UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 001-41259 ARCELLX, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 47-2855917 (State or other jurisdi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 001-41259 ARCELLX, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 47-2855917 (State or other jurisd ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-41259 ARCELLX, INC. (Exact name of Registrant as specified in its Charter) Delaware 47-2855917 (State or other jurisdiction of (I.R.S ...

Corporate Presentation Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than statements of historical facts contained in this presentation, including statements regarding the anticipated 3202 comple ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Common Stock, $0.001 par value per share ACLX The Nasdaq Global Select Market FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 001-41259 | --- | --- | --- | --- | |-- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Common Stock, $0.001 par value per share ACLX The Nasdaq Global Select Market FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 001-41259 | --- | --- | --- | --- | |------- ...

PART I. FINANCIAL INFORMATION This section presents Arcellx, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Arcellx, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031,%202022%20and%20December%2031,%202021) Presents Arcellx's financial position, highlighting significant increases in assets and a shift to positive stockholders' equity | Metric (in thousands) | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Cash and cash equivalents | $127,160 | $30,833 | | Marketable securities | $83,769 | $73,784 | | Total Assets | $243,390 | $128,782 | | Total Liabilities | $21,799 | $16,918 | | Total Stockholders' Equity (Deficit) | $221,591 | $(121,515) | - The company's total assets significantly increased from **$128.8 million** at December 31, 2021, to **$243.4 million** at March 31, 2022, primarily driven by a substantial increase in cash and cash equivalents[12](index=12&type=chunk) - Stockholders' equity shifted from a deficit of **$121.5 million** at December 31, 2021, to a positive equity of **$221.6 million** at March 31, 2022, reflecting recent financing activities[14](index=14&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202022%20and%202021) Details Arcellx's financial performance, showing increased net loss driven by higher operating expenses | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $— | $— | | Research and development | $24,401 | $8,521 | | General and administrative | $8,034 | $2,761 | | Total operating expenses | $32,435 | $11,282 | | Net loss | $(32,385) | $(11,281) | | Net loss per share (basic and diluted) | $(1.56) | $(33.45) | - The company reported no revenue for both periods. Net loss significantly increased to **$32.4 million** in Q1 2022 from **$11.3 million** in Q1 2021, primarily due to increased operating expenses[16](index=16&type=chunk) - Research and development expenses more than doubled year-over-year, reaching **$24.4 million** in Q1 2022, reflecting intensified product development[16](index=16&type=chunk) [Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Redeemable%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)%20for%20the%20Three%20Months%20Ended%20March%2031,%202022%20and%202021) Outlines changes in equity, including the conversion of preferred stock to common stock and increased paid-in capital - As of March 31, 2022, all redeemable convertible preferred stock (Series A, B, and C) had been converted to common stock, resulting in zero outstanding preferred shares and a significant increase in common stock and additional paid-in capital[17](index=17&type=chunk) | Metric (in thousands) | December 31, 2021 | March 31, 2022 | | :-------------------- | :---------------- | :------------- | | Series A Preferred Stock | $28,894 | $— |\ | Series B Preferred Stock | $85,367 | $— |\ | Series C Preferred Stock | $119,118 | $— |\ | Total Redeemable Convertible Preferred Stock | $233,379 | $— |\ | Common Stock (Amount) | $1 | $36 |\ | Additional Paid-in Capital | $8,615 | $384,095 |\ | Accumulated Deficit | $(130,111) | $(162,496) |\ | Total Stockholders' Equity (Deficit) | $(121,515) | $221,591 | - Additional paid-in capital surged from **$8.6 million** to **$384.1 million**, reflecting the conversion of preferred stock and proceeds from the IPO and private placement[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031,%202022%20and%202021) Summarizes cash inflows and outflows from operating, investing, and financing activities for the periods | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(32,586) | $(9,507) |\ | Net cash used in investing activities | $(10,643) | $(1,066) |\ | Net cash provided by financing activities | $139,556 | $81,628 |\ | Net increase in cash and cash equivalents and restricted cash | $96,327 | $71,055 |\ | Cash and cash equivalents and restricted cash, end of period | $127,359 | $117,850 | - Operating cash outflow increased significantly to **$32.6 million** in Q1 2022 from **$9.5 million** in Q1 2021, driven by higher net loss and changes in operating assets and liabilities[20](index=20&type=chunk) - Financing activities provided substantial cash inflows of **$139.6 million** in Q1 2022, primarily from the IPO and a private placement, compared to **$81.6 million** in Q1 2021 from preferred stock issuance[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of Arcellx's business, accounting policies, and specific financial statement line items [1. Nature of the Business](index=9&type=section&id=1.