)

 

 

 

Net cash provided by financing activities

 

 

188,786

 

 

 

357,536

 

 

 

20,048

 

Increase (decrease) in cash, cash equivalents and restricted cash

 

 

13,619

 

 

 

(18,525

)

 

 

32,455

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

62,092

 

 

 

80,617

 

 

 

48,162

 

Cash, cash equivalents and restricted cash at end of period

 

$

75,711

 

 

$

62,092

 

 

$

80,617

 

Non-cash investing and financing activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock through ATM facilities received

  subsequent to December 31, 2019

 

$

1,185

 

 

$

 

 

$

 

Property and equipment purchases included in accounts payable and other

  accrued liabilities

 

$

276

 

 

$

1,579

 

 

$

10,122

 

Accrued costs related to underwritten public offering

 

$

172

 

 

$

 

 

$

160

 

Capitalized lease obligations

 

$

 

 

$

441

 

 

$

9,904

 

Property and equipment acquired under capital leases

 

$

 

 

$

191

 

 

$

1,076

 

Asset retirement costs

 

$

 

 

$

88

 

 

$

580

 

Interest capitalized during construction period for build-to-suit lease arrangement

 

$

 

 

$

77

 

 

$

264

 

Proceeds from options exercised received subsequent to December 31, 2017

 

$

 

 

$

 

 

$

439

 

Supplemental cash flow disclosure

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

50

 

 

$

240

 

 

$

 

Cash paid for taxes

 

$

 

 

$

 

 

$

 

98



Atara Biotherapeutics, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

 

Net loss

 

$

(228,302

)

 

$

(340,141

)

 

$

(306,620

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

Gain on sale of ATOM Facility

 

 

(50,237

)

 

 

 

 

 

 

Stock-based compensation expense

 

 

53,838

 

 

 

53,865

 

 

 

51,351

 

Depreciation and amortization expense

 

 

5,653

 

 

 

9,345

 

 

 

8,332

 

Non-cash operating lease expense

 

 

8,915

 

 

 

1,948

 

 

 

1,457

 

Amortization of investment premiums

 

 

1,024

 

 

 

1,769

 

 

 

828

 

Other non-cash items, net

 

 

147

 

 

 

108

 

 

 

208

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(39,235

)

 

 

264

 

 

 

(1,250

)

Inventories

 

 

(1,586

)

 

 

 

 

 

 

Other current assets

 

 

1,836

 

 

 

8,182

 

 

 

(8,666

)

Operating lease assets

 

 

 

 

 

 

 

 

886

 

Other assets

 

 

(266

)

 

 

(1,727

)

 

 

(219

)

Accounts payable

 

 

(9,211

)

 

 

9,067

 

 

 

(815

)

Accrued compensation

 

 

(7,491

)

 

 

4,692

 

 

 

5,752

 

Accrued research and development expenses

 

 

11,541

 

 

 

(2,362

)

 

 

7,472

 

Other current liabilities

 

 

2,067

 

 

 

1,618

 

 

 

(187

)

Deferred revenue

 

 

(11,468

)

 

 

35,218

 

 

 

61,250

 

Operating lease liabilities

 

 

(8,009

)

 

 

(1,859

)

 

 

(1,316

)

Other long-term liabilities

 

 

354

 

 

 

(509

)

 

 

778

 

Net cash used in operating activities

 

 

(270,430

)

 

 

(220,522

)

 

 

(180,759

)

Investing activities

 

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(180,589

)

 

 

(301,129

)

 

 

(425,868

)

Proceeds from maturities and sales of short-term investments

 

 

292,973

 

 

 

333,967

 

 

 

309,653

 

Purchases of property and equipment

 

 

(4,193

)

 

 

(10,580

)

 

 

(4,513

)

Net proceeds from sale of ATOM Facility

 

 

94,765

 

 

 

 

 

 

 

Net cash provided by (used in) investing activities

 

 

202,956

 

 

 

22,258

 

 

 

(120,728

)

Financing activities

 

 

 

 

 

 

 

 

 

Proceeds from sale of common stock and pre-funded warrants in
  underwritten offerings, net

 

 

 

 

 

 

 

 

353,780

 

Proceeds from issuance of common stock through ATM facilities, net

 

 

21,891

 

 

 

98,697

 

 

 

69,189

 

Proceeds from employee stock awards

 

 

1,921

 

 

 

6,762

 

 

 

6,680

 

Proceeds from sale of future revenues, net

 

 

30,605

 

 

 

 

 

 

 

Taxes paid related to net share settlement of restricted stock units

 

 

(623

)

 

 

(1,244

)

 

 

(1,521

)

Principal payments on finance lease obligations

 

 

(518

)

 

 

(254

)

 

 

(389

)

Other financing activities, net

 

 

(192

)

 

 

(17

)

 

 

(165

)

Net cash provided by financing activities

 

 

53,084

 

 

 

103,944

 

 

 

427,574

 

Increase (decrease) in cash, cash equivalents and restricted cash

 

 

(14,390

)

 

 

(94,320

)

 

 

126,087

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

107,478

 

 

 

201,798

 

 

 

75,711

 

Cash, cash equivalents and restricted cash at end of period

 

$

93,088

 

 

$

107,478

 

 

$

201,798

 

Non-cash investing and financing activities

 

 

 

 

 

 

 

 

 

Property and equipment purchases included in accounts payable and other
  accrued liabilities

 

$

61

 

 

$

2,139

 

 

$

326

 

Accrued costs related to underwritten public offering

 

$

 

 

$

 

 

$

192

 

Accrued costs related to ATM facility

 

$

 

 

$

87

 

 

$

 

Accrued transaction costs related to sale of future revenues

 

$

332

 

 

$

 

 

$

 

Supplemental cash flow disclosure

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

335

 

 

$

32

 

 

$

62

 

Cash paid for income taxes

 

$

19

 

 

$

15

 

 

$

10

 

See accompanying notes to the consolidated financial statements.

99


Atara Biotherapeutics, Inc.

Notes to Consolidated Financial Statements

1.
Description of Business

1.

Description of Business

Atara Biotherapeutics, Inc. (“Atara”, “we”, “our” or “the Company”) was incorporated in August 2012 in Delaware. Delaware. Atara is a leading off-the-shelf, allogeneicleader in T-cell immunotherapy, company that is developingleveraging its novel treatmentsallogeneic Epstein-Barr Virus (“EBV”) T-cell platform to develop transformative therapies for patients with cancer and autoimmune and viral diseases. disease.

We have several T-cell immunotherapies in clinical development and are progressing amultiple next-generation allogeneic chimeric antigen receptor T-cell (“CAR T”) program.programs. Our most advanced T-cell immunotherapy program, tab-cel® (tabelecleucel), has received marketing authorization approval by the European Commission (“EC”) for commercial sale and use in the European Union (“EU”) and is currently in Phase 3 development in the US. In October 2021, we entered into a commercialization agreement (“Pierre Fabre Commercialization Agreement”) with Pierre Fabre Medicament (“Pierre Fabre”), as amended in September 2022, 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 (the “Territory”), following regulatory approval. We retain full rights to tab-cel in other major markets, including North America, Asia Pacific and Latin America. See Note 5 for further information.

In December 2020, we entered into a research, development and license agreement (“Bayer License Agreement”) with Bayer AG (“Bayer”) 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 under the Bayer License Agreement and to further advance our collaboration, we entered into (i) a Manufacturing and Supply Agreement; (ii) a Pharmacovigilance Agreement; (iii) a Quality Agreement; and (iv) a Technology Transfer Agreement (collectively, the Bayer License Agreement, the Manufacturing and Supply Agreement and the Technology Transfer Agreement are referred to as the “Bayer Agreements”). In May 2022, Bayer notified us of its decision to terminate the Bayer Agreements and on August 2, 2022, we entered into the Termination, Amendment and Program Transfer Agreement with Bayer which terminated the Bayer Agreements (the “Bayer Termination Agreement”) and returned full product development and commercialization rights related to ATA2271 and ATA3271 to us, effective as of July 31, 2022. See Note 5 for further information.

We have licensed rights to T-cell product candidates from Memorial Sloan Kettering Cancer Center (“MSK”), rights related to our next-generation CAR T programs from MSK and from H. Lee Moffitt Cancer Center (“Moffitt”), and rights to know-how and technology from the Council of the Queensland Institute of Medical Research (“QIMR Berghofer”). See Note 610 for further information.

2.

Summary of Significant Accounting Policies

BasisIn 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 Presentation

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 136 of our ATOM Facility employees transitioned to FDB as part of the transaction. We preparealso entered into a Master Services and Supply Agreement and related Statements of Work with FDB (collectively the “Fujifilm MSA”) which became effective upon the closing and could extend for up to ten years. Pursuant to the Fujifilm MSA, FDB will supply us with specified quantities of our consolidated financial statementscell therapy product candidates and any products approved by regulatory authorities, manufactured in accordance with accounting principles generally acceptedcGMP standards. See Notes 7, 8, and 10 for further information.

In August 2022, we announced a reduction in force that reduced our workforce by approximately 20%. We expect to recognize restructuring charges of $6.0 million in total for severance and related benefits for employees laid off under the reduction in force. These charges are primarily one-time termination benefits and are all cash charges. Refer to Note 9 for further information.

Certain prior year amounts, which are not material, have been reclassified to conform to current year presentation in the United StatesConsolidated Statements of America (“U.S. GAAP”)Cash Flows and follow the rules and regulationsNotes to Consolidated Financial Statements.

2.
Summary of the U.S. Securities and Exchange Commission (“SEC”).

Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Atara and our wholly owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation.

100


Segment and Geographic Information

We operate and manage our business as 1one operating and reportable segment, which is the business of developing and commercializing therapeutics. Our Chief Executive Officer, who is our chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. Substantially all of our assets are located in the U.S.

Of the $63.6 million license and collaboration revenue recognized in 2022, $61.8 million related to our agreements with Bayer, a German company, and $1.8 million related to our agreements with Pierre Fabre, a French company.

Use of Estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. Significant estimates and assumptions relied upon in preparing these financial statements include those related to revenue recognition, accrued research and development expenses, stock-based compensation expense and income taxes. Additionally, we use available market information to assess the fair value of our short-term investments. Actual results could differ materially from those estimates. If actual amounts differ from estimates, we include the updates in our consolidated results of operations in the period the actual amounts become known. Historically, the aggregate differences, if any, between our estimates and actual amounts in any year have not had a material effect on our consolidated financial statements.

Liquidity Risk

We have incurred significant operating losses since inception and have relied primarily on public and private equity financings and receipts from commercialization and license and collaboration agreements to fund our operations. As of December 31, 2019, we had an accumulated deficit of $818.0 million. As we continue to incur losses, our transition to profitability will depend on the successful development, approval and commercialization of product candidates and on the achievement of sufficient revenues to support our cost structure. We may never achieve profitability, and unless and until we do, we will need to continue to raise additional capital.sustained operating cash inflows or profitability. We expect that existing cash, cash equivalents and short-term investments as of December 31, 2019,2022 , together with net proceeds from the sale of common stock from our 2019 ATM Facility, as defined in Note 9,$40.0 million received in January 2020,2023 for achievement of certain milestones under the Pierre Fabre Commercialization Agreement, will be sufficient to fund our planned operations intofor at least the second quarternext twelve months from the date of 2021.issuance of these financial statements. However, the uncertainties inherent in Atara’s future operations and in our ability to obtain additional funding may raise substantial doubt about our ability to continue as a going concern in future reporting periods. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Although we have been successful in raising capital in the past, and expect to continue to raise capital as required, there is no assurance that we will be successful in obtaining additional funding on terms acceptable to us, if at all. If we are unable to obtain sufficient funding on acceptable terms, we could be forced to delay, limit, reduce or terminate preclinical studies, clinical studies or other development activities for one or more of our product candidates.

Concentration of Credit Risk and Other Uncertainties

We place cash and cash equivalents in the custody of financial institutions that management believes are of high credit quality, the amount of which at times, may be in excess of the amount insured by the Federal Deposit Insurance Corporation. We also make short-term investments in money market funds; U.S. Treasury, government agency and corporate debt obligations; commercial paper; certificates of deposit; and asset-backed securities, which can be subject to certain credit risk. However, we mitigate the risks by investing in high-grade instruments, limiting our exposure to any one issuer and monitoring the ongoing creditworthiness of the financial institutions and issuers.

Currency Translation

Transactions and monetary assets and liabilities that are denominated in a foreign currency are translated into U.S. dollars at the current exchange rate on the transaction date and as of each balance sheet date, respectively, with gains or losses on foreign exchange changes recognized in interest and other income (expense), net in the consolidated statements of operations and comprehensive loss. Foreign currency-denominated monetary assets and liabilities as of December 31, 2022 were not material.

Cash, Cash Equivalents and Short-Term Investments

Cash and cash equivalents are defined as highly liquid investments with original maturities of 90 days or less at the date of purchase.

101


Investments with original maturities of greater than 90 days are classified as short-term investments on the balance sheet.

As our entire investment portfolio is considered available for use in current operations, we classify all investments as available-for-sale and as current assets, even though the stated maturity may be more than one year from the current balance sheet date. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive loss, which is a separate component of stockholders’ equity in the consolidated balance sheet.

The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity, which are both recorded to interest and other income (expense), net in the consolidated statements of operations and comprehensive loss.

Changes in the fair value of available-for-sale securities impact the consolidated statements of operations and comprehensive loss only when such securities are sold, if an allowance for credit losses is recognized or if an impairment is recognized. Realized gains and losses on the sale of securities are determined by specific identification of each security’s cost basis. We regularly review our investment portfolio to determine if any security is impaired, which would require us to record an allowance for credit losses or impairment charge in the period any such determination is made. In making this judgment, we evaluate, among other things, the duration and extent to which the fair value of a security is less than its cost, our intent to sell or whether it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, the financial condition of the issuer and any changes thereto, and, as necessary, the portion of a decline in fair value that is credit-related. This assessment could change in the future due to new developments or changes in assumptions related to any particular security. Realized gains and losses, allowances for credit losses and impairments on available-for-sale securities, if any, are recorded to interest and other income, net in the statements of operations and comprehensive loss.


Fair Value Measurement

The carrying amounts of certain of our financial instruments including cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities approximate fair value due to their short maturities. Short-term investments are comprised of available-for-sale securities, which are carried at fair value.

Financial Instruments

Our financial assets are measured at fair value on a recurring basis using the following hierarchy to prioritize valuation inputs, in accordance with applicable GAAP:

Level 1: Quoted prices in active markets for identical assets or liabilities that we have the ability to access

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data such as quoted prices, interest rates and yield curves

Level 3: Inputs that are unobservable data points that are not corroborated by market data

We are subjectreview the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain riskssecurities within the fair value hierarchy. We recognize transfers into and uncertaintiesout of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs. There have been no transfers between Level 1, Level 2, and believe that changesLevel 3 in any periods presented.

Financial assets and liabilities are considered Level 2 when their fair values are determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In addition, Level 2 financial instruments are valued using comparisons to like-kind financial instruments and models that use readily observable market data as their basis. U.S. Treasury, government agency and corporate debt obligations, commercial paper and asset-backed securities are valued primarily using market prices of comparable securities, bid/ask quotes, interest rate yields and prepayment spreads and are included in Level 2.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. We have no Level 3 financial assets or liabilities.

102


Accounts Receivable, net

Accounts receivable are recorded net of estimates of variable consideration for which reserves are established and which result from discounts and chargebacks that are offered within contracts between us and a limited number of specialty pharmacies and a specialty distributor in the United States. These reserves are classified as reductions of accounts receivable.

We estimate the allowance for doubtful accounts using the current expected credit loss model, or CECL model. Under the CECL model, the allowance for doubtful accounts reflects the net amount expected to be collected from the accounts receivable. We evaluate the collectability of these cash flow based on the asset’s amortized cost, the risk of loss even when that risk is remote, losses over an asset’s contractual life, and other relevant information available to us. Accounts receivable balances are written off against the allowance when it is probable that the receivable will not be collected. Given the nature and history of our accounts receivable, we determined that an allowance for doubtful accounts was not required as of the following areas could haveperiods presented.

Inventories

Inventories are stated at the lower of cost or estimated net realizable value, on a material adverse effect on future financial position or resultsspecific identification basis. We use actual costs to determine our cost basis for inventories. Inventories consist of operations: our ability to obtain future financing;raw materials, work-in-process and finished goods. Finished goods inventories in excess of one year of forecasted sales are classified in the Consolidated Balance Sheets as non-current “Other assets.”

We begin capitalizing costs as inventory when the product candidate receives regulatory approval and market acceptance of,when the manufacturing facility producing such inventory is qualified by the relevant regulatory agency. Prior to regulatory approval and reimbursement for, ourqualification, we record such production costs related to product candidates if approved by applicable regulatory authorities; performance of third-partyas research and development expenses. Any manufactured product that is available for commercial sale is recorded to inventory; to the extent it is later used for clinical studies, such inventory costs are then recorded within research organizations and manufacturers upon which we rely; development of sales channels; protectionexpenses.

We periodically assess the recoverability of our intellectual property; litigationinventory and reduce the carrying value of the inventory when items are determined to be obsolete, defective or claims against us basedin excess of forecasted sales requirements. Inventory write-downs for excess, defective and obsolete inventory are recorded as a cost of sales. There have been no write-downs of our inventories for the periods presented.

Property and Equipment, net

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, ranging from three to five years, except for leasehold improvements, which are depreciated on intellectuala straight-line basis over the lesser of the estimated useful life of the leasehold improvement or the lease term. Costs incurred to acquire, construct or install property patent, product, regulatoryand equipment during the construction stage of a capital project or other factors;costs incurred to purchase and our abilitydevelop internal use software during the application development stage are recorded as construction in progress. Maintenance and repairs are charged to attract and retain employees necessary to support our growth.operations as incurred.

Long-lived Assets

UseWe evaluate the carrying amount of Estimatesour long-lived assets whenever events or changes in circumstances indicate that the assets may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount of the asset. To date, there have been no such impairment losses.

Asset Retirement Obligation (“ARO”)

The preparationAn ARO is a legal obligation associated with the retirement of financial statements in conformity with U.S. GAAP requires managementlong-lived assets pertaining to make estimates, assumptionsleasehold improvements. These liabilities are initially recorded at fair value and judgments that affect the amounts reportedrelated asset retirement costs are capitalized by increasing the carrying amount of the related assets by the same amount as the liability. Asset retirement costs are subsequently depreciated over the useful lives of the related assets. Subsequent to initial recognition, the Company records period-to-period changes in the financial statementsARO liability resulting from the passage of time and accompanying notes. Significant estimates relied upon in preparing these financial statements include estimatesrevisions to either the timing or the amount of the original estimate of undiscounted cash flows. The Company derecognizes ARO liabilities when the related to clinical study and other accruals, lease assets and liabilities, stock-based compensation expense and income taxes. Actual results could differ materially from those estimates.obligations are settled.