%20Nature%20of%20the%20Business) Describes Arcellx as a clinical-stage biopharmaceutical company and details its recent IPO and funding outlook - Arcellx, Inc. is a clinical-stage biopharmaceutical company focused on developing innovative cell therapies for cancer and other incurable diseases, headquartered in Gaithersburg, Maryland[22](index=22&type=chunk) - The company completed its Initial Public Offering (IPO) on February 8, 2022, issuing 9,487,500 shares of common stock at **$15.00 per share**, generating net proceeds of **$127.3 million**[23](index=23&type=chunk) - Arcellx expects its current cash, cash equivalents, and marketable securities to fund operations into the second half of 2023, but anticipates needing additional funding due to ongoing operating losses and development costs[24](index=24&type=chunk)[25](index=25&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines key accounting policies, including the adoption of the new lease accounting standard in Q1 2022 - No material changes to significant accounting policies were made in Q1 2022, except for the adoption of the new lease accounting standard (ASU 2016-02, Topic 842) effective January 1, 2022[26](index=26&type=chunk)[27](index=27&type=chunk) - The adoption of Topic 842 resulted in the recognition of **$3.3 million** in operating lease right-of-use (ROU) assets and **$5.4 million** in operating lease liabilities on the balance sheet, with no cumulative effect adjustment to accumulated deficit[28](index=28&type=chunk) [3. Restricted Cash](index=10&type=section&id=3.%20Restricted%20Cash) Details the company's restricted cash balance held as collateral for a lease agreement - The company maintains **$0.2 million** in restricted cash as collateral for a lease agreement, consistent with the prior period[33](index=33&type=chunk) | Metric (in thousands) | March 31, 2022 | March 31, 2021 | | :-------------------- | :------------- | :------------- | | Cash and cash equivalents | $127,160 | $117,651 |\ | Restricted cash | $199 | $199 |\ | Total | $127,359 | $117,850 | [4. Fair Value of Financial Instruments](index=10&type=section&id=4.%20Fair%20Value%20of%20Financial%20Instruments) Presents the fair value measurements of financial assets, showing an increase and shift towards Level 1 assets | Asset (in thousands) | March 31, 2022 (Level 1) | March 31, 2022 (Level 2) | December 31, 2021 (Level 1) | December 31, 2021 (Level 2) | | :------------------- | :----------------------- | :----------------------- | :-------------------------- | :-------------------------- | | Money market fund (cash equivalent) | $124,509 | $— | $26,472 | $— |\ | Money market fund (long-term restricted cash) | $199 | $— | $199 | $— |\ | Commercial paper | $— | $50,904 | $— | $43,969 |\ | Corporate debt | $— | $14,797 | $— | $17,072 |\ | U.S. government agency | $— | $15,061 | $— | $5,053 |\ | Asset-backed securities | $— | $3,007 | $— | $7,690 |\ | Total assets measured at fair value | $124,708 | $83,769 | $26,671 | $73,784 | - The company's financial assets measured at fair value increased significantly, with a shift towards higher Level 1 assets (money market funds) and an increase in Level 2 marketable securities (commercial paper, corporate debt, U.S. government agency, asset-backed securities)[35](index=35&type=chunk)[37](index=37&type=chunk) [5. Marketable Securities](index=11&type=section&id=5.%20Marketable%20Securities) Details the composition and fair value of marketable securities, noting short-term maturities and interest income | Security Type (in thousands) | Amortized Cost (Mar 31, 2022) | Fair Value (Mar 31, 2022) | Amortized Cost (Dec 31, 2021) | Fair Value (Dec 31, 2021) | | :--------------------------- | :---------------------------- | :------------------------ | :---------------------------- | :------------------------ | | Commercial paper | $50,904 | $50,904 | $43,969 | $43,969 |\ | Corporate debt | $14,814 | $14,797 | $17,084 | $17,072 |\ | U.S. government agency | $15,081 | $15,061 | $5,056 | $5,053 |\ | Asset-backed securities | $3,013 | $3,007 | $7,695 | $7,690 |\ | Total | $83,812 | $83,769 | $73,804 | $73,784 | - All marketable securities held as of March 31, 2022, had contractual maturities of less than one year. Unrealized losses were primarily due to changes in interest rates, not increased credit risks[39](index=39&type=chunk) - The company recorded **$0.2 million** in interest income, offset by **$0.1 million** in premium amortization, for the three months ended March 31, 2022[39](index=39&type=chunk) [6. Prepaid Expenses and Other Current Assets](index=12&type=section&id=6.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) Reports an increase in prepaid expenses and other current assets, driven by R&D and other operational prepayments | Category (in thousands) | March 31, 2022 | December 31, 2021 | | :---------------------- | :------------- | :---------------- | | Prepaid research and development costs | $6,388 | $6,143 |\ | Other prepaid expense and current assets | $3,586 | $2,049 |\ | Total | $9,974 | $8,192 | - Total prepaid expenses and other current assets increased by **$1.8 million**, from **$8.2 million** at December 31, 2021, to **$10.0 million** at March 31, 2022, reflecting increases in both R&D and other prepaid expenses[41](index=41&type=chunk) [7. Commitments](index=12&type=section&id=7.%20Commitments) Outlines significant contractual obligations, including a manufacturing services agreement with Lonza Houston, Inc - Arcellx entered into a manufacturing services agreement (Lonza SOW) in February 2022 with Lonza Houston, Inc. for technology transfer and cGMP manufacturing of CART-ddBCMA and other pipeline products[42](index=42&type=chunk) - As of March 31, 2022, minimum non-cancellable costs payable to Lonza were approximately **$40.6 million**, with **$5.8 million** paid during Q1 2022[42](index=42&type=chunk) [8. Accrued Liabilities](index=12&type=section&id=8.%20Accrued%20Liabilities) Details the increase in total accrued liabilities, primarily due to higher research and development expenses | Category (in thousands) | March 31, 2022 | December 31, 2021 | | :---------------------- | :------------- | :---------------- | | Research and development accrued expenses | $12,129 | $6,626 |\ | Accrued offering costs | $— | $1,301 |\ | Accrued bonus | $793 | $3,429 |\ | Other liabilities | $1,478 | $1,824 |\ | Total | $14,400 | $13,180 | - Total accrued liabilities increased to **$14.4 million** at March 31, 2022, from **$13.2 million** at December 31, 2021, primarily due to a significant increase in research and development accrued expenses[43](index=43&type=chunk) [9. Leases](index=12&type=section&id=9.%20Leases) Provides details on operating lease assets and liabilities, including future minimum lease payments - As of March 31, 2022, the company had operating lease ROU assets of **$3.2 million** and total operating lease liabilities of **$5.2 million** (current **$0.4 million**, non-current **$4.8 million**), with a remaining lease term of 7.8 years[45](index=45&type=chunk) Lease Costs (in thousands) | Lease Costs (in thousands) | Three Months Ended March 31, 2022 | | :------------------------- | :-------------------------------- | | Operating lease costs | $163 |\ | Short-term lease costs | $377 |\ | Variable lease costs | $14 |\ | Total | $554 | Future Minimum Operating Lease Payments (in thousands) | Future Minimum Operating Lease Payments (in thousands) | Amount | | :----------------------------------------------------- | :----- | | Through December 31, 2022 | $555 |\ | 2023 | $851 |\ | 2024 | $872 |\ | 2025 | $894 |\ | 2026 | $916 |\ | 2027 | $939 |\ | Thereafter | $2,033 |\ | Total operating lease payments | $7,060 |\ | Less: imputed interest | $(1,846)|\ | Present value of total operating lease liabilities | $5,214 | [10. Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=13&type=section&id=10.%20Redeemable%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)) Explains the conversion of preferred stock to common stock following the IPO and changes in outstanding shares - All outstanding redeemable convertible preferred stock automatically converted into 24,785,564 shares of common stock upon the company's IPO[48](index=48&type=chunk) - As of March 31, 2022, the company had 35,718,764 shares of common stock issued and outstanding, compared to 544,210 shares at December 31, 2021, reflecting the IPO and preferred stock conversion[51](index=51&type=chunk) - No dividends have been declared or paid on common stock through March 31, 2022[51](index=51&type=chunk) [11. Share-Based Compensation](index=14&type=section&id=11.%20Share-Based%20Compensation) Details share-based compensation expenses, including the impact of the 2022 Equity Incentive Plan and RSU awards - The company recognized **$4.5 million** in share-based compensation expense for Q1 2022, a significant increase from **$0.8 million** in Q1 2021, with **$1.3 million** allocated to R&D and **$3.2 million** to G&A[56](index=56&type=chunk) Share-Based Compensation (in thousands) | Share-Based Compensation (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Stock options | $3,030 | $757 |\ | Restricted stock units | $696 | $— |\ | Restricted stock units - executive officer | $755 | $— |\ | Total | $4,481 | $757 | - The 2022 Equity Incentive Plan became effective on February 3, 2022, reserving 4,296,875 shares for equity awards, with an annual cumulative increase provision[55](index=55&type=chunk) - An RSU Award of 952,804 units to an executive officer, subject to service, performance, and market conditions, began recognizing share-based compensation expense of **$0.8 million** in Q1 2022 following the IPO[61](index=61&type=chunk)[69](index=69&type=chunk) [12. Net Loss Per Share Attributable to Common Stockholders](index=16&type=section&id=12.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Stockholders) Explains the calculation of net loss per share, noting the exclusion of anti-dilutive securities - Potentially dilutive securities, including options, unvested restricted stock, and redeemable convertible preferred stock, were excluded from diluted net loss per share calculation as their effect would be anti-dilutive[70](index=70&type=chunk) Potentially Dilutive Securities | Potentially Dilutive Securities | March 31, 2022 | March 31, 2021 | | :------------------------------ | :------------- | :------------- | | Redeemable convertible preferred stock | — | 22,359,669 |\ | Options to purchase common stock | 8,113,589 | 2,871,594 |\ | Unvested shares of restricted common stock from early exercises | 17,820 | 34,647 |\ | Restricted stock units | 702,663 | — |\ | Restricted stock units - executive officer | 952,804 | — |\ | Total | 9,786,876 | 25,265,910 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on Arcellx's financial condition and operational results, highlighting losses, financing, and R&D expansion [Overview](index=17&type=section&id=Overview) Introduces Arcellx as a clinical-stage biotech, detailing its net losses, accumulated deficit, and recent financing activities - Arcellx is a clinical-stage biotechnology company focused on developing innovative immunotherapies for cancer and other incurable diseases, utilizing its D-Domain, ddCAR, and ARC-SparX platforms[74](index=74&type=chunk) - The company reported net losses