103


Leases

Leases

We determine if an arrangementa contract is or contains a lease at contract inception. Operating leases are included in operating lease assets, other current liabilities, and operating lease liabilities on our consolidated balance sheets. LeasesOur policy is to not recognize right-of-use (“ROU”) assets and lease liabilities for short-term operating leases with an initial termterms of 12 months or less are not recorded on the balance sheet;less; we recognize short-term lease expense for these leases on a straight-line basis over the lease term. Finance leasesLong-term operating lease ROU assets and long-term operating lease liabilities are includedpresented separately and operating lease liabilities payable in the next twelve months are recorded in other current liabilities. Finance lease ROU assets are recorded in other assets and the related finance lease liabilities are presented in other current liabilities and other long-term liabilities on our consolidated balance sheets.liabilities.

Lease assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The lease term includes renewal options that we are reasonably certain of exercising as of the commencement date. None of the lease terms used to calculate the future minimum lease payments at commencement date include renewal options. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The incremental borrowing rate for our leases is determined based on lease term and currency in which lease payments are made, adjusted for impacts of collateral. Lease assets also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Finance lease assets are amortized over the shorter of the lease term or the asset’s estimated useful life.

Our facilities and equipment operating leases have lease and non-lease components and we have made a policy election to account for the lease and non-lease components as a single lease component.

Through December 31, 2018,We are considered the leases were reviewedsub-lessor for classification as operating, capital or build-to-suit leases. For operating leases, rent was recognized on a straight-line basis over the lease period. For capital leases, we recorded the leased asset with a corresponding liability for principal and interest. Payments were recorded as reductions to these liabilities with interest being charged to interest expense in our consolidated statements of operations and comprehensive loss.

We analyzed the nature of the renovations and our involvement during the construction periodcertain of our manufacturing facilityleases where we have entered into a sub-lease agreement with or have assigned our lease to another party. Rental income was not material for any period presented and determined that we wererecord rental income as a reduction to rent expense within operating expenses.

Accruals of Research and Development Costs

We record accruals for estimated research and development costs based on an evaluation of our vendors’ progress towards completion of specific tasks, using data such as patient enrollment, clinical site activations or information provided to us by our vendors regarding their actual costs incurred. Payments for these activities are based on the deemed “owner”terms of individual contracts and payment timing may differ significantly from the construction project duringperiod in which the construction period. As a result, we were required to capitalize the fair value of the buildingservices are performed. We determine accrual estimates through reports from and discussions with internal personnel and outside service providers as well as the construction costs incurred on our consolidated balance sheet along with a corresponding financing liability for landlord-paid construction costs (i.e. “build-to-suit” accounting).

Once construction was complete, the Company considered the requirements for sale-leaseback accounting treatment, including evaluating whether all risks of ownership have been transferred back to the landlord, as evidenced by a lackprogress or state of continuing involvement in the leased property. Since the arrangement did not qualify for sale-leaseback accounting treatment, the building asset remained on the Company’s consolidated balance sheets at its historical cost, and such asset was depreciated over its estimated useful life. The Company bifurcated its lease payments into a portion allocated to the building and a portion allocated to the parcelcompletion of land on which the building has been built. The portion of the lease payments allocated to the land was treated for accounting purposes as operating lease payments, and therefore was recorded as rent expense in the consolidated statements of operations and comprehensive loss. The portion of the lease payments allocated to the building was further bifurcated into a portion allocated to interest expense and a portion allocated to reduce the build-to-suit lease obligation. The initial recording of these assets and liabilities were classified as non-cash investing and financing items, respectively, for purposes of the consolidated statements of cash flows. The build-to-suit asset and corresponding lease obligation was derecognized upon adoption of the new lease standard as we did not control the building during the construction period.


Asset Retirement Obligations (“ARO”)

ARO are legal obligations associated with the retirement of long-lived assets pertaining to leasehold improvements. These liabilities are initially recorded at fair value and the related asset retirement costs are capitalized by increasing the carrying amount of the related assets by the same amount as the liability. Asset retirement costs are subsequently depreciated over the useful lives of the related assets. Subsequent to initial recognition, the Company records period-to-period changes in the ARO liability resulting from the passage of time and revisions to either the timingstudies, or the amountservices completed. Our estimates of the original estimate of undiscounted cash flows. The Company derecognizes ARO liabilities when the related obligations are settled.

Foreign Currency

Transactions and monetary assets and liabilities that are denominated in a foreign currency are translated into U.S. dollars at the current exchange rate on the transaction date andaccrued expenses as of each balance sheet date respectively,are based on the facts and circumstances known at the time. Costs that are paid in advance of performance are deferred as a prepaid expense and amortized over the period in which the services are provided.

Sale of Future Revenues

To the extent that we account for the sale of future revenues as debt in accordance with gainsASC 470, we amortize the liability and recognize interest expense related to the sale of future revenues using the effective interest rate method over the estimated life of the underlying agreement. The liability and related interest expense are based on our current estimate of expected future payments over the life of the arrangement. We will re-assess the amount and timing of expected payments each reporting period using a combination of internal projections and forecasts from external resources and record interest expense on the carrying value of the liability using the imputed effective interest rate on a prospective basis.

Revenue Recognition

For contracts that are determined to be within the scope of Accounting Standards Codification Topic 606 (Accounting Standards Update (“ASU”) No. 2014-09), Revenue from Contracts with Customers, and all subsequent amendments (collectively, “ASC 606”), revenue is recognized as we satisfy performance obligations and when a customer obtains control of the promised goods or losses on foreignservices. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange changes recognized in interestfor these goods and other income (expense), netservices. To achieve this core principle, we apply the following five steps (i) identify the contract with the customer; (ii) identify the performance obligations in the consolidated statementscontract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as we satisfy a performance obligation. We only apply the five-step model to contracts when we determine that collection of operationssubstantially all consideration for goods and comprehensive loss. Foreign currency-denominated monetary assetsservices that are transferred is probable based on the customer’s intent and liabilitiesability to pay the promised consideration.

104


Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. To the extent a contract includes multiple promised goods and services, we apply judgment to determine whether promised goods and services are both capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation.

The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods and services to the customer. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes. Determining the transaction price requires significant judgment, which is discussed in further detail for our out-license agreements in Note 5. Our out-license agreements do not contain a significant financing component.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The consideration to be received is allocated among the separate performance obligations based on relative standalone selling prices. We typically determine standalone selling prices using an expected cost plus margin approach model.

We satisfy performance obligations either over time or at a point in time. Revenue is recognized over time if either (i) the customer simultaneously receives and consumes the benefits provided by our performance, (ii) our performance creates or enhances an asset that the customer controls as the asset is created or enhanced or (iii) our performance does not create an asset with an alternative use to the entity and we have an enforceable right to payment for performance completed to date. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. If we do not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring control of a promised good or service to a customer.

As of December 31, 2019 were not material.

Cash Equivalents and Short-Term Investments

Cash equivalents are defined as short-term, highly liquid investments with original maturities2022, our deferred revenue is related to the Pierre Fabre Commercialization Agreement, which is within the scope of 90 daysASC 606. As discussed in further detail in Note 5, the terms of these arrangements include potential payments to us for some or less atall of the date of purchase, and generally consist of money market funds, U.S. Treasury, government agency and corporate debt obligations,following: nonrefundable, upfront fees; development, regulatory, and commercial paper.

Investments with original maturities of greater than 90 days are classified as short-term investmentsmilestone payments; research and development funding payments; and royalties on the balance sheet, and consist primarilynet sales of U.S. Treasury, government agency and corporate debt obligations, commercial paper and asset-backed securities.licensed products. These payments relate to promised goods or services for which revenue will be recognized upon our satisfaction of the underlying performance obligations.

As Licenses of intellectual property: If the license of our entire investment portfoliointellectual property is considered available for use in current operations, we classify all investments as available-for-sale and as current assets, even though the stated maturity maydetermined to be more than one yeardistinct from the current balance sheet date. Available-for-sale securitiesother performance obligations identified in an arrangement, we recognize revenues from consideration allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are carriedcombined with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at fair value, with unrealized gainsa point in time and, losses reported in accumulated other comprehensive loss, which isif over time, the appropriate method of measuring progress for purposes of recognizing revenue.

Upfront payments: Upfront payments and fees are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a separate componentfuture period until we have satisfied our obligations under these arrangements.

Milestone payments: At the inception of stockholders’ equityeach arrangement that includes development milestone payments, we evaluate the probability of reaching the milestones and estimates the amount to be included in the consolidated balance sheet.

The amortized cost of securitiestransaction price using the most likely amount method. If it is adjusted for amortization of premiums and accretion of discounts to maturity, which are both recorded to interest and other income (expense), netprobable that a significant revenue reversal would not occur in the consolidated statements of operations and comprehensive loss.

Changesfuture, the associated milestone value is included in the fair valuetransaction price. The transaction price is then allocated to each performance obligation on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of available-for-sale securities impacteach subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and collaboration revenues and the consolidated statements of operations and comprehensive loss only when such securities are sold or if an other-than-temporary impairment is recognized. Realized gains and losses on the sale of securities are determined by specific identification of each security’s cost basis. We regularly review our investment portfolio to determine if any security is other-than-temporarily impaired, which would require us to record an impairment charge in the period any such determinationof adjustment.

105


Royalties: For arrangements that include sales-based royalties, including milestone payments based on levels of sales, if the license is made. In making this judgment, we evaluate, among other things,deemed to be the duration and extentpredominant item to which the fair valueroyalties relate, we recognize revenue at the later of a security is less than its cost,(i) when the financial conditionrelated sales occur, or (ii) when the performance obligation to which some or all of the issuerroyalty has been allocated has been satisfied, or partially satisfied. To date, we have not recognized any royalty revenue resulting from our out-licensing agreements.

Certain judgments affect the application of our revenue recognition policy. For example, we record short-term and any changes thereto,long-term deferred revenue based on our intentbest estimate of when such revenue will be recognized. Short-term deferred revenue consists of amounts that are expected to sell, or whether it is more likely than notbe recognized as revenue in the next 12 months, and long-term deferred revenue consists of amounts that we do not expect will be required to sellrecognized in the security before recovery of its amortized cost basis. Our assessmentnext 12 months. This estimate is based on whether a security is other-than-temporarily impaired couldour forecasted patient demand and current operating plan and, if patient demand or our operating plan should change in the future, due to new developments or changeswe may recognize a different amount of deferred revenue over the next 12-month period.

Research and Development Expense

Research and development expense consists of costs incurred in assumptionsperforming research and development activities, including compensation and benefits for research and development employees; expenses incurred under agreements with contract research organizations and investigative sites that conduct clinical and preclinical studies; expense incurred under agreements with contract manufacturing organizations related to any particular security. Realized gainsacquiring and losses and declines in value judged to be other-than-temporary on available-for-sale securities, if any, are recorded to interestmanufacturing clinical study materials and other income (expense), net insupplies to support the statements of operations and comprehensive loss. 

Fair Value Measurement

The carrying amounts of certainmanufacture of our financial instruments including cash equivalents, prepaid expensesproduct candidates; payments under licensing and research and development agreements; other current assets, accounts payableoutside services and accrued liabilities approximate fair value due to their short maturities. Short-term investmentsconsulting costs, and facilities, information technology and overhead expenses. Research and development costs are comprised of available-for-sale securities, which are carried at fair value.

Fair Value of Financial Instruments

Our financial assets are measured at fair value on a recurring basis using the following hierarchy to prioritize valuation inputs, in accordance with applicable GAAP:

Level1:

Quoted prices in active markets for identical assets or liabilities that we have the ability to access

Level2:

Observable market-based inputs or unobservable inputs that are corroborated by market data such as quoted prices, interest rates and yield curves


Level 3:

Inputs that are unobservable data points that are not corroborated by market data

We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. We recognize transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs. There have been no transfers between Level 1, Level 2, and Level 3 in any periods presented.

Financial assets and liabilities are considered Level 2 when their fair values are determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In addition, Level 2 financial instruments are valued using comparisons to like-kind financial instruments and models that use readily observable market data as their basis. U.S. Treasury, government agency and corporate debt obligations, commercial paper and asset-backed securities are valued primarily using market prices of comparable securities, bid/ask quotes, interest rate yields and prepayment spreads and are included in Level 2.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. We have no Level 3 financial assets or liabilities.

Property and Equipment, net

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, ranging from three to five years. Costs incurred to acquire, construct or install property and equipment during the construction stage of a capital project or costs incurred to purchase and develop internal use software during the application development stage are recorded as construction in progress. Leasehold improvements are amortized over the lesser of the life of the leasehold improvements or the lease term. Maintenance and repairs are charged to operationsexpensed as incurred.

Long-lived Assets

We evaluate the carrying amount of our long-lived assets whenever events or changes in circumstances indicate that the assets may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount of the asset. To date, there have been 0 such impairment losses.

Stock-Based Compensation Expense

We account for stock-based compensation expense, including the expense of restricted common stock awards (“RSAs”), grants of restricted stock units (“RSUs”), and stock options that may be settled in shares of our common stock, based on the fair values of the equity instruments issued. The fair value is determined on the measurement date, which is generally the date of grant. The fair value for our RSAs is their intrinsic value, which is the difference between the fair value of the underlying stock at the measurement date and the purchase price. The fair value of our RSUs is measured at the fair valueclosing market price of the underlyingour common stock aton the measurement date. The fair value for our stock option awards is determined at the grant date using the Black-Scholes valuation model.

In determining the fair value of stock option awards granted, we use the Black-Scholes valuation model and assumptions include:

Expected term – We derived the expected term using the “simplified” method (the expected term is determined as the average of the time-to-vesting and the contractual life of the options), as we have limited historical information to develop expectations about future exercise patterns and post vesting employment termination behavior.

Expected volatility – Prior to 2021, expected volatility was estimated using comparable public companies’ volatility for similar terms. Beginning in 2021, volatility is estimated using an average of Atara’s historical volatility and comparable public companies’ volatility for similar terms.

Expected dividend – We have not historically declared or paid dividends to our stockholders and have no plans to pay dividends; therefore, we assumed an expected dividend yield of 0%.

Risk-free interest rate – The risk-free interest rate is based on the yield on U.S. Treasury securities with the expected term of the associated award.

For awards with performance-based vesting criteria, we assess the probability of the achievement of the performance conditions at the end of each reporting period and begin to recognize the share-based compensation costs when it becomes probable that the performance conditions will be met. For awards that are subject to both service and performance conditions, no expense is recognized until it is probable that performance conditions will be met. Stock-based compensation expense for awards with time-based vesting criteria is recognized as expense on a straight-line basis over the requisite service period. Stock-based compensation expense for awards with performance and other vesting criteria is recognized as expense under an accelerated graded vesting model.

Key assumptions used in the Black-Scholes valuation model used for employee stock awards include:

Expected term – We derived the expected term using the “simplified” method (the expected term is determined as the average of the time-to-vesting and the contractual life of the options), as we have limited historical information to develop expectations about future exercise patterns and post vesting employment termination behavior.

Expected volatility – Expected volatility is estimated using comparable public companies’ volatility for similar terms.

Expected dividend – We have not historically declared or paid dividends to our stockholders and have no plans to pay dividends; therefore, we assumed an expected dividend yield of 0%.


Risk-free interest rate – The risk-free interest rate is based on the yield on U.S. Treasury securities with the expected term of the associated award.

The fair value of our common stock is based on observable market prices. We account for forfeitures of stock-based awards as they occur.

Research and Development Expense106


Research and development expense consists of costs incurred in performing research and development activities, including 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 clinical and preclinical 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 an allocation of facility, information technology and overhead expenses. Research and development costs are expensed as incurred.

Clinical Study Accruals

Costs for preclinical studies, clinical studies and manufacturing activities are recognized based on an evaluation of our vendors’ progress towards completion of specific tasks, using data such as patient enrollment, clinical site activations or information provided to us by our vendors regarding their actual costs incurred. Payments for these activities are based on the terms of individual contracts and payment timing may differ significantly from the period in which the services are performed. We determine accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or state of completion of studies, or the services completed. Our estimates of accrued expenses as of each balance sheet date are based on the facts and circumstances known at the time. Costs that are paid in advance of performance are deferred as a prepaid expense and amortized over the service period as the services are provided.

Defined Contribution Plan

We have one qualified 401(k) plan covering all eligible employees. Under the plan, employees may contribute up to the statutory allowable amount for any calendar year. Beginning in 2019, weWe make matching contributions, equal to 50%50% of each dollar contributed up to the first 6%6% of an individual’s eligible earnings, up to the annual IRS maximum. For the yearyears ended December 31, 2019,2022, 2021, and 2020 we recorded matching contributions of approximately $1.6 million.$2.3 million, $2.6 million, and $2.1 million, respectively.

Other Current Liabilities

Other current liabilities consisted of the following as of each period end:

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(in thousands)

 

Accrued operating expenses

 

$

3,900

 

 

$

5,627

 

Current portion of operating lease liabilities

 

 

1,312

 

 

 

 

Current portion of finance and capital lease liabilities

 

 

269

 

 

 

587

 

Other accrued liabilities

 

 

252

 

 

 

200

 

Total other current liabilities

 

$

5,733

 

 

$

6,414

 

Income Taxes

We use the asset and liability method to account for income taxes. We record deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect when the differences are expected to reverse. Valuation allowances are provided when necessary to reduce net deferred tax assets to the amount that is more likely than not to be realized. Based on the available evidence, we are unable, at this time, to support the determination that it is more likely than not that our deferred tax assets will be utilized in the future. Accordingly, we recorded a full valuation allowance as of December 31, 20192022 and 2018.2021. We intend to maintain valuation allowances until sufficient evidence exists to support their reversal.

Tax benefits related to uncertain tax positions are recognized when it is more likely than not that a tax position will be sustained during an audit. Interest and penalties related to unrecognized tax benefits are included within the provision for income tax.


Comprehensive Income (Loss)

Comprehensive income (loss) is defined as a change in equity of a business enterprise during a period resulting from transactions from non-owner sources. Our other comprehensive income (loss) is comprised solely of unrealized gains (losses) on available-for-sale securities and is presented net of taxes. WeThere have not recordedbeen any material reclassifications from other comprehensive income (loss) to net loss recorded during any period presented.

Recent Accounting Pronouncements

The Company considersWe consider the applicability and impact of any Accounting Standards Update (“ASU”)recent ASU issued by the Financial Accounting Standards Board (“FASB”). Based on our assessment, the ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which was clarified and amended by the issuances of ASUs 2018-19, 2019-04, 2019-05 and 2019-11 in November 2018, April 2019, May 2019 and November 2019, respectively. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis are measured using an expected-loss model, replacing the current incurred-loss model, and recorded through an allowance for credit losses. The guidance also establishes a new impairment model for available-for-sale debt securities. We adopted the new standard and the related amendments on January 1, 2020 using a modified retrospective approach. The adoption did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software (and hosting arrangements that include an internal-use software license). The guidance provides criteria for determining which implementation costs to capitalize as an asset related to the service contract and which costs to expense. We adopted the new standard on January 1, 2020 using a prospective approach. We do not expect the adoption to have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which eliminates certain exceptions related to the general principles in ASC 740 and makes amendments to other areas with the intention of simplifying various aspects related to accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We early adopted the new standard on January 1, 2020. We do not expect the adoption to have a material impact on our consolidated financial statements.