of **$32.4 million** for Q1 2022, up from **$11.3 million** for Q1 2021, and an accumulated deficit of **$162.5 million** as of March 31, 2022[75](index=75&type=chunk)[76](index=76&type=chunk) - Arcellx completed its IPO in February 2022, raising approximately **$127.3 million** in net proceeds, and a private placement in March 2022 for **$10.0 million**, bringing total cash and marketable securities to **$210.9 million** as of March 31, 2022[79](index=79&type=chunk)[80](index=80&type=chunk) - The company expects its current funding to support operations into the second half of 2023, but anticipates substantial increases in operating expenses and capital requirements as it advances product candidates and expands its pipeline[76](index=76&type=chunk)[80](index=80&type=chunk) [Components of Results of Operations](index=18&type=section&id=Components%20of%20Results%20of%20Operations) Analyzes the key components driving Arcellx's financial results, including revenue and operating expenses [Revenue](index=18&type=section&id=Revenue) Discusses the company's lack of product revenue to date and future reliance on collaboration agreements - Arcellx has not generated any revenue from product sales to date and does not expect to in the near future, relying on potential collaboration agreements for future revenue[82](index=82&type=chunk) [Operating Expenses](index=19&type=section&id=Operating%20Expenses) Examines the primary categories of operating expenses: research and development, and general and administrative [Research and Development Expenses](index=19&type=section&id=Research%20and%20Development%20Expenses) Details R&D costs, including external and internal components, and projected increases for pipeline advancement - R&D expenses are a significant portion of operating costs, comprising external (CROs, CMOs, supplies) and internal (employee-related) costs for product candidate development[84](index=84&type=chunk)[85](index=85&type=chunk) - The company expects R&D expenses to increase substantially as CART-ddBCMA advances to Phase 2, ARC-SparX candidates enter clinical trials, and the pipeline expands[87](index=87&type=chunk) - Successful development is highly uncertain, with costs and timelines dependent on factors like clinical trial success, regulatory approvals, manufacturing capabilities, and market acceptance[88](index=88&type=chunk)[89](index=89&type=chunk) [General and Administrative Expenses](index=20&type=section&id=General%20and%20Administrative%20Expenses) Covers G&A costs, including personnel and professional fees, and anticipated increases due to company growth and public company operations - G&A expenses primarily include salaries, benefits, share-based compensation, and professional fees for executive, finance, and administrative functions[90](index=90&type=chunk) - G&A expenses are expected to increase substantially due to company growth, increased headcount, and costs associated with operating as a public company (legal, accounting, compliance, investor relations)[91](index=91&type=chunk) [Other Income, Net](index=20&type=section&id=Other%20Income,%20Net) Describes other income, primarily interest on cash and marketable securities, which has been insignificant - Other income, net, primarily consists of interest earned on cash, cash equivalents, and marketable securities, which has not been significant to date[92](index=92&type=chunk) [Results of Operations (Comparison of the Three Months Ended March 31, 2022 and 2021)](index=20&type=section&id=Results%20of%20Operations) Compares Arcellx's financial performance for Q1 2022 versus Q1 2021, detailing changes in operating expenses and net loss | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :----- | | Research and development | $24,401 | $8,521 | $15,880|\ | General and administrative | $8,034 | $2,761 | $5,273 |\ | Total operating expenses | $32,435 | $11,282 | $21,153|\ | Net loss | $(32,385) | $(11,281) | $(21,104)|\ | Other income, net | $50 | $1 | $49 | [Research and Development Expenses](index=20&type=section&id=Research%20and%20Development%20Expenses_2) Analyzes the increase in R&D expenses, driven by higher external costs for clinical trials and personnel costs - R&D expenses increased by **$15.9 million** to **$24.4 million** in Q1 2022, primarily due to **$12.7 million** higher external costs for CART-ddBCMA clinical trials and **$1.1 million** for preclinical development, alongside a **$2.1 million** increase in personnel costs[94](index=94&type=chunk) [General and Administrative Expenses](index=21&type=section&id=General%20and%20Administrative%20Expenses_2) Examines the rise in G&A expenses, attributed to increased personnel costs, professional fees, and other expenses - G&A expenses rose by **$5.2 million** to **$8.0 million** in Q1 2022, driven by a **$3.2 million** increase in personnel costs, **$1.3 million** in professional fees, and **$0.7 million** in other expenses[96](index=96&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses Arcellx's cash position, funding sources, and future capital requirements for operations and development - Arcellx had **$210.9 million** in cash, cash equivalents, and marketable securities as of March 31, 2022, following **$127.3 million** net proceeds from its IPO and **$10.0 million** from a private placement[97](index=97&type=chunk)[98](index=98&type=chunk) - The company expects current funds to cover operating expenses and capital expenditures into the second half of 2023, but will require substantial additional capital for future development and commercialization[98](index=98&type=chunk)[100](index=100&type=chunk) - Future funding may come from equity