Adoption of New Accounting Pronouncements

We adopted ASU No. 2016-02, Leases (Topic 842), as of January 1, 2019, using the optional transition method, which allows for the initial application of the new accounting standard at the adoption date and the recognition of a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the period of adoption. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. In addition, we elected the hindsight practical expedient to determine the lease term for existing leases.

Adoption of the new standard resulted in the recording of additional operating lease assets and operating lease liabilities of $14.3 million and $15.3 million, respectively, as of January 1, 2019. This was partially offset by de-recognition of the build-to-suit asset and corresponding lease obligation of $10.3 million for our Thousand Oaks manufacturing facility lease, as we did not control the building during the construction period (see Note 7). We evaluated the impact of the new standard for deferred tax accounting purposes and recorded corresponding deferred tax assets and liabilities upon adoption of ASC 842. The deferred tax assets are offset by the valuation allowance on deferred taxes. The cumulative effect adjustment to the opening balance of accumulated deficit was a decrease of $0.4 million. The standard did not have a significant impact on our consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flow for the years ended December 31, 2019, 2018 and 2017.

We adopted ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income to retained earnings for adjustments to tax effects that were originally recorded in other comprehensive income due to changes in the U.S. federal corporate income tax rate resulting from the enactment of the U.S. tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The new standard had no impact on our consolidated balance sheets as of December 31, 2019 and 2018 or our consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flow for the years ended December 31, 2019, 2018 and 2017.


3.
Net Loss per Common Share

3.

Net Loss per Common Share

Basic net loss per common share is calculated by dividing net loss by the weighted-average number of shares of common stock and pre-funded warrants outstanding during the period, without consideration of common share equivalents. Diluted net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock, pre-funded warrants and common share equivalents outstanding for the period. The pre-funded warrants are included in the computation of basic and diluted net loss per common share as the exercise price is negligible and the pre-funded warrants are fully vested and exercisable. Common share equivalents are only included in the calculation of diluted net loss per common share when their effect is dilutive.

Potential dilutive securities, which include unvested restrictedRSUs, unvested performance-based RSUs and performance-based options to purchase common stock units (“RSUs”),for which established performance criteria have been achieved as of the end of the respective periods, vested and unvested options to purchase common stock and shares to be issued under our employee stock purchase plan (“ESPP”), have been excluded from the computation of diluted net loss per share as the effect is antidilutive. Therefore, the denominator used to calculate both basic and diluted net loss per common share is the same in all periods presented.

The following table represents the potential common shares issuable pursuant to outstanding securities as of the related period end dates listed that were excluded from the computation of diluted net loss per common share, as their inclusion would have an antidilutive effect:

 

As of December 31,

 

 

2022

 

 

2021

 

 

2020

 

Unvested RSUs

 

6,698,858

 

 

 

5,253,347

 

 

 

2,868,407

 

Vested and unvested options

 

10,336,634

 

 

 

9,200,337

 

 

 

7,832,386

 

ESPP share purchase rights

 

86,782

 

 

 

27,238

 

 

 

26,349

 

Total

 

17,122,274

 

 

 

14,480,922

 

 

 

10,727,142

 

107


 

As of December 31,

 

 

2019

 

 

2018

 

 

2017

 

Unvested RSUs

 

1,910,764

 

 

 

1,405,460

 

 

 

1,685,000

 

Vested and unvested options

 

6,934,262

 

 

 

6,276,999

 

 

 

5,229,648

 

ESPP share purchase rights

 

20,438

 

 

 

7,974

 

 

 

14,905

 

Total

 

8,865,464

 

 

 

7,690,433

 

 

 

6,929,553

 

4.
Financial Instruments


4.

Financial Instruments

The following tables summarize the estimated fair value and related valuation input hierarchy of our available-for-sale securities as of each period end:

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of December 31, 2022:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

78,033

 

 

$

 

 

$

 

 

$

78,033

 

U.S. Treasury obligations

 

Level 2

 

 

63,013

 

 

 

3

 

 

 

(394

)

 

 

62,622

 

Government agency obligations

 

Level 2

 

 

8,086

 

 

 

 

 

 

(48

)

 

 

8,038

 

Corporate debt obligations

 

Level 2

 

 

82,598

 

 

 

4

 

 

 

(1,513

)

 

 

81,089

 

Commercial paper

 

Level 2

 

 

996

 

 

 

 

 

 

 

 

 

996

 

Asset-backed securities

 

Level 2

 

 

6,343

 

 

 

 

 

 

(119

)

 

 

6,224

 

Total available-for-sale securities

 

 

 

 

239,069

 

 

 

7

 

 

 

(2,074

)

 

 

237,002

 

Less: amounts classified as cash equivalents

 

 

 

 

(87,122

)

 

 

(3

)

 

 

 

 

 

(87,125

)

Amounts classified as short-term investments

 

 

 

$

151,947

 

 

$

4

 

 

$

(2,074

)

 

$

149,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of December 31, 2021:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

89,738

 

 

$

 

 

$

 

 

$

89,738

 

U.S. Treasury obligations

 

Level 2

 

 

111,832

 

 

 

1

 

 

 

(138

)

 

 

111,695

 

Government agency obligations

 

Level 2

 

 

21,346

 

 

 

 

 

 

(23

)

 

 

21,323

 

Corporate debt obligations

 

Level 2

 

 

99,757

 

 

 

6

 

 

 

(190

)

 

 

99,573

 

Commercial paper

 

Level 2

 

 

36,993

 

 

 

 

 

 

 

 

 

36,993

 

Asset-backed securities

 

Level 2

 

 

10,174

 

 

 

1

 

 

 

(25

)

 

 

10,150

 

Total available-for-sale securities

 

 

 

 

369,840

 

 

 

8

 

 

 

(376

)

 

 

369,472

 

Less: amounts classified as cash equivalents

 

 

 

 

(104,488

)

 

 

 

 

 

 

 

 

(104,488

)

Amounts classified as short-term investments

 

 

 

$

265,352

 

 

$

8

 

 

$

(376

)

 

$

264,984

 

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of December 31, 2019:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

63,554

 

 

$

 

 

$

 

 

$

63,554

 

U.S. Treasury obligations

 

Level 2

 

 

52,805

 

 

 

46

 

 

 

(1

)

 

 

52,850

 

Government agency obligations

 

Level 2

 

 

6,151

 

 

 

1

 

 

 

(1

)

 

 

6,151

 

Corporate debt obligations

 

Level 2

 

 

100,512

 

 

 

180

 

 

 

(10

)

 

 

100,682

 

Commercial paper

 

Level 2

 

 

26,290

 

 

 

 

 

 

 

 

 

26,290

 

Asset-backed securities

 

Level 2

 

 

7,266

 

 

 

6

 

 

 

 

 

 

7,272

 

Certificate of deposit

 

Level 2

 

 

500

 

 

 

 

 

 

 

 

 

500

 

Total available-for-sale securities

 

 

 

 

257,078

 

 

 

233

 

 

 

(12

)

 

 

257,299

 

Less amounts classified as cash equivalents

 

 

 

 

(72,507

)

 

 

 

 

 

 

 

 

(72,507

)

Amounts classified as short-term investments

 

 

 

$

184,571

 

 

$

233

 

 

$

(12

)

 

$

184,792

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of December 31, 2018:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

38,708

 

 

$

 

 

$

 

 

$

38,708

 

U.S. Treasury obligations

 

Level 2

 

 

111,164

 

 

 

4

 

 

 

(80

)

 

 

111,088

 

Government agency obligations

 

Level 2

 

 

15,206

 

 

 

1

 

 

 

(32

)

 

 

15,175

 

Corporate debt obligations

 

Level 2

 

 

121,017

 

 

 

15

 

 

 

(217

)

 

 

120,815

 

Commercial paper

 

Level 2

 

 

12,935

 

 

 

 

 

 

 

 

 

12,935

 

Asset-backed securities

 

Level 2

 

 

11,894

 

 

 

 

 

 

(31

)

 

 

11,863

 

Total available-for-sale securities

 

 

 

 

310,924

 

 

 

20

 

 

 

(360

)

 

 

310,584

 

Less amounts classified as cash equivalents

 

 

 

 

(61,651

)

 

 

 

 

 

 

 

 

(61,651

)

Amounts classified as short-term investments

 

 

 

$

249,273

 

 

$

20

 

 

$

(360

)

 

$

248,933

 

The amortized cost and fair value of our available-for-sale securities by contractual maturity were as follows:

 

As of December 31, 2019

 

 

As of December 31, 2018

 

 

Amortized

 

 

Estimated

 

 

Amortized

 

 

Estimated

 

 

Cost

 

 

Fair Value

 

 

Cost

 

 

Fair Value

 

 

(in thousands)

 

 

(in thousands)

 

Maturing within one year

$

214,085

 

 

$

214,199

 

 

$

287,755

 

 

$

287,469

 

Maturing in one to five years

 

42,993

 

 

 

43,100

 

 

 

23,169

 

 

 

23,115

 

Total available-for-sale securities

$

257,078

 

 

$

257,299

 

 

$

310,924

 

 

$

310,584

 


 

As of December 31, 2022

 

 

As of December 31, 2021

 

 

Amortized

 

 

Estimated

 

 

Amortized

 

 

Estimated

 

 

Cost

 

 

Fair Value

 

 

Cost

 

 

Fair Value

 

 

(in thousands)

 

 

(in thousands)

 

Maturing within one year

$

202,323

 

 

$

201,359

 

 

$

278,457

 

 

$

278,354

 

Maturing in one to five years

 

36,746

 

 

 

35,643

 

 

 

91,383

 

 

 

91,118

 

Total available-for-sale securities

$

239,069

 

 

$

237,002

 

 

$

369,840

 

 

$

369,472

 

We considered the current and expected future global economic and market conditions, including the COVID-19 pandemic and the war in Ukraine, and determined that our investments have not been significantly impacted. As of December 31, 2019, certain available-for-sale securities had been in a continuous unrealized loss position, each for less than twelve months. As of this date,2022, no significant facts or circumstances were present to indicate a deterioration in the creditworthiness of the respective issuers. Becauseissuers of the available-for-sale securities we do not intend to sell these securitieshold, and it is not more likely than not that we will be requiredhave no requirement or intention to sell these securities before maturity or recovery of their amortized cost bases, which may be maturity,basis. For all securities with a fair value less than its amortized cost basis, we do not consider these investmentsdetermined the decline in fair value below amortized cost basis to be other-than-temporarily impaired at December 31, 2019. non-credit related and no allowance for losses has been recorded. During the years ended December 31, 2019, 20182022, 2021 and 2017,2020, we did not recognize any other-than-temporary impairment losses.losses on our investments.

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We have elected the practical expedient to exclude the applicable accrued interest from both the fair value and the amortized cost basis of our available-for-sale securities for purposes of identifying and measuring an impairment. We present accrued interest receivable related to our available-for-sale securities in other current assets, separate from short-term investments on our consolidated balance sheet. As of December 31, 2022 and 2021, accrued interest receivable was $0.8 million and $0.8 million, respectively. Our accounting policy is to not measure an allowance for credit losses for accrued interest receivables and to write-off any uncollectible accrued interest receivable as a reversal of interest income in a timely manner, which we consider to be in the period in which we determine the accrued interest will not be collected by us. We have not written off any accrued interest receivables for the years ended December 31, 2022, 2021 and 2020.

In addition, restricted cash collateralized by money market funds is a financial asset measured at fair value and is a Level 1 financial instrument under the fair value hierarchy. As of December 31, 2019 and 2018, restricted cash totaled $1.4 million.

The following table provides a reconciliation of cash, cash equivalents and restricted cash within the consolidated balance sheets that sum to the total of the same such amounts in the consolidated statement of cash flows:

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Cash and cash equivalents

 

$

92,942

 

 

$

106,084

 

Restricted cash - short-term

 

 

146

 

 

 

194

 

Restricted cash - long-term

 

 

 

 

 

1,200

 

Total cash, cash equivalents and restricted cash

 

$

93,088

 

 

$

107,478

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(in thousands)

 

Cash and cash equivalents

 

$

74,317

 

 

$

60,698

 

Restricted cash - short-term

 

 

194

 

 

 

194

 

Restricted cash - long-term

 

 

1,200

 

 

 

1,200

 

Total cash, cash equivalents and restricted cash

 

$

75,711

 

 

$

62,092

 

 

 

 

 

 

 

 

 

 

5.
Out-license Agreements

Pierre Fabre Commercialization Agreement

5.

Property and Equipment

PropertyIn 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 equipmentdistribute Ebvallo in Europe and select emerging markets in the Territory following regulatory approval. Atara retains full rights to Ebvallo in other major markets, including North America, Asia Pacific and Latin America. In September 2022, we entered into Amendment No. 1 to the Pierre Fabre Commercialization Agreement (the “PF Amendment”). Under the terms of the PF Amendment, following European Commission approval of Ebvallo for EBV+ PTLD and subsequent filing of the Marketing Authorization Application (“MAA”) transfer to Pierre Fabre, we are entitled to receive an additional $30 million milestone payment in exchange for, among other things, a reduction in: (i) royalties we are eligible to receive as a percentage of net sales of Ebvallo in the Territory, and (ii) the supply price mark up on Ebvallo purchased by Pierre Fabre. Additionally, we also agreed to extend the time period for provision of certain services to Pierre Fabre under the Pierre Fabre Commercialization Agreement.

We are responsible at our cost for the conclusion of the ongoing Phase 3 ALLELE clinical study and the Phase 2 multi-cohort clinical study. We will also be responsible at our cost for certain other activities directed to obtaining regulatory approval for Ebvallo for EBV-positive lymphoproliferative disease pursuant to the terms of the Pierre Fabre Commercialization Agreement in Europe. Pierre Fabre will be responsible at its cost for obtaining and maintaining all other regulatory approvals and for commercialization and distribution of Ebvallo in the Territory. We will own any intellectual property rights developed solely by us under the Agreement.

Pierre Fabre paid us an upfront cash payment of $45.0 million for the exclusive license grant in the fourth quarter of 2021. In December 2022, we met the contractual right to receive $40.0 million in milestone payments upon certain regulatory milestones. Subject to the terms of the royalty purchase agreement with HCRx, as described in Note 6, we are entitled to receive an aggregate of up to $308.0 million in remaining milestone payments upon achieving certain regulatory and commercial milestones in addition to double-digit tiered royalties as a percentage of net sales of Ebvallo, until the later of 12 years after the first commercial sale in such country, the expiration of specified patent rights, or the expiration of all regulatory exclusivity for such product on a country-by-country basis.

We have entered into a separate manufacturing and supply agreement with Pierre Fabre for us to manufacture Ebvallo for Pierre Fabre to use in the Territory based on a fixed price through December 31, 2023 and cost plus a margin post January 1, 2024. We are responsible for manufacturing and supplying Pierre Fabre with Ebvallo for commercialization in the Territory at Pierre Fabre’s cost for a minimum of seven years from the first commercial sale, as defined in the Pierre Fabre Commercialization Agreement, of Ebvallo in the Territory. Following this period, we have the option to transfer the manufacturing responsibility and related manufacturing

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technology to a third party contract manufacturing organization (“CMO”), and Pierre Fabre may also elect to directly assume the manufacturing responsibility and receive the related manufacturing technology.

We are also responsible for cell selection services at our cost for a certain period of time unless the parties agree to transfer the related cell selection technology to Pierre Fabre prior to this date. After this period of time, if we agree to continue to provide cell selection services, it shall be at the sole expense of Pierre Fabre.

We have formed a joint steering committee with Pierre Fabre that provides oversight, decision making and implementation guidance regarding the commercialization activities covered under the agreement.

We assessed this arrangement in accordance with ASC 606 and concluded that the promises in the Pierre Fabre Commercialization Agreement represent transactions with a customer. We concluded that the Pierre Fabre Commercialization Agreement includes transfer of intellectual property rights in the form of a license, the potential to manufacture and supply Ebvallofor a minimum of seven years and until tech transfer, the potential to perform cell-selection services for a minimum of three years and until tech transfer, and obligation to participate in the JSC. We concluded that the promises are not distinct because Pierre Fabre cannot benefit from the license without the other services and vice versa. Consequently, the license, manufacture and supply, cell selection and participation in the JSC is a single performance obligation.

Under the Pierre Fabre Commercialization Agreement, we determined that the $45.0 million upfront payment, constituted the entire consideration to be included in the transaction price at the outset of the arrangement. The $40.0 million in development milestones met in December 2022 were added to the transaction price upon meeting of the related milestones. Revenue associated with the upfront fee and development milestones for the single performance obligation will be deferred until the initial delivery of services related to the manufacture and supply and cell selection and then recognized over the period during which Pierre Fabre’s material right to these services exists. The $85.0 million in upfront fee and milestones met is recorded as deferred revenue as of December 31, 2022, of which $8.0 million is included in current liabilities and $77.0 million is included in long-term liabilities, and we expect to recognize this revenue over the next 12 years.

The remaining potential development and commercial milestone payments that we are eligible to receive were excluded from the transaction price, as the milestone amounts were fully constrained based on the probability of achievement or have not been earned. None of the future royalty and sales-based milestone payments were included in the transaction price, as the potential payments represent sales-based consideration. We will reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and, if necessary, adjust our estimate of the transaction price.

Bayer Agreements

Research, Development and License Agreement

In December 2020, we entered into the Bayer License Agreement to develop mesothelin-directed CAR T-cell therapies for the treatment of solid tumors, 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 (the “Licensed Products”).

Under the terms of the Bayer License Agreement, we were responsible at our cost for all mutually agreed preclinical and clinical activities for ATA2271 through the first in human Phase 1 clinical study in collaboration with MSK, following which Bayer was responsible for the further development of ATA2271 at its cost. Bayer was responsible for the development of ATA3271, except for certain mutually agreed preclinical, translational, manufacturing and supply chain activities to be performed by us relating to ATA3271, in each case at Bayer’s cost. Bayer was also be solely responsible for commercializing the Licensed Products at its cost.

In December 2020, we received an upfront cash payment of $45.0 million from Bayer for the exclusive license grant, net of applicable withholding taxes, which were fully recovered in August 2021, and an additional $15.0 million upfront reimbursement payment for certain research and process development activities to be performed by us.

The transaction price at inception consisted of a $45.0 million upfront payment for the license, $15.0 million for certain research and process development activities and the $5.0 million for additional specified translational activities, and this amount was allocated to the single performance obligation. The potential development and commercial milestone payments that we are eligible to receive were excluded from the transaction price, as all milestone amounts were fully constrained based on the probability of achievement. None of the future royalty and sales-based milestone payments were included in the transaction price, as the potential payments represent sales-based consideration. We reevaluated the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and, if necessary, adjust our estimate of the transaction price.

110


Technology Transfer Agreement

In March 2021, we entered into a Technology Transfer Agreement with Bayer (the “Bayer Tech Transfer Agreement”), which was contemplated as part of the Bayer License Agreement, to transfer to Bayer the ATA3271 manufacturing process being developed as part of the CMC services in the Bayer License Agreement. Upon entering into the agreement, we invoiced Bayer 20 percentof the total fee of $15.3 million under the Bayer Tech Transfer Agreement, or $3.1 million, which we received in the second quarter of 2021 and invoiced 40 percent of the total fee, or $6.1 million, in the first quarter of 2022.

We assessed this arrangement in accordance with ASC 606 and concluded that the promises in the Bayer Tech Transfer Agreement represent transactions with a customer. We concluded that the Bayer Tech Transfer Agreement should be combined with the Bayer License Agreement and accounted for as a modification of that agreement and that the Bayer Tech Transfer Agreement contains the following promises: (i) technology transfer services and (ii) supply of materials required for the technology transfer services. In accordance with ASC 606, we determined that the technology transfer services and supply of materials required for the technology transfer services were not distinct from each other, as they are highly interdependent upon one another. In addition, we concluded that the technology transfer services and supply of materials required for the technology transfer services were highly interdependent with the license, early-stage R&D and CMC services identified in the Bayer License Agreement. Accordingly, we determined that these promises should be combined into a single performance obligation.

Under the Bayer Tech Transfer Agreement, in order to evaluate the appropriate transaction price, we determined that the $15.3 million fee constituted the entire consideration to be included in the transaction price, and this amount was allocated to the single performance obligation as identified under the Bayer License Agreement.

We utilize a cost-based input method to recognize revenue based on the amount of actual costs incurred relative to the total budgeted costs expected to be incurred for the combined performance obligation.

Manufacturing and Supply Agreement

In March 2021, we entered into a Manufacturing and Supply Agreement with Bayer (the “Bayer Manufacturing Agreement”), which was contemplated as part of the Bayer License Agreement, to manufacture Phase 1 and 2 allogeneic mesothelin-directed CAR T-cell therapies for Bayer to use in clinical trials at a price based on our costs plus a reasonable margin, which is consistent with our standalone selling price. Under the Bayer Manufacturing Agreement, we will also provide storage and distribution services to Bayer at a price that is consistent with our standalone selling price for these services.

Upon entering into the Bayer Manufacturing Agreement, Bayer submitted, and we approved, a binding purchase order for manufacturing services and storage services. Any fees for the manufacturing services will be invoiced as follows: (i) 50 percent upon written acceptance by us of the binding purchase order, and (ii) the remainder upon delivery of the certification of analysis of such lots to Bayer. Storage and distribution services are billed monthly as those services are provided to Bayer.

In March 2021, we invoiced Bayer 50 percent of the total estimated supply price of $13.1 million for manufacturing services under the initial purchase order for the supply of six lots, or $6.6 million, which we received in the second quarter of 2021. The remainder of the supply price will be billed upon the release of the lots ordered by Bayer.

We assessed this arrangement in accordance with ASC 606 and concluded that the promises in the manufacturing and supply agreement represent transactions with a customer. We concluded that the Bayer Manufacturing Agreement contains the following promises: (i) manufacturing services; (ii) storage services provided on a month-to-month basis; and (iii) distribution services. In accordance with ASC 606, we determined that the manufacturing services for the initial purchase order of six lots, that are expected to be provided prior to completion of the technology transfer, are not distinct as they are highly interdependent on the manufacturing process being developed and transferred under the Bayer License Agreement and the Bayer Tech Transfer Agreement. Accordingly, we determined that these promises should be combined into a single performance obligation. We also determined that each of the other services were distinct and separate performance obligations. We determined that the initial binding order for the manufacture and supply of six lots should be combined with the Bayer License Agreement and accounted for as a modification of that agreement along with the Bayer Tech Transfer Agreement. We also concluded that a binding purchase order from Bayer, together with the Bayer Manufacturing Agreement, form the contract for manufacturing services and storage services and a shipping order from Bayer forms the contract for distribution services. We also determined that the storage services provided on a month-to-month basis and distribution services are distinct and separate performance obligations. All the performance obligations identified above are priced at their standalone selling price.

Under the Bayer Manufacturing Agreement, in order to evaluate the appropriate transaction price, we determined that the $13.1 million fee constituted the entire consideration to be included in the transaction price, and this amount was allocated to the single

111


performance obligation as identified under the Bayer License Agreement. Revenue for the manufacturing services for the initial six lots will be recognized based on the amount of actual costs incurred relative to the total budgeted costs expected to be incurred for the combined performance obligation. Revenue for the storage services will be recognized over time as those services are provided. Revenue for the distribution services will be recognized at a point in time when the product is delivered to a clinical site designated by Bayer.

Bayer Agreements Termination and Revenue Recognition

In May 2022, Bayer notified us of its decision to terminate the Bayer Agreements, and on August 2, 2022, we entered into the Bayer Termination Agreement with an effective date of July 31, 2022. Upon the termination effective date, full product development rights related to ATA2271 and ATA3271 reverted to Atara. In return for certain activities performed by Atara prior to the termination effective date, Bayer paid Atara $4.2 million in September 2022. Utilizing the cost-based input method, we recognized license and collaboration revenue of $61.8 million for the year ended December 31, 2022, under the Bayer Agreements and Bayer Termination Agreement. For the year ended December 31, 2021, we recognized license and collaboration revenue of $19.8 million under the Bayer Agreements. There was no deferred revenue related to the Bayer Agreements as of December 31, 2022, compared to $51.5 million as of December 31, 2021. No development or sales-based milestone payments have been earned or received.

6.
Liability Related to the Sale of Future Revenues

In December 2022, we entered into a Purchase and Sale Agreement (the “HCRx Agreement”) with HCR Molag Fund, L.P., a Delaware limited partnership, (“HCRx”). In exchange for a payment of $31.0 million (the “Investment Amount”), net of certain transaction expenses, to Atara, HCRx obtained the right to receive certain Ebvallo royalties and milestone payments payable by Pierre Fabre under the Pierre Fabre Commercialization Agreement up to an agreed upon multiple of the Investment Amount. We received the Investment Amount, net of certain transaction costs, from HCRx on December 30, 2022.

Under the HCRx Agreement, HCRx is entitled to receive tiered royalties on net sales of Ebvallo in the Territory (as defined in the Pierre Fabre Commercialization Agreement) in amounts ranging from the mid-single digits to double digits based on annual net sales. HCRx is also entitled to certain milestone payments due to Atara from Pierre Fabre. The total royalties and milestones payable to HCRx are capped between 185% and 250% of the Investment Amount, depending upon the timing of such royalties and milestones. Upon meeting the cap amount, HCRx’s right to receive royalties and milestone payments will terminate and all rights will revert to Atara. To the extent a certain milestone within the Pierre Fabre Commercialization Agreement is not achieved on or prior to June 30, 2026, we will be required to make a one-time cash payment in the amount of $9.0 million to HCRx, and HCRx shall transfer all of its right, title and interest in this certain $9.0 million milestone payment to Atara. This payment, if required, would be included in the calculation of aggregate payments made to HCRx.

The gross proceeds of the Investment Amount of $31.0 million were recorded as a liability related to the sale of future revenues, net of transaction costs of $0.4 million, and will be amortized using the effective interest method over the life of the arrangement.

To determine the amortization of the recorded liability, we are required to estimate the total amount of future payments to be received by HCRx. The sum of these amounts less the $31.0 million proceeds we received will be recorded as interest expense over the life of the HCRx Agreement. We will estimate the effective interest rate used to record non-cash interest expense under the HCRx Agreement based on the estimate of future royalty payments to be received by HCRx. Over the life of the arrangement, the actual effective interest rate will be affected by the amount and timing of the royalty and milestone payments received by HCRx and changes in our forecasted payments to HCRx. At each reporting date, we will reassess our estimate of total future royalty payments to be received by HCRx, and prospectively adjust the effective interest rate and amortization of the liability as necessary.

The following table presents the changes in the liability related to the sale of future revenues under the HCRx Agreement for the year ended December 31, 2022:

 

 

For the year ended December 31,

 

 

 

2022

 

 

 

(in thousands)

 

Liability related to the sale of future revenues, beginning balance

 

$

 

Proceeds from sale of future revenues, net

 

 

30,605

 

Less: debt issuance costs

 

 

(368

)

Liability related to the sale of future revenues, ending balance

 

$

30,237

 

112


7.
Sale of ATOM Facility

On April 4, 2022, we completed the sale of the ATOM Facility to FDB for net proceeds of $94.8 million, after deducting transaction costs of $4.6 million and other adjustments to the purchase price. The sale resulted in a gain of $50.2 million included within other income (expense), net for the year end December 31, 2022. As disclosed in Note 8, although we have assigned the lease for the ATOM Facility to FDB, we have not received novation from the landlord. Therefore, the lease-related assets and liabilities for the ATOM Facility remain on our balance sheet. Refer to the summary of assets sold and gain on sale of the ATOM Facility:

(in thousands)

 

 

 

Net proceeds from sale of ATOM Facility

 

$

94,765

 

 

 

 

 

Assets sold:

 

 

 

Other current assets

 

$

190

 

Property and equipment, net

 

 

44,299

 

Other assets

 

 

39

 

Less: Assets sold

 

 

44,528

 

Gain on sale of ATOM Facility

 

$

50,237

 

In connection with the sale, we entered into a Transition Services Agreement (“TSA”) with FDB, pursuant to which we are assisting them in the transition of certain functions, including, but not limited to, information technology, finance and technical operations. FDB will reimburse us at cost for all third party expenses incurred in conjunction with the TSA and for time incurred by our employees to satisfy requirements set forth by the TSA. The reimbursements are recorded as reductions to the related Operating expenses and the amounts associated with reimbursements for employee time incurred were not material for the year ended December 31, 2022. Any amounts owed to us by FDB under the TSA as of December 31, 2022 are included in other current assets.

8.
Leases

We lease office space in South San Francisco, California under a non-cancellable lease agreement. In December 2021, we entered into a second amendment with the landlord to extend the lease term through May 2025. The amended lease agreement does not include an option to extend the lease term. In connection with the amended lease, we are required to maintain a letter of credit in the amount of $0.1 million to the landlord. In October 2022, we entered into a sub-lease agreement with a third party for this office space. The sub-lease term commenced in November 2022 and expires in May 2025, with no option to extend the sub-lease term. Subsequently, we have moved our corporate headquarters to our office space in Thousand Oaks, California. In November 2018, we entered into a lease agreement for this office space that expires in February 2026 and for which we have the option to extend the lease for an additional period end:of five years after the initial term.

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(in thousands)

 

Leasehold improvements

 

$

49,028

 

 

$

47,609

 

Build-to-suit asset (see Note 7)

 

 

 

 

 

10,686

 

Lab equipment

 

 

6,815

 

 

 

3,019

 

Machinery and equipment

 

 

3,832

 

 

 

2,980

 

Computer equipment and software

 

 

3,299

 

 

 

3,049

 

Furniture and fixtures

 

 

1,764

 

 

 

1,628

 

Construction in progress

 

 

1,116

 

 

 

4,682

 

Property and equipment, gross

 

 

65,854

 

 

 

73,653

 

Less accumulated depreciation and amortization

 

 

(11,678

)

 

 

(5,077

)

Property and equipment, net

 

$

54,176

 

 

$

68,576

 

ConstructionIn March 2021, we entered into a new lease agreement for approximately 33,659 square feet of office, lab and warehouse space in progress represents capitalized costsThousand Oaks, California. During the third quarter of 2021, the initial 10.5-year lease term commenced, upon substantial completion of the landlord’s work as defined under the agreement. Base rent is subject to annual increases of 3% with each annual anniversary of the rent commencement date. We have the option to extend this lease for two additional five-year periods after the initial term. Additionally, in 2021, we entered into an amended lease agreement for our office and lab space in Aurora, Colorado, to add additional lab space.

In February 2017, we entered into a lease agreement (the “ATOM Lease”) for approximately 90,580 square feet of office, lab and cellular therapy manufacturing facilityspace in Thousand Oaks, California. The initial 15-year term of the lease commenced on February 15, 2018, upon the substantial completion of landlord’s work as defined under the agreement. In April 2022, we assigned the ATOM Lease to FDB in connection with the closing of the sale of the ATOM Facility to FDB. Under ASC 842, we are considered to be the sub-lessor of the ATOM Lease.

We evaluated our vendor contracts to identify embedded leases and determined that the Fujifilm MSA contained items that constituted a lease under ASC 842, Leases, as Atara has the right to substantially all of the economic benefits from the use of the asset and can direct the use of the asset. We concluded that the Fujifilm MSA contains an embedded operating lease for certain dedicated processing rooms for the manufacturing of Atara product and an embedded finance lease for certain freezers dedicated for Atara’s use. The Fujifilm MSA includes contractual obligations in the form of payments for the processing rooms and the freezers, each over a term of five years.

113


The maturities of lease liabilities under our operating and finance leases as of December 31, 2022 were as follows:

 

Operating Leases

 

Finance Leases

 

Years Ending December 31,

 

(in thousands)

 

2023

 

$

19,158

 

 

$

1,339

 

2024

 

 

18,035

 

 

 

1,242

 

2025

 

 

17,880

 

 

 

1,263

 

2026

 

 

16,557

 

 

 

1,285

 

2027

 

 

5,631

 

 

 

436

 

Thereafter

 

 

15,778

 

 

 

 

Total lease payments

 

$

93,039

 

 

$

5,565

 

Less: amount representing interest

 

 

(22,169

)

 

 

(1,088

)

Present value of lease liabilities

 

$

70,870

 

 

$

4,477

 

 

 

 

 

 

 

 

Balance as of December 31, 2022

 

 

 

 

 

 

Other current liabilities

 

$

12,806

 

 

$

834

 

Operating lease liabilities - long-term

 

 

58,064

 

 

 

 

Other long-term liabilities

 

 

 

 

 

3,643

 

Total

 

$

70,870

 

 

$

4,477

 

The components of lease cost were as follows:

 

 

Year Ended

 

 

Year Ended

 

 

Year Ended

 

 

 

December 31, 2022

 

 

December 31, 2021

 

 

December 31, 2020

 

 

 

(in thousands)

 

Operating lease cost:

 

 

 

 

 

 

 

 

 

Operating lease cost

 

$

14,245

 

 

$

3,827

 

 

$

3,020

 

Short-term lease cost

 

 

386

 

 

 

836

 

 

 

987

 

Total operating lease cost

 

$

14,631

 

 

$

4,663

 

 

$

4,007

 

Finance lease cost:

 

 

 

 

 

 

 

 

 

Amortization expense

 

$

872

 

 

$

244

 

 

$

389

 

Interest on lease liabilities

 

 

373

 

 

 

29

 

 

 

60

 

Total finance lease cost

 

$

1,245

 

 

$

273

 

 

$

449

 

Other information related to leases was as follows:

 

 

Year Ended

 

 

Year Ended

 

 

Year Ended

 

 

 

December 31, 2022

 

 

December 31, 2021

 

 

December 31, 2020

 

 

 

(in thousands, except lease term and discount rate)

 

Supplemental Cash Flows Information

 

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of
   lease liabilities:

 

 

 

 

 

 

 

 

 

Operating cash flows for operating leases

 

$

13,417

 

 

$

3,738

 

 

$

2,878

 

Operating cash flows for finance leases

 

 

335

 

 

 

32

 

 

 

62

 

Financing cash flows for finance leases

 

 

518

 

 

 

254

 

 

 

389

 

 

 

 

 

 

 

 

 

 

 

Operating lease assets obtained in exchange for lease obligations:

 

$

50,779

 

 

$

13,427

 

 

$

 

Finance lease assets obtained in exchange for lease obligations:

 

 

4,795

 

 

 

 

 

 

281

 

Non-cash increase to operating lease assets due to
remeasurement of lease liabilities:

 

 

 

 

 

1,760

 

 

 

639

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Remaining Lease Term

 

 

 

 

 

 

 

 

 

Operating leases

 

5.9 years

 

 

9.2 years

 

 

9.4 years

 

Finance leases

 

4.2 years

 

 

1.0 years

 

 

1.7 years

 

Weighted Average Discount Rate

 

 

 

 

 

 

 

 

 

Operating leases

 

 

9.9

%

 

 

9.6

%

 

 

10.3

%

Finance leases

 

 

10.4

%

 

 

9.7

%

 

 

9.7

%

114


Asset Retirement Obligation

Our asset retirement obligation (“ARO”) consists of a contractual requirement to remove the tenant improvements at the ATOM Facility in Thousand Oaks, California and capitalizable costs incurred for equipment held atrestore the facility to a condition specified in the lease agreement. Although we assigned the ATOM Lease to FDB in connection with the closing of the sale of the ATOM Facility to FDB in April 2022, we have not received novation from the landlord. Therefore, the ARO associated with the ATOM Facility remains on our facilities. Depreciationbalance sheet. We recorded an estimate of the fair value of our ARO liability in other long-term liabilities and amortization expensethe ARO asset as a long-term asset in the period incurred. The fair value of the ARO asset is amortized over the lease term. The fair value of our ARO was $7.1estimated by discounting projected cash flows over the estimated life of the related assets using our credit adjusted risk-free rate. As of December 31, 2022 and December 31, 2021, the ARO asset and liability were not material.

9.
Restructuring

On August 8, 2022, we announced a strategic reduction in workforce of approximately 20% to focus our activities as an organization centered on research and development. The workforce reduction is expected to include total restructuring charges of $6.0 million, $3.7 million and $1.0 millioncomprised primarily of severance payments, wages for the years60-day notice period in accordance with the California Worker Adjustment and Retraining Notification Act and continuing health care coverage for a period of time after separation. In most cases, the severance payments were paid as a lump sum in October 2022. Certain of the notified employees had employment agreements which provided for separation benefits in the form of salary continuation; these benefits will be paid between October 2022 and November 2023. All of the costs are cash expenditures and primarily represent one-time termination benefits.

We recorded the following restructuring charges associated with the reduction in force:

 

 

Year Ended December 31,

 

 

 

2022

 

 

 

(in thousands)

 

 

 

 

 

Research and development expense

 

$

2,544

 

General and administrative expense

 

 

3,420

 

Total restructuring charges

 

$

5,964

 

The following restructuring liability activity was recorded in connection with the reduction in force for the year ended December 31, 20192022, with all of the $, 2018 and 20171.5, respectively.

million liability balance as of December 31, 2022 included within other current liabilities on the accompanying consolidated balance sheet:

6.

License, Collaboration and Manufacturing Agreements

Total Restructuring Charges

(in thousands)

Liability balance, January 1, 2022

$

Charges

5,964

Cash payments

(4,419

)

Liability balance, December 31, 2022

$

1,545

10.
Commitments and Contingencies

MSK Agreements

In June 2015, we entered into an exclusive license agreement with MSK for three clinical stage T-cell therapies. In connection with the execution of the agreement, the Company paid $4.5 millionin cash to MSK.