offerings, debt financings, or collaborations, with requirements dependent on the pace of product development, regulatory outcomes, and market conditions[100](index=100&type=chunk) [Cash Flows](index=22&type=section&id=Cash%20Flows) Analyzes cash movements across operating, investing, and financing activities for the reported periods | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(32,586) | $(9,507) |\ | Net cash used in investing activities | $(10,643) | $(1,066) |\ | Net cash provided by financing activities | $139,556 | $81,628 |\ | Net increase in cash, cash equivalents, and restricted cash | $96,327 | $71,055 | [Operating Activities](index=22&type=section&id=Operating%20Activities) Details the increase in net cash used in operating activities, driven by net loss and changes in working capital - Net cash used in operating activities increased to **$32.6 million** in Q1 2022, primarily due to a net loss of **$32.4 million** and **$5.3 million** in net changes in operating assets and liabilities, partially offset by **$5.1 million** in non-cash charges[105](index=105&type=chunk) [Investing Activities](index=22&type=section&id=Investing%20Activities) Explains cash used in investing activities, mainly for marketable securities purchases and lab equipment - Net cash used in investing activities was **$10.6 million** in Q1 2022, mainly from **$10.1 million** in net purchases of marketable securities and **$0.5 million** for lab equipment[107](index=107&type=chunk) [Financing Activities](index=22&type=section&id=Financing%20Activities) Highlights significant cash provided by financing activities, primarily from the IPO and a private placement - Net cash provided by financing activities was **$139.6 million** in Q1 2022, primarily from **$129.2 million** net proceeds from the IPO and **$10.0 million** from a private placement[108](index=108&type=chunk) [Contractual Obligations and Contingencies](index=23&type=section&id=Contractual%20Obligations%20and%20Contingencies) Outlines the company's significant contractual commitments, including lease payments and manufacturing agreements - As of March 31, 2022, the company had total future undiscounted minimum operating lease payments of **$7.1 million**[111](index=111&type=chunk) - Minimum non-cancellable costs payable to Lonza Houston, Inc. under a manufacturing services agreement were approximately **$40.6 million** as of March 31, 2022[112](index=112&type=chunk) - Other contracts with CROs, CMOs, and third parties include potential development milestones up to **$18.7 million** and commercial milestones up to **$52.0 million**, plus low single-digit royalties[113](index=113&type=chunk) [Critical Accounting Estimates](index=23&type=section&id=Critical%20Accounting%20Estimates) States that no material changes occurred in critical accounting policies and estimates during Q1 2022 - The company's financial statements rely on estimates and judgments affecting reported amounts, with no material changes to critical accounting policies and estimates during Q1 2022[114](index=114&type=chunk)[115](index=115&type=chunk) [Emerging Growth Company and Smaller Reporting Company Status](index=23&type=section&id=Emerging%20Growth%20Company%20and%20Smaller%20Reporting%20Company%20Status) Explains Arcellx's status as an emerging growth and smaller reporting company, detailing associated regulatory exemptions - Arcellx qualifies as an 'emerging growth company' under the JOBS Act, allowing it to delay adopting new accounting standards and benefit from reduced reporting requirements[117](index=117&type=chunk)[120](index=120&type=chunk) - The company is also a 'smaller reporting company,' which provides additional exemptions from certain disclosure requirements, including auditor attestation for internal controls[121](index=121&type=chunk) [Recent Accounting Pronouncements](index=24&type=section&id=Recent%20Accounting%20Pronouncements) Refers to Note 2 for details on recently issued and adopted accounting pronouncements - A description of recently issued and adopted accounting pronouncements is disclosed in Note 2 to the condensed consolidated financial statements[123](index=123&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Arcellx is exempt from providing market risk disclosures due to its status as a smaller reporting company - Arcellx is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[124](index=124&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated disclosure controls and procedures, concluding they were effective as of March 31, 2022 [Evaluation of Disclosure Controls and Procedures](index=24&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022 - Management, with CEO and Interim CFO participation, evaluated disclosure controls and procedures as of March 31, 2022, concluding they were effective in providing reasonable assurance for timely and accurate reporting[125](index=125&type=chunk) [Changes in Internal Control over Financial Reporting](index=24&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the most recent fiscal quarter - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[126](index=126&type=chunk) PART II. OTHER INFORMATION This section covers other information including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) Arcellx is not currently involved in material legal proceedings, but litigation poses financial and resource risks - Arcellx is not currently a party to any litigation or legal proceedings deemed to have a material adverse effect on its business[128](index=128&type=chunk) - Litigation, even if successfully defended, can adversely impact the company through defense and settlement costs