We are required to make additional payments of up to $33.0 million to MSK based on achievement of specified regulatory and sales-related milestones, as well as mid-single-digit percentage tiered royalty payments based onfuture sales of products resulting from the development of the licensed product candidates, if any. In addition, under certain circumstances, we are required to make certain minimum annual royalty payments to MSK, which are creditable against earned royalties owed for the same annual period. We are also required to pay a low double-digit percentage of any consideration we receive for sublicensing the licensed rights. The license agreement expires on a product-by-product and country-by-country basis on the laterlatest of: (i) expiration of the last licensed patent rights related to each licensed product, (ii) expiration of any market exclusivity period granted by law with respect to each licensed product, and (iii) a specified number of years after the first commercial sale of the licensed product in each country. Upon expiration of the license agreement, Atara will retain non-exclusive rights to the licensed products.


In May and December 2018, we licensed additional technology from MSK. In connection with the effectiveness of the December 2018 license agreement, we made upfront cash payments of $12.5 million in first quarter of 2019, which were recorded as research and development expense in our consolidated statement of operations and comprehensive loss in the fourth quarter of 2018. We are obligated to make additional milestone payments based on achievement of specified development, regulatory and sales-related milestones as well as mid-single-digit percentage tiered royalty payments based on future sales of products resulting from the development of the licensed product candidates, if any.

115


In March 2021, we amended and restated our license agreement with MSK to terminate our license to certain rights and license additional know-how rights not otherwise covered by our existing agreements.

QIMR Berghofer Agreements

In October 2015, we entered into an exclusive license agreement and a research and development collaboration agreement with QIMR Berghofer. In consideration for the exclusive license, the Company paid $3.0 million in cash to QIMR Berghofer.

Under the terms of the license agreement, we possessobtained an exclusive, worldwide license to develop and commercialize allogeneic T-cell therapy programs utilizing technology and know-how developed by QIMR Berghofer. In September 19 2016, the exclusive license agreement and research and development collaboration agreement were amended and restated. Under the amended and restated agreements, we obtained an exclusive, worldwide license to develop and commercialize additional T-cell programs, as well as the option to license additional technology in exchange for $3.3 million in cash, which was recorded as research and development expense in our consolidated statement of operations and comprehensive loss in the third quarter of 2016. Wethat we exercised this option in June 2018. We further amended and restated our license agreement and research and development collaboration agreements with QIMR Berghofer in August 2019 to eliminateterminate our license to certain rights related to cytomegalovirus.rights. Our current license agreement also provides for various milestone and royalty payments to QIMR Berghofer based on future product sales, if any.

Under the terms of our current research and development collaboration agreement, we are also required to reimburse the cost of agreed-upon development activities related to programs developed under the collaboration. These payments are expensed on a straight-line basis over the related development periods. The agreement also provides for various milestone payments to QIMR Berghofer based on achievement of certain developmental and regulatory milestones.

Other In-license and Collaboration Agreements

From time to time, we have entered into other license and collaboration agreements with other parties. For example, we licensed additional rights related to our MSK-partnered next-generation CAR T programs from MSK in May 2018 and from the National Institutes of Health in December 2018 and we licensed rights related to our next-generation CAR T programs from Moffitt Cancer Center in August 2018, and we agreed to collaborate through sponsored research in connection with each of these licenses. We also licensed rights related to our MSK-partnered next-generation CAR T programs from the National Institutes of Health in December 2018.

Milestones and royalties under each of the above agreements are contingent upon future events and will be recorded as expense when it is probable that the underlying milestones will beare achieved or royalties are due.earned. As of December 31, 20192022 and 2018,2021, there were 0no material outstanding obligations for milestones and royalties under our licensein-license and collaboration agreements.

CognateCRL Manufacturing Agreement

In December 2019, Atarawe entered into a Commercial Manufacturing Services Agreement (the “Manufacturing Agreement”“CRL MSA”) with Cognate Bioservices,BioServices, Inc., which was acquired by Charles River Laboratories Inc. (“Cognate”CRL”) to supersede the Development and Manufacturing Agreement that was entered into with Cognate in August 2015 and amended in December 2017, May 2018, November 2018, June 2019 and November 2019. March 2021.

Pursuant to the Manufacturing Agreement, CognateCRL MSA, CRL provides manufacturing services for our product and certain Ataraof our product candidates. The initialIn February 2023, we amended the CRL MSA to extend the term until the earlier of the ManufacturingSeptember 30, 2023 or receipt of certain batches of our product and product candidates.

Fujifilm Master Services and Supply Agreement is from

In January 1, 2020 until December 31, 2021 and is renewable with Cognate’s approval for an additional one-year period. We may terminate the Manufacturing Agreement for convenience on six months’ written notice to Cognate, or immediately if Cognate is unable to perform the services under the Manufacturing Agreement or fails to obtain or maintain certain necessary approvals. The Manufacturing Agreement includes standard mutual termination rights for uncured breach or insolvency, or a force majeure event preventing the performance of services for at least ninety days.

7.

Leases

We lease our corporate headquarters in South San Francisco, California under a non-cancellable lease agreement that expires in April 2021. In connection with the lease, we are required to maintain a letter of credit in the amount of $0.2 million to the landlord, which expires and is renewed every 12 months, and is classified as restricted cash in our consolidated balance sheet. In November 2018,2022, we entered into a lease agreement for additional office space in Thousand Oaks, California that expires in February 2026. Additionally, we entered into a new lease for our office and lab space in Aurora, Colorado,the Fujifilm MSA, which became effective May 2019, that expires in April 2024.


In February 2017, we entered into a lease agreement for approximately 90,580 square feet of office, lab and cellular therapy manufacturing space in Thousand Oaks, California. The initial 15-year termupon the closing of the lease commencedsale of the ATOM Facility on February 15, 2018, upon the substantial completion of landlord’s work as defined under the agreement. The contractual obligations during the initial term are $16.4 million in aggregate. We have the option toApril 4, 2022 and could extend the lease for two additional periods ofup to ten and nine years respectively, after the initial term. In connection with the lease, we were required to issue a letter of credit in the amount of $1.2 million. Pursuant to the landlord, which is recorded as long-term restricted cash inFujifilm MSA, FDB will supply us with specified quantities of our consolidated balance sheet.

Based on the terms of the lease agreementcell therapy products and on our involvement in certain aspects of the construction, we were deemed the owner of the building during the construction periodproduct candidates, manufactured in accordance with U.S. GAAP in effect priorcGMP standards. We have certain non-cancellable minimum commitments to January 1, 2019. Under this build-to-suit lease arrangement, we recognized construction in progress based on all construction costs incurred by both uspurchase products and services over the landlord. We also recognized a financing obligation equal to all costs funded by the landlord.

Due to completionfirst five years of the construction by the landlordFujifilm MSA. The Fujifilm MSA does not obligate us to purchase products and not having met the criteria for sale-lease back accounting, we transferred the $10.3 million of landlord’s construction costs previously capitalized as construction in progress to a build-to-suit asset, and recognized a corresponding long-term financing obligation for the same amount in long-term liabilities in our consolidated balance sheets. In addition, we recorded $0.3 million of capitalized interest during the construction period through December 31, 2018. A portion of the monthly lease payment was allocated to land rent and recorded as an operating lease expense and the non-interest portion of the amortized lease payments to the landlord related to rent of the building was applied to the lease financing liability. Further, we recorded ground lease expense of $0.4 and $0.3 million for the years ended December 31, 2018 and 2017, respectively, in our consolidated statement of operations and comprehensive loss, representing the estimated cost of renting the land during the construction period. Due to the adoption of ASU No. 2016-02, Leases (Topic 842), 0 ground lease expense was recognized for the year ended December 31, 2019.

The maturities of lease liabilities under our operating and finance leases as of December 31, 2019 were as follows:

 

Operating Leases

 

Finance Leases

 

Years Ending December 31,

 

(in thousands)

 

2020

 

$

2,867

 

 

$

308

 

2021

 

 

2,740

 

 

 

127

 

2022

 

 

2,610

 

 

 

116

 

2023

 

 

2,685

 

 

 

29

 

2024

 

 

2,591

 

 

 

 

Thereafter

 

 

11,887

 

 

 

 

Total lease payments

 

$

25,380

 

 

$

580

 

Less: amount representing interest

 

 

(9,932

)

 

 

(67

)

Present value of lease liabilities

 

$

15,448

 

 

$

513

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2019

 

 

 

 

 

 

 

 

Other current liabilities

 

$

1,312

 

 

$

269

 

Operating lease liabilities

 

 

14,136

 

 

 

 

Other long-term liabilities

 

 

 

 

 

244

 

Total

 

$

15,448

 

 

$

513

 

The components of lease cost were as follows:

 

 

Year Ended

 

 

 

December 31, 2019

 

 

 

(in thousands)

 

Operating lease cost:

 

 

 

 

Operating lease cost

 

$

2,578

 

Short-term lease cost

 

 

770

 

Total operating lease cost

 

$

3,348

 

Finance lease cost:

 

 

 

 

Amortization expense

 

$

324

 

Interest on lease liabilities

 

 

56

 

Total finance lease cost

 

$

380

 


Future minimum payments under our operating, finance and capital leases as of December 31, 2018 were as follows:

 

Operating Leases

 

 

Finance Leases

 

 

 

Capital Leases

 

Years Ending December 31,

 

(in thousands)

 

2019

$

 

1,107

 

 

$

 

934

 

 

 

$

540

 

2020

 

 

1,666

 

 

 

 

962

 

 

 

 

234

 

2021

 

 

1,555

 

 

 

 

991

 

 

 

 

29

 

2022

 

 

1,337

 

 

 

 

1,020

 

 

 

 

 

2023

 

 

1,375

 

 

 

 

1,051

 

 

 

 

 

Thereafter

 

 

3,122

 

 

 

 

11,458

 

 

 

 

 

Total minimum payments

$

 

10,162

 

 

$

 

16,416

 

 

 

$

803

 

Less: amount representing interest

 

 

 

 

 

 

 

 

 

 

 

 

(65

)

Present value of capital lease obligations

 

 

 

 

 

 

 

 

 

 

 

 

738

 

Less: current portion

 

 

 

 

 

 

 

 

 

 

 

 

(490

)

Capital lease obligation, net of current portion

 

 

 

 

 

 

 

 

 

 

 

$

248

 

Rent expense under operating leases for the years ended December 31, 2018 and 2017 was $2.2 million and $1.4 million, respectively.

Other information related to leases was as follows:

 

 

Year Ended

 

 

 

December 31, 2019

 

 

 

(in thousands, except

lease term and

discount rate)

 

Supplemental Cash Flows Information

 

 

 

 

Cash paid for amounts included in the measurement of

   lease liabilities:

 

 

 

 

Operating cash flows for operating leases

 

$

2,346

 

Operating cash flows for finance leases

 

 

50

 

Financing cash flows for finance leases

 

 

486

 

 

 

 

 

 

Operating lease assets obtained in exchange for lease

   obligations:

 

$

838

 

Finance lease assets obtained in exchange for lease

   obligations:

 

 

323

 

 

 

 

 

 

Weighted Average Remaining Lease Term

 

 

 

 

Operating leases

 

10.3 years

 

Finance leases

 

2.5 years

 

Weighted Average Discount Rate

 

 

 

 

Operating leases

 

 

10.4

%

Finance leases

 

 

10.0

%


product candidates exclusively from FDB.Asset Retirement Obligation

The Company’s ARO consists of a contractual requirement to remove the tenant improvements at our manufacturing facility in Thousand Oaks, California and restore the facility to a condition specified in the lease agreement. The Company records an estimate of the fair value of its ARO in long-term liabilities in the period incurred. The fair value of the ARO is also capitalized in property and equipment, net and depreciated over the lease term. The fair value of our ARO was estimated by discounting projected cash flows over the estimated life of the related assets using our credit adjusted risk-free rate.

The following table presents the activity for our ARO liabilities:

 

 

ARO Liability

 

 

 

(In thousands)

 

Balance as of December 31, 2018

 

$

717

 

Accretion expense

 

 

71

 

Balance as of December 31, 2019

 

$

788

 

8.

Commitments and Contingencies

License and Collaboration Agreements

Potential payments related to our license and collaboration agreements, including milestone and royalty payments, are detailed in Note 6.

Other Research, Development and DevelopmentManufacturing Agreements

We may enter into other contracts in the normal course of business with clinical research organizations for clinical trials, with contract manufacturing organizationsCMOs for clinical supplies, and with other vendors for preclinical studies, supplies and other services for our operating purposes. These contracts generally provide for termination on notice. As of December 31, 20192022 and 2018,December 31, 2021, there were 0no material amounts accrued related to contract termination chargescharges. Based on our expectations of patients and demand for product in the EU, we believe our current inventory of Ebvallo is sufficient to supply commercial demand in the EU until the end of 2023.

116


Minimum Commitments

The non-cancellable minimum commitments for products and services, subject to agreements with a term of greater than one year with clinical research organizations and CMOs, excluding those recognized on our balance sheet, as of December 31, 2022 are set forth below:

Calendar Year

 

Remaining Minimum Commitment as of December 31, 2022

 

 

 

(in thousands)

 

2023

 

$

19,420

 

2024

 

 

14,085

 

2025

 

 

13,308

 

2026

 

 

9,605

 

2027

 

 

3,388

 

Total

 

$

59,806

 

We have incurred $14.2 million against such minimum commitments for the year ended December 31, 2022. No such amounts were recorded for the years ended December 31, 2021 and 2020.

As of December 31, 2022, we have accrued approximately $9.2 million in research and development expenses related to minimum purchase volumes not being met.commitments. As of December 31, 2021, no such amounts were accrued.

Indemnification Agreements

In the normal course of business, we enter into contracts and agreements that contain a variety of representations and warranties and provide for indemnification for certain liabilities. The exposure under these agreements is unknown because it involves claims that may be made against us in the future but have not yet been made. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. However, we may record charges in the future as a result of these indemnification obligations. We also have indemnification obligations to our directors and executive officers for specified events or occurrences, subject to some limits, while they are serving at our request in such capacities. There have been no claims to date and we believeconsider the fair value of these indemnification agreements isto be minimal. Accordingly, we did 0tnot record liabilities for these agreements as of December 31, 20192022 and 2018.2021.

Contingencies

From time to time, we may be involved in legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of our business or otherwise. The ultimate outcome of any litigation is uncertain and unfavorable outcomes could have a negative impact on our results of operations and financial condition. Regardless of outcome, litigation can have an adverse impact on us because of the defense costs, diversion of management resources and other factors. We are not currently involved in any material legal proceedings.

11.
Stockholders’ Equity

9.

Stockholders’ Equity

Our authorized capital stock consists of 520,000,000 shares, all with a par value of $0.0001$0.0001 per share, of which 500,000,000 shares are designated as common stock and 20,000,000 shares are designated as preferred stock. There were 0no shares of preferred stock outstanding as of December 31, 20192022 and 20182021..


Equity Offerings

In January 2018, we completed anAs part of our July 2019 underwritten public offering, of 7,675,072 shares of common stock at an offering price of $18.25 per share and received net proceeds of $131.4 million, after deducting underwriting discounts and commissions and offering expenses payable by us. Further, in March 2018, we completed an underwritten public offering of 4,928,571 shares of common stock at an offering price of $35.00 per share and received net proceeds of $161.9 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

In July 2019, we issued and sold 6,871,727pre-funded warrants to purchase 2,945,026 shares of common stock at a public offering price of $15.28 per share and pre-funded warrants to purchase 2,945,026 shares of common stock at an offering price of $15.2799 per warrant in an underwritten public offering pursuant to a shelf registration on Form S-3. The gross proceeds from this public offering were $150.0 million, resulting in aggregate net proceeds of $140.7 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

Each pre-funded warrant entitles the holder to purchase 1one share of common stock at an exercise price of $0.0001$0.0001 per share and expires seven years from the date of issuance. These warrants were recorded as a component of stockholders’ equity within additional paid-in capital. Per the terms of the warrant agreement, a holder of the outstanding warrants is not entitled to exercise any portion of any pre-funded warrant if, upon exercise of the warrant, the holder’s ownership (together with its affiliates) of our common stock or combined voting power of our securities beneficially owned by such holder (together with its affiliates) would exceed 9.99%9.99% after giving effect to the exercise (“Maximum Ownership Percentage”). Upon at least 61 days’ prior notice to us by the holder, any holder may increase or decrease the Maximum Ownership Percentage to any other percentage not to exceed 19.99%19.99%. As of December 31, 2022, pre-funded warrants to purchase 2,888,526 shares of our common stock from the July 2019 NaNoffering were outstanding.

117


In the second quarter of 2020, we issued and sold 12,633,039 shares of common stock at a public offering price of $11.32 per share and pre-funded warrants to purchase 2,866,961 shares of common stock at a public offering price of $11.3199 per warrant in an underwritten public offering pursuant to a shelf registration on Form S-3. We granted the underwriters an option to purchase up to 2,325,000 additional shares of our common stock at a public offering price of $11.32, less underwriting discounts and commissions. The full option was exercised by the underwriters in June 2020. The gross proceeds from this public offering were $201.8 million, resulting in net proceeds of $189.3 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

In December 2020, we issued and sold 5,102,041 shares of common stock at a public offering price of $24.50 per share and pre-funded warrants to purchase 2,040,816 shares of common stock at a public offering price of $24.4999 per warrant in an underwritten public offering pursuant to a shelf registration on Form S-3. The gross proceeds from this public offering were $175.0 million, resulting in net proceeds of $164.3 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

The terms of the pre-funded warrants had been exercised.issued and sold as part of the 2020 public offerings were similar to those issued and sold in 2019. As of December 31, 2022, all of the pre-funded warrants issued and sold as part of the 2020 underwritten public offerings were outstanding.

ATM Facilities

In March 2017,the past three years, we have entered into atwo separate sales agreement (the “2017 ATM Facility”)agreements with Cowen and Company, LLC (“Cowen”), which provided for the sale,(Cowen): in our sole discretion, of shares of our common stock, in the aggregate offering price of up to $75.0 million through Cowen, as our sales agent. We paid a commission of up to 3.0% of the gross sales proceeds of any common stock sold under the 2017 ATM Facility.

In February 2019, we terminated the 2017 ATM Facility and entered into a new sales agreement2020 (the “2019“2020 ATM Facility”) with Cowen, whichand in November 2021 (the “2021 ATM Facility”). Each ATM facility provides or provided for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0$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 underagent and the 2019 ATM Facility.

During the fiscal year ended December 31, 2019, we sold an aggregate of 3,135,347 shares of common stock under the 20192021 ATM Facility at an average price of $16.09 per share, for gross proceeds of $50.5 million and net proceeds of $48.9 million, after deducting commissions and other offering expenses payable by us. Approximately $1.2 million of the $48.9 million net proceeds was received on January 3, 2020. During the fiscal year ended December 31, 2018, we sold an aggregate of 1,007,806 shares of common stock under the 2017 ATM Facility, at an average price of $48.52 per share, for gross proceeds of $48.9 million and net proceeds of $47.6 million, after deducting commissions and other offering expenses payable by us. The issuance and sale of these shares by us pursuant to the 2019 ATM Facility and 2017 ATM Facility are deemed “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), and are registered under the Securities Act.

As of December 31, 2019, we had $49.5 million of common stock available to be sold under the 2019 ATM Facility. In January 2020, we sold an aggregate of 1,371,216 shares of common stock under the 2019 ATM Facility, at an average price of $15.77 per share, for gross proceeds of $21.6 million and net proceeds of $21.1 million, after deducting commissions payable by us. As of January 31, 2020, we had $27.9 million of common stock available to be sold under the 2019 ATM Facility.

In February 2020, we entered into a new sales agreement (the “2020 ATM Facility”) with Cowen, which provides for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0 million through Cowen, as our sales agent. The 2020 ATM Facility is separate from and doesdid not replace the 20192020 ATM Facility in any way. The issuance and sale of these shares by us pursuant to the 2020 ATM Facilityfacilities are deemed “at the market” offerings and are registereddefined in Rule 415 under the Securities Act of 1933, as amended. We will pay a commissionamended (the Securities Act), and were registered under the Securities Act. Commissions of up to 3.0% of3.0% are due on the gross sales proceeds of anythe common stock sold under each ATM facility.

During the fiscal year ended December 31, 2021, we sold an aggregate of 6,240,601 shares of common stock under the ATM facilities, at an average price of $16.23 per share, for gross proceeds of $101.3 million and net proceeds of $98.9 million, after deducting commissions and other offering expenses payable by us.

During the year ended December 31, 2022, we sold an aggregate of 1,618,672 shares of common stock under the 2021 ATM Facility, at an average price of $13.84 per share, for gross proceeds of $22.4 million and net proceeds of $22.0 million, after deducting commissions and other offering expenses payable by us.

As of December 31, 2022, we had fully utilized the 2020 ATM Facility and we had $55.9 million of common stock remaining and available to be sold under the 2021 ATM Facility.


Equity Incentive Plans

In March 2014, we adopted the 2014 Equity Incentive Plan (“2014 EIP”), which was amended and restated on October 15, 2014 upon the pricing of our initial public offering or IPO.(“IPO”).

The 2014 EIP provides for annual increases in the number of shares available for issuance thereunder on the first business day of each fiscal year, beginning with 2015 and ending in 2024, equal to 5five percent of the number of shares of the Company’s common stock outstanding as of such date or a lesser number of shares as determined by our board of directors.

Under the terms of the 2014 EIP, we may grant stock options, RSAs and RSUs to employees, directors, consultants and other service providers. RSUs generally vest over four years. Stock options are granted at prices no less than 100% of the estimatedyears. The fair value of RSUs, including those with performance conditions, is determined as the sharesclosing stock price on the date of grant as determined by the board of directors, provided, however, that the exercise price of an option granted to a 10% shareholder cannot be less than 110% of the estimated fair value of the shares on the date of grant. Options granted generally vest over four years and expire in seven to ten years. As of December 31, 2019, a total of 11,935,558 shares of common stock were reserved for issuance under the 2014 EIP, of which 3,948,605 shares were available for future grant and 7,986,953 shares were subject to outstanding options and RSUs.

In February 2018, we adopted the 2018 Inducement Plan (“Inducement Plan”), under which we may grant options, stock appreciation rights, RSAs and RSUs to new employees. In November 2020, September 2021 and June 2022, we amended the Inducement Plan to reserve an additional 1,500,000 shares of the Company’s common stock for issuance under the Inducement Plan in each case.

118


In 2020, we granted performance-based awards to certain of our employees that provide for the issuance of common stock if specified Company performance criteria related to our clinical programs are achieved. The number of performance-based awards that ultimately vests depends upon if, when and which performance criteria are achieved, as well as the employee’s continuous service, as defined in the 2014 EIP, through the date of vesting. None of the performance criteria were achieved by the required deadlines set forth in the award agreements and they were subsequently forfeited.

Stock options are granted with exercise prices at no less than 100% of the fair value of the shares on the date of grant as determined by the board of directors, provided, however, that the exercise price of an option granted to a 10% shareholder cannot be less than 110% of the fair value of the shares on the date of grant. The estimated fair value of the shares is generally equal to the closing market price of the Company’s common stock on the measurement date. Options granted generally vest over four years and expire in seven to ten years.

In 2022, we granted performance-based stock options to certain of our employees that provide for the issuance of stock options to purchase common stock if specified Company performance criteria related to business development initiatives are achieved. The number of performance-based awards that ultimately vests depends upon if performance criteria are achieved within a specified timeline, as well as the employee’s continuous service, as defined in the 2014 EIP, through the date of vesting. None of the performance criteria have been achieved as of December 31, 2022 and the amount of outstanding awards is not material.

As of December 31, 20192022, a total of , 1,213,76018,781,047 shares of common stock were reserved for issuance under the 2014 EIP, of which 4,702,072 shares were available for future grant and 14,078,975 shares were subject to outstanding options and RSUs, including performance-based awards. As of December 31, 2022, 5,191,916 shares of common stock were reserved for issuance under the Inducement Plan, of which 427,4361,916,728 shares were available for future grant and 786,3243,275,188 shares were subject to outstanding options and RSUs.

Restricted Stock Units

The fair valuefollowing is a summary of RSUs is determined as the closing stock price on the date of grant. RSU activity under our 2014 EIP and Inducement Plan:

 

 

RSUs

 

 

 

Shares

 

 

Weighted
Average
Grant Date
Fair Value

 

Balance as of December 31, 2021

 

 

5,592,358

 

 

$

16.22

 

Granted

 

 

5,947,417

 

 

$

8.26

 

Forfeited

 

 

(2,583,871

)

 

$

13.27

 

Vested

 

 

(2,247,296

)

 

$

15.29

 

Balance as of December 31, 2022

 

 

6,708,608

 

 

$

10.61

 

The weighted average grant date fair value of RSUs granted during the years ended December 31, 20192022, 2021 and 2020 was $8.26, 2018$16.42 and 2017 was $27.04, $36.83 and $15.07,$12.19, respectively. The estimated fair value of RSUs that vested in the years ended December 31, 2019, 20182022, 2021 and 20172020 was $13.8$34.4 million, $10.8$27.1 million and $3.7$23.6 million, respectively. As of December 31, 2019,2022, there was $38.0$63.5 million of unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted average period of 2.12.5 years. The aggregate intrinsic value of the RSUs outstanding as of December 31, 20192022 was $31.5$22.0 million.

The following is a summary of RSU activity under our 2014 EIP and Inducement Plan:

 

 

RSUs

 

 

 

Shares

 

 

Weighted

Average

Grant Date

Fair Value

 

Unvested as of December 31, 2018

 

 

1,405,460

 

 

$

26.94

 

Granted

 

 

1,591,888

 

 

$

27.04

 

Forfeited

 

 

(514,516

)

 

$

30.37

 

Vested

 

 

(572,068

)

 

$

24.16

 

Outstanding as of December 31, 2019

 

 

1,910,764

 

 

$

26.93

 


Under our RSU net settlement procedures, for mostsome of the RSUs granted to our employees, we withhold shares at settlement to cover the minimumestimated payroll withholding tax obligations. During 2019,2022, we settled 574,1682,247,296 shares underlying RSUs, of which 488,964114,444 shares underlying RSUs were net settled by withholding 212,87943,524 shares. The value of the shares underlying RSUs withheld was $6.70.6 million, based on the closing price of our common stock on the settlement date. During 2018,2021, we settled 638,5181,553,893 shares underlying RSUs, of which 440,503154,341 shares underlying RSUs were net settled by withholding 190,20561,385 shares. The value of the shares underlying RSUs withheld was $7.51.2 million, based on the closing price of our common stock on the settlement date. The value of RSUs withheld in each period was remitted to the appropriate taxing authorities and has been reflected as a financing activity in our consolidated statements of cash flows.

119


Stock Options

The following is a summary of stock option activity under our 2014 EIP and Inducement Plan. The table below also includes the activity relating to options for 275,000 shares of our common stock which were issued in 2017 outside of these plans:Plan:

 

 

Shares

 

 

Weighted Average Exercise Price

 

 

Weighted Average

Remaining

Contractual

Term (Years)

 

 

Aggregate

Intrinsic

Value

(in thousands)

 

Outstanding as of December 31, 2018

 

 

6,276,999

 

 

$

28.15

 

 

 

 

 

 

 

 

 

Granted

 

 

2,535,425

 

 

 

26.97

 

 

 

 

 

 

 

 

 

Exercised

 

 

(347,716

)

 

 

14.84

 

 

 

 

 

 

 

 

 

Forfeited or expired

 

 

(1,530,446

)

 

 

28.76

 

 

 

 

 

 

 

 

 

Outstanding as of December 31, 2019

 

 

6,934,262

 

 

$

28.25

 

 

 

5.9

 

 

$

4,103

 

Vested and expected to vest as of

   December 31, 2019

 

 

6,934,262

 

 

$

28.25

 

 

 

5.9

 

 

$

4,103

 

Exercisable as of December 31, 2019

 

 

2,932,449

 

 

$

26.89

 

 

 

4.0

 

 

$

1,689

 

 

 

Shares

 

 

Weighted Average Exercise Price

 

 

Weighted Average
Remaining
Contractual
Term (Years)

 

 

Aggregate
Intrinsic Value
(in thousands)

 

Balance as of December 31, 2021

 

 

9,219,837

 

 

$

20.81

 

 

 

6.4

 

 

$

12,810

 

Granted

 

 

3,615,971

 

 

 

9.06

 

 

 

 

 

 

 

Exercised

 

 

(15,989

)

 

 

8.96

 

 

 

 

 

 

 

Forfeited or expired

 

 

(2,174,264

)

 

 

20.62

 

 

 

 

 

 

 

Balance as of December 31, 2022

 

 

10,645,555

 

 

$

16.88

 

 

 

6.4

 

 

$

42

 

Vested and expected to vest as of
   December 31, 2022

 

 

10,645,555

 

 

$

16.88

 

 

 

6.4

 

 

$

42

 

Exercisable as of December 31, 2022

 

 

6,061,634

 

 

$

21.21

 

 

 

4.7

 

 

$

 

Aggregate intrinsic value represents the difference between the closing stock price of our common stock on December 31, 20192022 and the exercise price of outstanding, in-the-money options. As of December 31, 2019,2022, there was $69.7$29.2 million of unrecognized stock-based compensation expense related to stock options that is expected to be recognized over a weighted average period of 2.82.4 years. This excludes unrecognized stock-based compensation expense for performance-based stock options that were deemed not probable of vesting in accordance with U.S. GAAP.

Options for 347,716, 1,051,18015,989, 246,867, and 60,125268,938 shares of our common stock were exercised during the years ended December 31, 2019, 20182022, 2021 and 2017,2020, with an intrinsic value of $3.8$0.1 million, $19.2$0.8 million and $0.2$1.0 million, respectively. As we believe it is more likely than not that no stock option related tax benefits will be realized, we do 0tnot record any net tax benefits related to exercised options.

The fair value of each option issued was estimated at the date of grant using the Black-Scholes valuation model. The following table summarizes the weighted-average assumptions used as inputs to the Black-Scholes model and resulting weighted-average grant date fair values of stock options granted to employees during the periods indicated:

 

Year ended December 31,

 

 

Year ended December 31,

 

 

2019

 

 

2018

 

 

2017

 

 

2022

 

 

2021

 

 

2020

 

Assumptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected term (years)

 

 

5.9

 

 

 

4.6

 

 

 

4.5

 

 

 

6.0

 

 

 

6.0

 

 

 

6.0

 

Expected volatility

 

 

76.1

%

 

 

73.5

%

 

 

71.3

%

 

 

73.2

%

 

 

75.9

%

 

 

76.8

%

Risk-free interest rate

 

 

2.1

%

 

 

2.7

%

 

 

1.9

%

 

 

2.1

%

 

 

0.9

%

 

 

0.8

%

Expected dividend yield

 

 

0.0

%

 

 

0.0

%

 

 

0.0

%

 

 

0.0

%

 

 

0.0

%

 

 

0.0

%

Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average estimated grant date fair value per share

 

$

18.06

 

 

$

22.96

 

 

$

9.01

 

 

$

5.88

 

 

$

10.52

 

 

$

7.96

 

Options granted

 

 

2,535,425

 

 

 

2,998,650

 

 

 

1,694,000

 

 

 

3,615,971

 

 

 

2,643,378

 

 

 

2,641,125

 

Total estimated grant date fair value

 

$

45,790,000

 

 

$

68,849,000

 

 

$

15,263,000

 

 

$

21,261,909

 

 

$

27,808,000

 

 

$

21,023,000

 

The estimated fair value of stock options that vested in the years ended December 31, 2019, 20182022, 2021 and 20172020 was $31.6$23.2 million, $16.2$26.6 million and $14.0$29.4 million, respectively.


Employee Stock Purchase Plan

In May 2014, we adopted the 2014 Employee Stock Purchase Plan (“2014 ESPP”), which became effective on October 15, 2014 upon the pricing of our IPO. The 2014 ESPP permits eligible employees to purchase common stock at a discount through payroll deductions during defined offering periods. Eligible employees can purchase shares of the Company’s common stock at 85%85% of the lower of the fair market value of the common stock at (i) the beginning of a 12-monththe offering period or (ii) at the end of one of the two related 6-month purchase periods. No participant in the 2014 ESPP may purchase shares of common stock valued at more than $25,000 per calendar year. The first offering under the 2014 ESPP commenced on June 1, 2016, and subsequent offerings commence on each anniversary of this date.period. The Company recorded $1.3$1.1 million, $1.2$1.7 million and $0.6$1.8 million of expense related to the 2014 ESPP in the years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively. A total of 139,466, 109,193417,081, 319,190 and 81,922282,514 shares were purchased under the ESPP during the years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively.

As of December 31, 2019,2022, there was $0.5$0.4 million of unrecognized stock-based compensation expense related to the ESPP that is expected to be recognized by the end of second quarter of 2020.2023.

120


The 2014 ESPP provides for annual increases in the number of shares available for issuance thereunder on the first business day of each fiscal year, beginning with 2015 and ending in 2024, equal to the lower of (i) 1one percent of the number of shares of our common stock outstanding as of such date, (ii) 230,769 shares of our common stock, or (iii) a lesser number of shares as determined by our board of directors. As of December 31, 2019,2022, there were 1,355,9732,048,280 shares authorized under the 2014 ESPP.

Reserved Shares

The following shares of common stock were reserved for future issuance under our equity incentive plans as of December 31, 20192022::

Total Shares

Reserved

2014 Equity Incentive Plan

11,935,55818,781,047

2018 Inducement Plan

1,213,7605,191,916

2014 Employee Stock Purchase Plan

1,002,548676,070

Options outside the equity plans

109,666

Total reserved shares of common stock

14,261,53224,649,033

Stock-based Compensation Expense

Total stock-based compensation expense related to all stock awards was as follows:

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Research and development

 

$

31,363

 

 

$

32,063

 

 

$

31,527

 

General and administrative

 

 

22,475

 

 

 

21,802

 

 

 

19,824

 

Total stock-based compensation expense

 

$

53,838

 

 

$

53,865

 

 

$

51,351

 

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

 

 

(in thousands)

 

Research and development

 

$

26,773

 

 

$

16,211

 

 

$

8,778

 

General and administrative

 

 

24,923

 

 

 

17,606

 

 

 

14,322

 

Total stock-based compensation expense

 

$

51,696

 

 

$

33,817

 

 

$

23,100

 

12.
Income Taxes

10.

Income Taxes

Losses before provision for income taxes were as follows in each period presented:

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

United States

 

$

(228,395

)

 

$

(340,301

)

 

$

(306,758

)

Foreign

 

 

105

 

 

 

206

 

 

 

153

 

Total loss before provision for income taxes

 

$

(228,290

)

 

$

(340,095

)

 

$

(306,605

)

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

 

 

(in thousands)

 

United States

 

$

(291,049

)

 

$

(230,765

)

 

$

(12,894

)

Foreign

 

 

85

 

 

 

22

 

 

 

(106,611

)

Total loss before provision for income taxes

 

$

(290,964

)

 

$

(230,743

)

 

$

(119,505

)

The Company liquidated its Cayman Islands entity in 2018 and elected to treat the entity as disregarded for the fiscal year 2018. As such, the applicable 2018 losses are treated as losses in the United States.


The components of provision for (benefit from) income taxes were as follows in each period presented:

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Current provision for income taxes:

 

 

 

 

 

 

 

 

 

State

 

$

 

 

$

4

 

 

$

2

 

Foreign

 

 

12

 

 

 

42

 

 

 

13

 

Total current provision for income taxes

 

$

12

 

 

$

46

 

 

$

15

 

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

 

 

(in thousands)

 

Current provision for (benefit from) income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

 

 

$

(31

)

 

$

(14

)

State

 

 

 

 

 

(15

)

 

 

 

Foreign

 

 

12

 

 

 

2

 

 

 

 

Total current provision for (benefit from) income

   taxes

 

$

12

 

 

$

(44

)

 

$

(14

)

A reconciliation of statutory tax rates to effective tax rates were as follows in each of the periods presented:

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Federal income taxes at statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

Research tax credits

 

 

7.8

%

 

 

 

 

 

 

Stock-based compensation

 

 

(3.8

%)

 

 

(2.0

%)

 

 

(2.4

%)

Other

 

 

(0.2

%)

 

 

(0.3

%)

 

 

0.2

%

Change in valuation allowance

 

 

(24.8

%)

 

 

(18.7

%)

 

 

(18.8

%)

Effective tax rate

 

 

0.0

%

 

 

0.0

%

 

 

0.0

%

121

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

Federal income taxes at statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

34.0

%

Impact of stock compensation

 

 

0.1

%

 

 

 

 

 

(1.5

%)

Foreign income tax at different rate

 

 

 

 

 

 

 

 

(30.3

%)

Impact of U.S. tax reform

 

 

 

 

 

 

 

 

(11.3

%)

Non-deductible executive compensation

 

 

(0.7

%)

 

 

(0.7

%)

 

 

 

Capitalized research

 

 

 

 

 

7.8

%

 

 

 

Other

 

 

(0.2

%)

 

 

(0.6

%)

 

 

(3.8

%)

Change in valuation allowance

 

 

(20.2

%)

 

 

(27.5

%)

 

 

12.9

%

Effective tax rate

 

 

0.0

%

 

 

0.0

%

 

 

0.0

%


Deferred tax assets and liabilities reflect the net tax effecteffects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. purposes and (b) operating loss and tax credit carryforwards. Significant components of our deferred tax assets and liabilities were as follows for each of the dates presented:

 

 

As of December 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryforwards

 

$

302,591

 

 

$

308,997

 

Capitalized research expenses

 

 

50,522

 

 

 

10,499

 

Tax credit carryforwards

 

 

19,427

 

 

 

1,580

 

Stock-based compensation

 

 

19,201

 

 

 

24,181

 

Deferred revenue

 

 

10,069

 

 

 

12,133

 

Operating lease liabilities

 

 

15,857

 

 

 

7,972

 

License fees

 

 

6,877

 

 

 

8,716

 

Other

 

 

13,169

 

 

 

9,414

 

Total deferred tax assets

 

 

437,713

 

 

 

383,492

 

Valuation allowance

 

 

(422,493

)

 

 

(376,071

)

Total deferred tax assets

 

 

15,220

 

 

 

7,421

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

Operating lease assets

 

 

(15,220

)

 

 

(7,421

)

Total deferred tax liabilities

 

 

(15,220

)

 

 

(7,421

)

 

 

 

 

 

 

 

Net deferred tax assets (liabilities)

 

$

 

 

$

 

Beginning January 1, 2022, the Tax Cuts and Jobs Act (the "Tax Act”) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to capitalize such expenses pursuant to Internal Revenue Code (“IRC”) Section 174. The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. As a result of this provision of the Tax Act, deferred tax assets related to capitalized research expenses pursuant to IRC Section 174 increased by $43.7 million, partially offset by amortization on research expenses capitalized in prior years.