and diversion of management resources[128](index=128&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) Outlines significant risks to Arcellx's business, including funding needs, product development, competition, and regulatory challenges [Risks Related to Our Limited Operating History, Financial Condition and Capital Requirements](index=26&type=section&id=Risks%20Related%20to%20Our%20Limited%20Operating%20History,%20Financial%20Condition%20and%20Capital%20Requirements) Highlights risks from Arcellx's limited operating history, significant losses, and substantial future funding needs - Arcellx has a limited operating history and has incurred significant losses since inception, with an accumulated deficit of **$162.5 million** as of March 31, 2022, making future viability assessment difficult[130](index=130&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - The company will require substantial additional funding beyond its current cash and marketable securities (expected to last into H2 2023) to complete product development and potential commercialization[130](index=130&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - Failure to raise additional capital on acceptable terms could force delays, reductions, or elimination of R&D programs, commercialization efforts, or employee headcount, adversely affecting the business[130](index=130&type=chunk)[144](index=144&type=chunk) [Risks Related to Development of Our Product Candidates](index=26&type=section&id=Risks%20Related%20to%20Development%20of%20Our%20Product%20Candidates) Addresses risks in product development, including early-stage status, unproven platforms, clinical trial uncertainties, and manufacturing complexities - Arcellx's product candidates are in early development stages, with no approved products and limited human clinical trial experience, leading to a high risk of failure[131](index=131&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) - The ddCAR and ARC-SparX platforms are novel and unproven, making it difficult to predict development timing, results, costs, and regulatory approval likelihood, with potential for unforeseen negative consequences or off-target activity[131](index=131&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - Clinical development is lengthy, expensive, and uncertain; trials may fail to demonstrate adequate safety/efficacy, cause undesirable side effects (like CRS and neurotoxicity), or encounter substantial delays, including patient enrollment difficulties[131](index=131&type=chunk)[170](index=170&type=chunk)[172](index=172&type=chunk)[178](index=178&type=chunk) - Manufacturing genetically engineered products is complex, subject to human and systemic risks, and relies on third parties, potentially leading to production difficulties, supply constraints, and delays[131](index=131&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) - Interim or preliminary clinical trial data may change as more patient data become available, and adverse differences could significantly harm the company's reputation and business prospects[131](index=131&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) [Risks Related to Our Business](index=27&type=section&id=Risks%20Related%20to%20Our%20Business) Covers business-specific risks, including COVID-19 impacts, reliance on key personnel, growth management, and cybersecurity threats - The ongoing COVID-19 pandemic poses significant risks, potentially causing disruptions in the supply chain, manufacturing, clinical trial timelines, patient enrollment, and regulatory review processes[134](index=134&type=chunk)[223](index=223&type=chunk)[225](index=225&type=chunk) - Arcellx is highly dependent on attracting and retaining qualified key personnel; loss of such personnel could delay product development and harm the business[134](index=134&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) - Expected organizational growth will impose significant management responsibilities, and difficulties in managing this growth could adversely affect the ability to develop and commercialize product candidates[134](index=134&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - Internal computer systems and those of third parties are vulnerable to security breaches, which could disrupt development programs, lead to data loss, and incur liability[249](index=249&type=chunk)[250](index=250&type=chunk) - Employees, contractors, and partners may engage in misconduct or noncompliance with regulatory standards, leading to substantial penalties, investigations, and reputational harm[251](index=251&type=chunk)[252](index=252&type=chunk) [Risk Related to Reliance on Third Parties](index=27&type=section&id=Risk%20Related%20to%20Reliance%20on%20Third%20Parties) Examines risks associated with relying on third parties for clinical trials, manufacturing, and potential collaborations - Arcellx relies heavily on third parties (CROs, CMOs, strategic partners) to conduct clinical trials and manufacturing; their failure to perform contractual duties or meet deadlines could delay regulatory approval and commercialization[135](index=135&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk) - Reliance on third-party manufacturers for clinical product supplies exposes the company to risks like inability to identify suitable manufacturers, non-compliance with cGMP, production difficulties, and supply constraints[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk) - Sharing trade secrets with third parties increases the risk of misappropriation or disclosure, potentially impairing Arcellx's competitive position[282](index=282&type=chunk)[284](index=284&type=chunk) - Future