 

 

As of December 31,

 

 

 

2019

 

 

2018

 

 

 

(in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Net operating losses

 

$

162,436

 

 

$

91,994

 

Capitalized expenses

 

 

14,129

 

 

 

16,019

 

Stock-based compensation

 

 

17,573

 

 

 

8,578

 

License fees

 

 

6,870

 

 

 

7,380

 

Operating lease liabilities

 

 

4,325

 

 

 

 

Legal fees

 

 

1,683

 

 

 

1,375

 

Other

 

 

3,329

 

 

 

1,807

 

Total deferred tax assets

 

 

210,345

 

 

 

127,153

 

Valuation allowance

 

 

(205,249

)

 

 

(127,153

)

Total deferred tax assets

 

 

5,096

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Operating lease assets

 

 

(3,921

)

 

 

 

Other

 

 

(1,175

)

 

 

 

Total deferred tax liabilities

 

 

(5,096

)

 

 

 

 

 

 

 

 

 

 

 

 

Net deferred tax assets (liabilities)

 

$

 

 

$

 


We recognize deferred income taxes for temporary differences betweenOur tax credit carryforwards increased by $17.8 million, as compared to 2021, due to research and development and orphan drug credits generated during the basis of assets and liabilities for financial statement and income tax purposes, as well as for tax attribute carryforwards. current year.

We regularly evaluate the positive and negative evidence in determining the realizability of our deferred tax assets. Based upon the weight of available evidence, which includes our historical operating performance and reported cumulative net losses since inception, we maintained a full valuation allowance on the net deferred tax assets as of December 31, 20192022 and 2018.2021. We intend to maintain a full valuation allowance on our deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance. The valuation allowance increased by $78.1 million for the year ended $December 31, 201946.4 and increased by $79.9 million for the year ended December 31, 2018.2022 due to the increase in our net deferred tax assets.

In August 2022, the CHIPS and Science Act (“CHIPS Act”) and Inflation Reduction Act (“IRA”) were enacted, neither of which are expected to have a material impact to our financial statements. In addition, effective January 1, 2022, the California net operating loss deduction and temporary limit on business credits have been reinstated.

The American Rescue Plan Act (“ARA”) was signed into law on March 11, 2021. We do not expect the ARA to have a material impact on our financial statements, however, given the potential changes to IRC Section 162(m) effective in 2027 as a result of the ARA, we will continue to monitor and assess.

Under the Tax Act, federal net operating losses generated in tax years beginning on or after January 1, 2018 may be carried forward indefinitely, but the utilization of such federal net operating losses is limited to 80% of taxable income in future years. Since enactment, the IRS and Treasury have issued final and proposed regulations including clarifying guidance on several topics addressed by the Tax Act. Not all states conform to the Tax Act or and other states have varying conformity to the Tax Act.

122


As of December 31, 2019,2022, for federal income tax purposes, we had federal and state net operating loss carryforwards for tax return purposes of $547.7approximately $1.0 billion of which $22.6 million and $695.4 million, respectively. The federal and state net operating loss carryforwards begin to expire in 20322036 and the remaining may be carried forward indefinitely, research & development tax credits of $24.0 million which begin to expire in various amounts if not utilized. Of the $547.72032, and orphan drug tax credits of $106.9 million which begin to expire in 2035. During 2022, we utilized $42.7 million federal net operating losses $482.2 million were generated after January 1, 2018 and are not subject to expiration.

Under Section 382 of the Internal Revenue Code of 1986, as amended, our ability to utilizeoffset taxable income. For state income tax purposes, we had net operating loss carryforwards or otherof approximately $1.3 billion which begin to expire in 2030, research & development tax attributes in any taxable yearcredits of $38.0 million which may be limited if we havecarried forward indefinitely, and California Completes tax credit of $2.0 million, which begins to expire in 2025.

Under IRC Section 382, as amended, substantial restrictions exist on the utilization of net operating loss and tax credit carryforwards in the event a corporation experienced an “ownership change.” Generally, a Section 382 “ownership change” occurs if one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period. Similar rules may apply under state tax laws. Accordingly, our ability to utilize net operating loss and tax credit carryforwards may be limited as a result of such ownership changes, and such a limitation could result in the expiration of carryforwards before they are utilized.

We have completed a Section 382 study of transactions in our stock through December 31, 2019.2022. The study concluded that we have experienced ownership changes since inception and that our utilization of net operating loss carryforwards will be subject to annual limitations. However, it is not expected that the annual limitations will result in the expiration of tax attribute carryforwards prior to utilization.

On December 22, 2017, the Tax Act was enacted into law. The Tax Act, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%; limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses); limitation of the deduction of net operating losses generated in tax years beginning after December 31, 2017 to 80% of taxable income, indefinite carryforward of net operating losses generated in tax years after 2018 and elimination of net operating loss carrybacks; changes in the treatment of offshore earnings regardless of whether they are repatriated; current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations, mandatory capitalization of research and development expenses beginning in 2022; immediate deductions for certain new investments instead of deductions for depreciation expense over time; further deduction limits on executive compensation; and modifying, repealing and creating many other business deductions and credits, including the reduction in the orphan drug credit from 50% to 25% of qualifying expenditures.

The changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for the years ended December 31, 2017, 20182020, 2021 and 20192022 are as follows:

(In thousands)

 

Balance as of January 1, 2017

$

9,285

 

(In thousands)

 

Balance as of January 1, 2020

$

86,000

 

Gross increases for tax positions related to current year

 

16,371

 

 

24,648

 

Gross increases for tax positions related to prior year

 

9,534

 

 

 

Gross decreases for tax positions related to prior year

 

(4,643

)

 

(47

)

Impact of change in tax rate

 

(496

)

Balance as of December 31, 2017

 

30,051

 

Balance as of December 31, 2020

 

110,601

 

Gross increases for tax positions related to current year

 

12,927

 

 

28,171

 

Gross increases for tax positions related to prior year

 

704

 

 

5,295

 

Gross decreases for tax positions related to prior year

 

(2,608

)

 

 

Balance as of December 31, 2018

 

41,074

 

Balance as of December 31, 2021

 

144,067

 

Gross increases for tax positions related to current year

 

22,800

 

 

7,683

 

Gross increases for tax positions related to prior year

 

22,126

 

 

 

Gross decreases for tax positions related to prior year

 

 

 

(785

)

Balance as of December 31, 2019

$

86,000

 

Balance as of December 31, 2022

$

150,965

 


The CompanyWe currently hashave a full valuation allowance against itsour U.S. net deferred tax assets, which would impact the timing of the effective tax rate benefit should any uncertain tax position be favorably settled in the future. Of the $86.0 million totalThe reversal of unrecognized tax benefits as of December 31, 2019, 0 amount, if recognized, would not affect the Company’sour effective tax rate.rate to the extent we continue to maintain a full valuation allowance against our deferred tax assets.

The Company’sOur policy is to account for interest and penalties related to uncertain tax positions as a component of the income tax provision. The Company has notWe have no accrued interest and penalties as of December 31, 20192022 and 20182021 due to available tax losses.

Our significant jurisdictions are the U.S. federal jurisdiction and the California state jurisdiction. All of our tax years remain open to examination by the U.S. federal and California tax authorities. We also file in other state, local and foreign jurisdictions in which we operate, and such tax years remain open to examination.

As of December 31, 2022, we are not permanently reinvested with respect to its foreign earnings and has not recorded deferred income taxes and withholding taxes as these taxes are immaterial to the financial statements.

123



13.
Supplemental Balance Sheet Information

Inventories

Inventories consist of the following:

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Raw Materials

 

$

1,214

 

 

$

 

Work-in-process

 

 

372

 

 

 

 

Total inventories

 

$

1,586

 

 

$

 

Property and equipment, net

Property and equipment consisted of the following as of each period end:

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Leasehold improvements

 

$

875

 

 

$

50,142

 

Lab equipment

 

 

14,797

 

 

 

14,060

 

Machinery and equipment

 

 

572

 

 

 

5,228

 

Computer equipment and software

 

 

1,149

 

 

 

4,245

 

Furniture and fixtures

 

 

1,297

 

 

 

2,518

 

Construction in progress

 

 

32

 

 

 

6,325

 

Property and equipment, gross

 

 

18,722

 

 

 

82,518

 

Less: accumulated depreciation and amortization

 

 

(12,422

)

 

 

(28,738

)

Property and equipment, net

 

$

6,300

 

 

$

53,780

 

Depreciation and amortization expense was $5.7 million, $9.3 million and $8.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Other current liabilities

Other current liabilities consisted of the following as of each period end:

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Accrued operating expenses

 

$

7,435

 

 

$

5,960

 

Current portion of operating lease liabilities

 

 

12,806

 

 

 

2,582

 

Current portion of finance lease liabilities

 

 

834

 

 

 

171

 

Other accrued liabilities

 

 

319

 

 

 

344

 

Total other current liabilities

 

$

21,394

 

 

$

9,057

 

124


Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision of our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2019.2022. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 20192022 to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussion regarding required disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 20192022 based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on the results of its evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2019.2022. The effectiveness of our internal control over financial reporting as of December 31, 20192022 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in its report which is included in this Item 89A of this Annual Report on Form 10-K.

Inherent Limitations on Controls and Procedures

Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures and our internal controls will prevent all error and all fraud. A control system, no matter how well designed and operated, can only provide reasonable assurances that the objectives of the control system are met. The design of a control system reflects resource constraints; the benefits of controls must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been or will be detected. As these inherent limitations are known features of the financial reporting process, it is possible to design into the process safeguards to reduce, though not eliminate, these risks. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns occur because of simple error or mistake. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. While our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, there can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

We intend to review and evaluate the design and effectiveness of our disclosure controls and procedures on an ongoing basis and to improve our controls and procedures over time and to correct any deficiencies that we may discover in the future. While our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2019,2022, the design of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, was effective, future events affecting our business may cause us to significantly modify our disclosure controls and procedures.

125


Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended December 31, which were identified in connection with theour evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act, that occurred during the three months ended December 31, 2019 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite the fact that many of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation to minimize the impact to the design and operating effectiveness of our internal controls.


Report of the Independent Registered Public Accounting Firm

This Annual Report on Form 10-K includes an attestation report from our independent registered public accounting firm.

126


Report of Independent Registered Public Accounting Firm

To the stockholders and the Board of Directors of Atara Biotherapeutics, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Atara Biotherapeutics, Inc. and subsidiaries (the “Company”) as of December 31, 2019,2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2022, based on criteria established in Internal Control - Integrated Framework (2013)issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheetssheet and related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows as of and for the year ended December 31, 2019,2022, of the Company and our report dated February 27, 2020,8, 2023, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding a change in the method of accounting for leases in 2019 due to adoption of Accounting Standards Update No. 2016-02, statements.Leases (Topic 842), using the optional transition method.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Report on Internal Control over Financial Reporting”.Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

San Jose,Francisco, California

February 27, 20208, 2023


127


Item 9B. Other Information

At the Market Offering FacilityNone.

On February 27, 2020, we entered into a sales agreement, or the 2020 ATM Facility, with Cowen and Company, LLC, or Cowen, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, par value $0.0001 per share, or the Common Stock, having an aggregate offering price of up to $100.0 million through Cowen, as sales agent.Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

Cowen may sell the Common Stock by any method that is deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended, including sales made directly on the Nasdaq Global Select Market or any other trading market for our common stock. Cowen will use commercially reasonable efforts to sell the Common Stock from time to time, based upon instructions from us (including any price, time or size limits or other customary parameters or conditions we may impose). We will pay Cowen a commission of up to 3.0% of the gross sales proceeds of any common stock sold through Cowen under the 2020 ATM Facility, and we also have provided Cowen with customary indemnification rights.Not Applicable.

We are not obligated to make any sales of Common Stock under the 2020 ATM Facility. The offering of shares of Common Stock pursuant to the 2020 ATM Facility will terminate upon the earlier of (i) the sale of all common stock subject to the 2020 ATM Facility or (ii) termination of the 2020 ATM Facility in accordance with its terms.128

The foregoing description of the 2020 ATM Facility is qualified in its entirety by reference to the 2020 ATM Facility, a copy of which is attached hereto as Exhibit 1.1 and incorporated herein by reference.

The legal opinion of Cooley LLP relating to the shares of Common Stock being offered pursuant to the 2020 ATM Facility is filed as Exhibit 5.1 to this Annual Report on Form 10-K.

Cognate Agreement

On December 24, 2019, we entered into the Commercial Manufacturing Services Agreement, or the Manufacturing Agreement, with Cognate, which was effective as of January 1, 2020. The Manufacturing Agreement supersedes the Development and Manufacturing Services Agreement, or the DSMA Agreement, with Cognate, dated August 10, 2015, as amended. The Manufacturing Agreement governs similar manufacturing services provided for under the DMSA Agreement with similar terms. Specifically, pursuant to the Manufacturing Agreement, Cognate provides process development and manufacturing services for certain of our product candidates. The initial term of the Manufacturing Agreement runs until December 31, 2021 and is renewable with Cognate’s approval for an additional one-year period. Atara may terminate the Manufacturing Agreement for convenience on six months’ written notice to Cognate, or immediately if Cognate is unable to perform the services under the Manufacturing Agreement or fails to obtain or maintain certain necessary approvals. The Manufacturing Agreement includes standard mutual termination rights for uncured breach or insolvency, or a force majeure event preventing the performance of services for at least ninety days.

To facilitate the entry into the Manufacturing Agreement, on November 27, 2019, we and Cognate also entered into a Fifth Amendment to the DMSA Agreement, or the DMSA Amendment, which amended the expiration date of the DMSA Agreement to December 31, 2019.

The foregoing summary descriptions of the Manufacturing Agreement and the DMSA Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of the Manufacturing Agreement and the DMSA Amendment, respectively, which are filed as exhibits hereto.

Chief Operations Officer

On February 27, 2020, we appointed Joseph Newell to the position of Executive Vice President, Chief Operations Officer.

Mr. Newell, age 50, has served as our Executive Vice President and Chief Technical Operations Officer since April 2017. From July 2015 to April 2017, he was Vice President, North America Manufacturing at Alexion Pharmaceuticals, Inc., a publicly traded biotechnology company. From March 2008 to July 2015, Mr. Newell served in various roles within Amgen, Inc., a publicly traded human therapeutics company, including as Executive Director and Plant Manager from August 2012 to September 2014 and Executive Director, Operations Strategic Planning from September 2014 to June 2015. He received a B.S. from California State Polytechnic University – Pomona.

In his new role, Mr. Newell will receive an annual salary of $450,000 and will have a bonus target equal to 45% of his base salary, to be paid upon achievement of certain corporate goals. In addition, in connection with his appointment, Mr. Newell will receive 17,000 stock options and 8,500 restricted stock units.



Mr. Newell has no family relationships with any director, executive officer or person nominated or chosen by Atara to become a director or executive officer of Atara. Mr. Newell is not a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.


PART III

Certain information required by Part III is omitted from this Annual Report on Form 10-K since we intend to file our definitive proxy statement for our 20202023 annual meeting of stockholders or the(the Definitive Proxy Statement,Statement), pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, not later than 120 days after December 31, 2019,2022, and certain information to be included in the Definitive Proxy Statement is incorporated herein by reference.

Item 10. Directors, Executive Officers and Corporate Governance

Information required by this Item is hereby incorporated by reference to our Definitive Proxy Statement.

We have adopted a Code of Conduct that applies to our officers, directors and employees which is available on our internet website at www.atarabio.com. The Code of Conduct contains general guidelines for conducting the business of our company consistent with the highest standards of business ethics, and is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K. In addition, we intend to promptly disclose (1) the nature of any amendment to our Code of Conduct that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and (2) the nature of any waiver, including an implicit waiver, from a provision of our code of ethics that is granted to one of these specified officers, the name of such person who is granted the waiver and the date of the waiver on our website in the future.

Item 11. Executive Compensation

Information required by this Item is hereby incorporated by reference to our Definitive Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by this Item is hereby incorporated by reference to our Definitive Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information required by this Item is hereby incorporated by reference to our Definitive Proxy Statement.

Item 14. Principal AccountingAccountant Fees and Services

Information required by this Item is hereby incorporated by reference to our Definitive Proxy Statement.


129


PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Financial Statements.

(a)(1)

Financial Statements.

The response to this portion of Item 15 is set forth under Item 8 above.

(a)(2) Financial Statement Schedules.

(a)(2)

Financial Statement Schedules.

All schedules have been omitted because they are not required or because the required information is given in the financial statements or notes thereto set forth under Item 8 above.

(a)(3) Exhibits.

130


Exhibits.

A list of exhibits filed with this report or incorporated herein by reference can be found in the Exhibit Index immediately following the signature page of this Report.


EXHIBIT INDEX

Exhibit
Number

 

 

 

Incorporated by Reference

 

Filed

 

Exhibit Description

 

Form

 

File No.

 

Exhibit

 

Filing Date

 

Herewith

 

 

 

 

 

 

 

 

 

 

 

 

 

  1.1

 

Sales Agreement, dated February 27, 2020, by and between Atara Biotherapeutics, Inc. and Cowen and Company, LLC

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

  3.1

 

Amended and Restated Certificate of Incorporation of Atara Biotherapeutics, Inc.

 

S-1

 

333-196936

 

3.2

 

06/20/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  3.2

 

Amended and Restated Bylaws of Atara Biotherapeutics, Inc.