collaborations may not result in successful development or commercialization, and disagreements or terminations could adversely affect funding and business reputation[286](index=286&type=chunk)[287](index=287&type=chunk)[290](index=290&type=chunk) [Risk Related to Our Intellectual Property](index=27&type=section&id=Risk%20Related%20to%20Our%20Intellectual%20Property) Details risks concerning intellectual property protection, including patent uncertainty, infringement claims, and global enforcement challenges - Inability to obtain and maintain sufficient intellectual property protection (patents, trade secrets, trademarks) for platforms and product candidates could allow competitors to commercialize similar products, adversely affecting Arcellx's market position[136](index=136&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) - The patent application process is uncertain and subject to risks, including non-issuance, narrowing of claims, challenges to validity, and expiration before commercialization, limiting competitive advantage[301](index=301&type=chunk)[302](index=302&type=chunk)[311](index=311&type=chunk) - Third-party claims of intellectual property infringement are a substantial risk in the biopharmaceutical industry, potentially leading to costly litigation, injunctions, damages, or the need for expensive licenses[318](index=318&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk) - Changes in U.S. patent law or its interpretation could diminish the value of patents, increasing uncertainties and costs for protecting inventions[333](index=333&type=chunk)[334](index=334&type=chunk) - Protecting intellectual property globally is expensive and challenging, as foreign laws may not offer the same level of protection, potentially allowing competitors to use technologies in other jurisdictions[335](index=335&type=chunk)[336](index=336&type=chunk) [Risk Related to Government Regulation](index=27&type=section&id=Risk%20Related%20to%20Government%20Regulation) Covers regulatory risks, including challenges in obtaining approvals, lengthy processes, post-approval obligations, and international variations - Arcellx may be unable to obtain regulatory approval for its product candidates from the FDA or foreign health authorities, which would delay commercialization and materially impact revenue potential[137](index=137&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk) - The FDA regulatory approval process is lengthy, unpredictable, and may involve significant delays in clinical development, potentially preventing product revenue generation[352](index=352&type=chunk)[353](index=353&type=chunk)[355](index=355&type=chunk) - Even with Fast Track, orphan drug, or RMAT designations, there is no guarantee of faster development, regulatory review, or approval, and benefits may not be maintained[359](index=359&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk)[364](index=364&type=chunk) - Approved biologic products may face competition from biosimilars through abbreviated regulatory pathways, potentially shortening exclusivity periods and increasing competition[369](index=369&type=chunk)[370](index=370&type=chunk)[371](index=371&type=chunk) - Ongoing regulatory obligations and review post-approval, including REMS and compliance with cGMPs, may result in significant additional expenses and potential penalties for non-compliance[372](index=372&type=chunk)[373](index=373&type=chunk)[375](index=375&type=chunk) - Obtaining regulatory approval in one jurisdiction does not guarantee approval in others, and failure to secure foreign approvals would limit global market potential[378](index=378&type=chunk)[379](index=379&type=chunk) [Risk Related to Commercialization of Our Product Candidates](index=27&type=section&id=Risk%20Related%20to%20Commercialization%20of%20Our%20Product%20Candidates) Addresses commercialization risks, including market acceptance, healthcare regulations, sales capabilities, and data protection compliance - Even if regulatory approval is obtained, product candidates may fail to gain market acceptance among physicians, patients, and the medical community, especially if safety or efficacy advantages over existing therapies are not sufficiently demonstrated[137](index=137&type=chunk)[387](index=387&type=chunk)[388](index=388&type=chunk) - Changes in healthcare regulations and future legislation, including those affecting coverage and reimbursement policies, could increase commercialization costs and impact pricing and profitability[391](index=391&type=chunk)[392](index=392&type=chunk)[393](index=393&type=chunk) - The company currently lacks a marketing and sales organization and limited experience in marketing cell therapy products; inability to establish these capabilities or secure third-party agreements could hinder revenue generation[407](index=407&type=chunk)[408](index=408&type=chunk) - Non-compliance with health and data protection laws (e.g., HIPAA, CCPA, CPRA) could lead to government enforcement actions, private litigation, adverse publicity, and negatively affect operating results[412](index=412&type=chunk)[413](index=413&type=chunk)[414](index=414&type=chunk)[415](index=415&type=chunk) - International commercialization efforts face risks such as differing regulatory requirements, economic instability, foreign currency fluctuations, and geopolitical events, which could adversely affect profitability[416](index=416&type=chunk)[418](index=418&type=chunk) [Risk Related to Ownership of our Common Stock](index=27&type=section&id=Risk%20Related%20to%20Ownership%20of%20our%20Common%20Stock) Addresses risks related to common stock ownership, including market volatility, dilution, and corporate governance provisions - An active, liquid, and orderly trading market for common stock may not be sustained, making it difficult for investors to sell shares quickly or at market price, and potentially impairing future capital raising[138](index=138&type=chunk)[433](index=433&type=chunk)[434](index=434&type=chunk) - The price of common stock is likely to be highly volatile, influenced by clinical trial results, regulatory decisions, competition, and general market conditions, leading to potential loss of investment[138](index=138&type=chunk)[435](index=435&type=chunk)[436](index=436&type=chunk) - Principal stockholders and management own a significant percentage (**57.9%** as of March 1, 2022) of voting stock, allowing them to exert significant influence over stockholder-approved matters[440](index=440&type=chunk) - As an emerging growth company and smaller reporting company, reduced reporting requirements may make common stock less attractive to investors, potentially leading to a less active trading market and increased stock price volatility[441](index=441&type=chunk)[443](index=443&type=chunk) - Substantial amounts of outstanding shares may be sold into the market when lock-up periods end, potentially causing the stock price to fall due to increased supply[450](index=450&type=chunk)[451](index=451&type=chunk) - Future sales and issuances of common stock or rights to purchase common stock, including under equity incentive plans, could result in additional dilution for existing stockholders and cause the stock price to fall[455](index=455&type=chunk)[457](index=457&type=chunk)[459](index=459&type=chunk) - Failure to establish and maintain proper and effective internal controls over financial reporting could harm operating results, lead to inaccurate financial statements, and result in investor loss of confidence[460](index=460&type=chunk)[461](index=461&type=chunk)[463](index=463&type=chunk) - The company does not intend to pay dividends on common stock, limiting returns to capital appreciation, which may never occur[468](index=468&type=chunk) - Provisions in charter documents and Delaware law could delay or prevent a change of control, potentially limiting the market price of common stock and frustrating stockholder attempts to change management[469](index=469&type=chunk)[470](index=470&type=chunk)[473](index=473&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details unregistered equity sales, including stock options and a private placement, and confirms IPO proceeds use [Sales of Unregistered Securities](index=75&type=section&id=Sales%20of%20Unregistered%20Securities) Reports on stock option grants, common stock issuances from exercises, and a private placement, all exempt from registration - From January 1 to March 31, 2022, Arcellx granted 45,419 stock options under the 2017 Plan (weighted-average exercise price **$6.66**) and 2,784,016 options under the 2022 Plan (weighted-average exercise price **$15.00**)[482](index=482&type=chunk) - During the same period, 327,025 shares of common stock were issued and sold upon exercise of 2017 Plan stock options, generating **$0.4 million**[483](index=483&type=chunk) - On March 4, 2022, 590,318 shares of common stock were sold in a private placement to one accredited investor for **$10.0 million** at **$16.94 per share**[484](index=484&type=chunk) - These transactions were exempt from registration under Section 4(a)(2) of the Securities Act or Rule 701[485](index=485&type=chunk) [Use of Proceeds from Public Offering of Common Stock](index=75&type=section&id=Use%20of%20Proceeds%20from%20Public%20Offering%20of%20Common%20Stock) Confirms the IPO closed on February 8, 2022, raising **$127.3 million** net proceeds, with no material change in planned use - Arcellx closed its IPO on February 8, 2022, issuing 9,487,500 shares of common stock at **$15.00 per share**, generating net proceeds of **$127.3 million**[486](index=486&type=chunk) - There has been no material change in the planned use of IPO proceeds from what was described in the final prospectus filed on February 7, 2022[487](index=487&type=chunk) [Item 3. Defaults Upon Senior Securities](index=75&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Arcellx reported no defaults upon senior securities for the period - The company reported no defaults upon senior securities[487](index=487&type=chunk) [Item 4. Mine Safety Disclosures](index=75&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Arcellx - Mine Safety Disclosures are not applicable to Arcellx[487](index=487&type=chunk) [Item 5. Other Information](index=75&type=section&id=Item%205.%20Other%20Information) Arcellx reported no other information for this item - The company reported no other information for this item[487](index=487&type=chunk) [Item 6. Exhibits](index=76&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed or furnished as part of the Quarterly Report on Form 10-Q, including organizational documents and certifications - The report includes various exhibits such as Amended and Restated Certificate of Incorporation, Bylaws, Investors' Rights Agreement, equity incentive plans (2017 and 2022), Employee Stock Purchase Plan, and employment letters[489](index=489&type=chunk) - Key exhibits also include the Master Services Agreement and Statement of Work with Lonza Houston, Inc., and certifications from the Principal Executive Officer and Principal Financial Officer[489](index=489&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-41259 (Exact name of Registrant as specified in its Charter) Delaware 47-2855917 (State or other jurisdiction of incorporation or org ...