 

S-1

 

333-196936

 

3.4

 

06/20/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  4.1

 

Form of Common Stock Certificate

 

S-1/A

 

333-196936

 

4.1

 

07/10/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  4.2

 

Form of Pre-Funded Warrant

 

8-K

 

001-36548

 

4.1

 

07/22/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  4.3

 

Investors’ Rights Agreement, by and among Atara Biotherapeutics, Inc. and the stockholders named therein, dated March 31, 2014

 

S-1

 

333-196936

 

4.2

 

06/20/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  4.4

 

Description of Securities

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

  5.1

 

Opinion of Cooley LLP

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

10.1*

 

Amended and Restated 2014 Equity Incentive Plan

 

10-Q

 

001-36548

 

10.2

 

08/08/2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.2*

 

Forms of Option Agreement and Option Grant Notice under the 2014 Equity Incentive Plan

 

S-1

 

333-196936

 

10.2

 

06/20/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.3*

 

Form of Restricted Stock Unit Agreement and Restricted Stock Unit Grant Notice under the 2014 Equity Incentive Plan

 

10-Q

 

001-36548

 

10.1

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4*

 

2014 Employee Stock Purchase Plan

 

S-1/A

 

333-196936

 

10.8

 

07/10/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.5*

 

Atara Biotherapeutics, Inc. 2018 Inducement Plan (the “Inducement Plan”)

 

10-Q

 

001-36548

 

10.1

 

05/08/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.6*

 

Form of Restricted Stock Unit Agreement and Restricted Stock Unit Grant Notice under the Inducement Plan

 

10-Q

 

001-36548

 

10.2

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.7*

 

Form of Stock Option Agreement and Stock Option Grant Notice under the Inducement Plan

 

10-Q

 

001-36548

 

10.3

 

05/08/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.8*

 

Forms of Inducement Grant Notice and Inducement Grant Agreement

 

10-Q

 

001-36548

 

10.3

 

08/07/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.9*

 

Form of Indemnification Agreement made by and between Atara Biotherapeutics, Inc. and each of its directors and executive officers

 

S-1

 

333-196936

 

10.9

 

06/20/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.10*

 

Form of Employment Agreement by and between Atara Biotherapeutics, Inc. and its executive officers.

 

10-Q

 

001-36548

 

10.4

 

08/01/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.11*

 

Form of Executive Employment Agreement

 

10-Q

 

001-36548

 

10.2

 

08/08/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.12*

 

Executive Employment Agreement, dated May 23, 2019, by and between Pascal Touchon and Atara Biotherapeutics, Inc.

 

8-K

 

001-36548

 

10.1

 

05/28/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.13†

 

Exclusive License Agreement, by and between Atara Biotherapeutics, Inc. and Memorial Sloan Kettering Cancer Center, dated as of June 12, 2015

 

S-1

 

333-205347

 

10.30

 

06/29/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.14†

 

Amendment No. 1 to the Exclusive License Agreement, by and between Atara Biotherapeutics, Inc. and Memorial Sloan Kettering Cancer Center, dated as of August 30, 2018

 

10-K

 

001-36548

 

10.14

 

02/26/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Exhibit
Number

 

 

 

Incorporated by Reference

 

Filed

 

Exhibit Description

 

Form

 

File No.

 

Exhibit

 

Filing Date

 

Herewith

 

 

 

 

 

 

 

 

 

 

 

 

 

10.15

 

Amended and Restated Exclusive License Agreement, by and between Atara Biotherapeutics, Inc. and the Council of the Queensland Institute of Medical Research, dated September 23, 2016, as amended

 

10-Q

 

001-36548

 

10.1

 

08/01/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.16

 

Amended and Restated Research and Development Collaboration Agreement, by and between Atara Biotherapeutics, Inc. and the Council of the Queensland Institute of Medical Research, dated September 2016, as amended

 

10-Q

 

001-36548

 

10.2

 

08/01/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.17+

 

Second Amended and Restated Research and Development Collaboration Agreement, by and between Atara Biotherapeutics, Inc. and the Counsel of the Queensland Institute of Medical Research, dated August 28, 2019

 

10-Q

 

001-36548

 

10.3

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.18+

 

Second Amended and Restated Exclusive License Agreement, by and between Atara Biotherapeutics, Inc. and the Counsel of the Queensland Institute of Medical Research, dated August 28, 2019

 

10-Q

 

001-36548

 

10.4

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.19

 

Development and Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated August 2015, as amended

 

10-Q

 

001-36548

 

10.3

 

08/01/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.20+

 

Amended and Restated Amendment No. 2 to the Development and Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated November 4, 2018

 

10-Q

 

001-36548

 

10.5

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.21+

 

Amendment No. 3 to the Development and Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated June 28, 2019

 

10-Q

 

001-36548

 

10.6

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.22+

 

Amendment No. 4 to the Development and Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated November 4, 2019

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

10.23+

 

Amendment No. 5 to the Development and Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated November 27, 2019

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

10.24+

 

Commercial Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated December 24, 2019

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

10.25

 

Office Lease, by and between BXP 611 Gateway Center LP and Atara Biotherapeutics, Inc., dated as of December 9, 2015

 

10-K

 

001-36548

 

10.29

 

03/04/2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.26

 

Standard Industrial Lease by and between Thousand Oaks Industrial Portfolio, LLC and Atara Biotherapeutics, Inc. dated February 6, 2017

 

10-Q

 

001-36548

 

10.1

 

05/04/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21.1

 

List of Subsidiaries

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

23.1

 

Consent of Independent Registered Public Accounting Firm

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

23.2

 

Consent of Cooley LLP (included in Exhibit 5.1)

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

24.1

 

Power of Attorney (included on signature page)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31.1

 

Certification of the Chief Executive Officer pursuant to Securities Exchange Act Rules 13A-14A and 15D-14A

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 


Exhibit

 

 

 

Incorporated by Reference

 

Filed

Number

 

Exhibit Description

 

Form

 

 

Exhibit

 

Filing Date

 

Herewith

  3.1

 

Amended and Restated Certificate of Incorporation of Atara Biotherapeutics, Inc.

 

S-1

 

 

3.2

 

06/20/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  3.2

 

Second Amended and Restated Bylaws of Atara Biotherapeutics, Inc.

 

8-K

 

 

3.1

 

09/27/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  4.1

 

Form of Common Stock Certificate

 

S-1/A

 

 

4.1

 

07/10/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  4.2

 

Form of 2019 Pre-Funded Warrant

 

8-K

 

 

4.1

 

07/22/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  4.3

 

Form of May 2020 Pre-Funded Warrant

 

8-K

 

 

4.1

 

05/28/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  4.4

 

Form of December 2020 Pre-Funded Warrant

 

8-K

 

 

4.1

 

12/09/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  4.5

 

Description of Securities

 

10-K

 

 

4.4

 

02/27/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.1*

 

Amended and Restated 2014 Equity Incentive Plan

 

10-Q

 

 

10.2

 

08/08/2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.2*

 

Forms of Option Agreement and Option Grant Notice under the 2014 Equity Incentive Plan

 

S-1

 

 

10.2

 

06/20/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.3*

 

Form of Restricted Stock Unit Agreement and Restricted Stock Unit Grant Notice under the 2014 Equity Incentive Plan

 

10-Q

 

 

10.1

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4*

 

2014 Employee Stock Purchase Plan

 

S-1/A

 

 

10.8

 

07/10/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.5*

 

Atara Biotherapeutics, Inc. Third Amended and Restated 2018 Inducement Plan

 

S-8

 

 

4.3

 

07/22/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.6*

 

Form of Restricted Stock Unit Agreement and Restricted Stock Unit Grant Notice under the Inducement Plan

 

10-Q

 

 

10.2

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.7*

 

Form of Stock Option Agreement and Stock Option Grant Notice under the Inducement Plan

 

10-Q

 

 

10.3

 

05/08/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.8*

 

Forms of Inducement Grant Notice and Inducement Grant Agreement

 

10-Q

 

 

10.3

 

08/07/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.9*

 

Form of Indemnification Agreement made by and between Atara Biotherapeutics, Inc. and each of its directors and executive officers

 

S-1

 

 

10.9

 

06/20/2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.10*

 

Form of Employment Agreement by and between Atara Biotherapeutics, Inc. and its executive officers.

 

10-Q

 

 

10.4

 

08/01/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.11*

 

Form of Executive Employment Agreement

 

10-Q

 

 

10.2

 

08/08/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.12*

 

Executive Employment Agreement, dated May 23, 2019, by and between Pascal Touchon and Atara Biotherapeutics, Inc.

 

8-K

 

 

10.1

 

05/28/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.13†

 

Exclusive License Agreement, by and between Atara Biotherapeutics, Inc. and Memorial Sloan Kettering Cancer Center, dated as of June 12, 2015

 

S-1

 

 

10.30

 

06/29/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.14†

 

Amendment No. 1 to the Exclusive License Agreement, by and between Atara Biotherapeutics, Inc. and Memorial Sloan Kettering Cancer Center, dated as of August 30, 2018

 

10-K

 

 

10.14

 

02/26/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.15†

 

Amended and Restated Exclusive License Agreement, by and between Atara Biotherapeutics, Inc. and the Council of the Queensland Institute of Medical Research, dated September 23, 2016, as amended

 

10-Q

 

 

10.1

 

08/01/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.16†

 

Amended and Restated Research and Development Collaboration Agreement, by and between Atara Biotherapeutics, Inc. and the Council of the Queensland Institute of Medical Research, dated September 23, 2016, as amended

 

10-Q

 

 

10.2

 

08/01/2018

 

 

131


Exhibit

 

 

 

Incorporated by Reference

 

Filed

Number

 

Exhibit Description

 

Form

 

 

Exhibit

 

Filing Date

 

Herewith

 

 

 

 

 

 

 

 

 

 

 

 

10.17+

 

Second Amended and Restated Research and Development Collaboration Agreement, by and between Atara Biotherapeutics, Inc. and the Counsel of the Queensland Institute of Medical Research, dated August 28, 2019

 

10-Q

 

 

10.3

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.18+

 

Second Amended and Restated Exclusive License Agreement, by and between Atara Biotherapeutics, Inc. and the Counsel of the Queensland Institute of Medical Research, dated August 28, 2019

 

10-Q

 

 

10.4

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.19+

 

Third Amended and Restated Exclusive License Agreement, by and between Atara Biotherapeutics, Inc. and the Counsel of the Queensland Institute of Medical Research, dated August 26, 2020

 

10-Q

 

 

10.1

 

11/09/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.20+

 

Third Amended and Restated Research and Development Collaboration Agreement, by and between Atara Biotherapeutics, Inc. and the Counsel of the Queensland Institute of Medical Research, dated August 26, 2020

 

10-Q

 

 

10.2

 

11/09/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.21†

 

Development and Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated August 10, 2015, as amended

 

10-Q

 

 

10.3

 

08/01/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.22+

 

Amended and Restated Amendment No. 2 to the Development and Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated November 4, 2018

 

10-Q

 

 

10.5

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.23+

 

Amendment No. 3 to the Development and Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated June 28, 2019

 

10-Q

 

 

10.6

 

11/07/2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.24+

 

Amendment No. 4 to the Development and Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated November 4, 2019

 

10-K

 

 

10.22

 

02/27/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.25+

 

Amendment No. 5 to the Development and Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated November 27, 2019

 

10-K

 

 

10.23

 

02/27/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.26+

 

Commercial Manufacturing Services Agreement, by and between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated January 1, 2020

 

10-K

 

 

10.24

 

02/27/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.27+

 

Amendment No. 1 to Commercial Manufacturing Services Agreement, between Atara Biotherapeutics, Inc. and Cognate BioServices, Inc., dated September 1, 2021

 

10-Q

 

 

10.1

 

11/04/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.28

 

Office Lease, by and between BXP 611 Gateway Center LP and Atara Biotherapeutics, Inc., dated as of December 9, 2015

 

10-K

 

 

10.29

 

03/04/2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.29

 

First Amendment to Lease, by and between BXP 611 Gateway Center LP and Atara Biotherapeutics, Inc., dated October 21, 2020

 

10-Q

 

 

10.4

 

11/09/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.30

 

Standard Industrial Lease by and between Thousand Oaks Industrial Portfolio, LLC and Atara Biotherapeutics, Inc. dated February 6, 2017

 

10-Q

 

 

10.1

 

05/04/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.31+

 

Research, Development and License Agreement, by and between Atara Biotherapeutics, Inc. and Bayer AG, dated December 4, 2020

 

10-Q

 

 

10.1

 

05/04/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.32

 

Lease Agreement between LA Region No. 2, LLC and Atara Biotherapeutics, Inc. dated March 17, 2021

 

10-Q

 

 

10.2

 

05/04/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.33+

 

First Amended and Restated Exclusive License Agreement by and between Atara Biotherapeutics, Inc. and Memorial Sloan Kettering Cancer Center, dated March 22, 2021

 

10-Q

 

 

10.3

 

05/04/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.34+

 

Deed of Amendment Number 1 to Third Amended and Restated License Agreement dated April 21, 2021

 

10-Q

 

 

10.1

 

08/09/2021

 

 

132


Exhibit

 

 

 

Incorporated by Reference

 

Filed

Number

 

Exhibit Description

 

Form

 

 

Exhibit

 

Filing Date

 

Herewith

 

 

 

 

 

 

 

 

 

 

 

 

10.35+

 

Commercialization Agreement by and between Atara Biotherapeutics, Inc. and Pierre Fabre Medicament, dated October 2, 2021

 

 

10-K

 

 

10.35

 

02/28/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.36

 

Second Amendment to Lease, by and between Atara Biotherapeutics, Inc. and 611 Gateway Center LP, LLC, dated December 9, 2021

 

10-K

 

 

10.36

 

02/28/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.37+

 

Fourth Amended and Restated Research and Development Collaboration Agreement between Atara Biotherapeutics, Inc. and the Counsel of the Queensland Institute of Medical Research, dated December 17, 2021

 

10-K

 

 

10.37

 

02/28/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.38+

 

Fourth Amended and Restated Exclusive License Agreement between Atara Biotherapeutics, Inc. and the Counsel of the Queensland Institute of Medical Research, dated December 17, 2021

 

10-K

 

 

10.38

 

02/28/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.39*

 

Form of Atara Biotherapeutics, Inc. Executive Employment Agreement

 

10-K

 

 

10.39

 

02/28/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.40+

 

Asset Purchase Agreement, dated as of January 26, 2022, by and between Atara Biotherapeutics, Inc., FUJIFILM Diosynth Biotechnologies California, Inc., and certain limited purposes, FUJIFILM Holdings America Corporation

 

8-K

 

 

2.1

 

04/04/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.41

 

Master Services and Supply Agreement dated as of January 26, 2022 by and between Atara Biotherapeutics, Inc., and FUJIFILM Diosynth Biotechnologies California, Inc.

 

10-Q

 

 

10.1

 

05/05/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.42

 

Amendment No. 2 to Commercial Manufacturing Services Agreement dated as of May 31, 2022 by and between Atara Biotherapeutics, Inc. and Charles River Laboratories, Inc.

 

10-Q

 

 

10.1

 

08/08/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.43+

 

Amendment No. 3 to Commercial Manufacturing Services Agreement dated as of August 1, 2022 by and between Atara Biotherapeutics, Inc. and Charles River Laboratories, Inc.

 

10-Q

 

 

10.1

 

11/08/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.44

 

Termination, Amendment and Program Transfer Agreement dated August 2, 2022, by and between Atara Biotherapeutics, Inc., and Bayer AG+

 

10-Q

 

 

10.2

 

11/08/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.45+

 

Amendment No. 1 to the Commercialization Agreement dated September 28, 2022, by and between Atara Biotherapeutics, Inc. and Pierre Fabre Medicament

 

10-Q

 

 

10.3

 

11/08/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.46+

 

Purchase and Sale Agreement between Atara Biotherapeutics, Inc., and HCR Molag Fund, L.P., dated December 20, 2023

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

21.1

 

List of Subsidiaries

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

23.1

 

Consent of Independent Registered Public Accounting Firm

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

24.1

 

Power of Attorney (included on signature page)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31.1

 

Certification of the Chief Executive Officer pursuant to Rules 13A-14A and 15D-14A of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

133


Exhibit
Number

Incorporated by Reference

Filed

Number

Exhibit Description

Exhibit Description

Form

Form

File No.

Exhibit

Filing Date

Herewith

31.2

Certification of the Chief Financial Officer pursuant to Securities Exchange Act Rules 13A-14A and 15D-14A of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

32.1(1)

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 USCU.S.C Section 1350 as adopted pursuant to Section 906 of Thethe Sarbanes-Oxley Act of 2002

X

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

X

101.SCH

Inline XBRL Taxonomy Extension Schema Document

X

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

X

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

X

101.LAB

Inline XBRL LabelsTaxonomy Extension Label Linkbase Document

X

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

X

104

The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline XBRL

X

Confidential treatment has been granted for a portion of this exhibit.

+

Portions of this exhibit have been omitted as being immaterial and would be competitively harmful if publicly disclosed.

*

Indicates management contract or compensatory plan or arrangement.

(1)Cover Page Interactive Data File (embedded within the Inline XBRL document)

The certifications attached as Exhibit 32.1 accompany this Annual Report on Form 10-K pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

X

† Confidential treatment has been granted for a portion of this exhibit.

+ Portions of this exhibit have been omitted as being both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.

* Indicates management contract or compensatory plan or arrangement.

(1)
The certifications attached as Exhibit 32.1 accompany this Annual Report on Form 10-K pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Item 16. Form 10-K Summary

None.

134



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of South San Francisco,Thousand Oaks, State of California, on the 27th8th day of February, 2020.2023.

Atara Biotherapeutics, Inc.

By:

/s/ Pascal Touchon

Pascal Touchon

President and Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Pascal Touchon and Utpal Koppikar, and each of them, as his or her true and lawful attorneys-in-fact and agents, each with the full power of substitution, for him or her and in his or her name, place or stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Pascal Touchon

Pascal Touchon

President, Chief Executive Officer and Director
(
principal executive officer)

February 27, 20208, 2023

/s/ Utpal Koppikar

Utpal Koppikar

Chief Financial Officer
(
principal financial and accounting officer)

February 27, 20208, 2023

/s/ Roy D. Baynes

Roy D. Baynes, M.D., Ph.D./s/ Carol G. Gallagher

Director

February 27, 2020

Carol G. Gallagher, Pharm. D.

Director, Chair

February 8, 2023

/s/ Eric Dobmeier

/s/ Eric L. Dobmeier

Director

February 27, 2020

Eric L. Dobmeier

Director

February 8, 2023

/s/ Matthew K. Fust

Matthew K. Fust

Director

February 27, 20208, 2023

/s/ Carol G. GallagherWilliam K. Heiden

Carol G. Gallagher, Pharm.D.William K. Heiden

Director

February 27, 20208, 2023

/s/ William HeidenAmeet Mallik

William HeidenAmeet Mallik

Director

February 27, 20208, 2023

/s/ Maria Grazia Roncarolo

Maria Grazia Roncarolo, M.D.

Director

February 8, 2023

/s/ Beth Seidenberg

Beth Seidenberg, M.D.

Director

February 27, 20208, 2023

107135