[PART I: FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%3A%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited H1 2023 financial statements show decreased **total assets**, increased **net losses**, and **cash provided by financing activities** [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) **Total assets** decreased to **$771.0 million** by June 30, 2023, from **$817.1 million** at year-end 2022, due to reduced investments Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $154,758 | $61,904 | | Total current assets | $502,101 | $528,824 | | Total assets | $770,971 | $817,079 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $54,721 | $54,518 | | Total liabilities | $148,065 | $151,209 | | Total stockholders' equity | $622,906 | $665,870 | | Total liabilities and stockholders' equity | $770,971 | $817,079 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) **Net loss** increased to **$77.9 million** for Q2 2023 and **$176.7 million** for H1 2023, primarily due to higher R&D expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $44 | $86 | $96 | $147 | | Research and development | $62,038 | $57,171 | $142,276 | $117,327 | | General and administrative | $18,524 | $19,509 | $37,408 | $39,406 | | Loss from operations | ($80,518) | ($76,594) | ($179,588) | ($156,586) | | Net loss | ($77,989) | ($74,787) | ($176,693) | ($154,637) | | Net loss per share | ($0.53) | ($0.52) | ($1.21) | ($1.09) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) **Stockholders' equity** decreased to **$622.9 million** by June 30, 2023, due to **net losses**, partially offset by **$87.9 million** from an ATM offering - During the **six months** ended June 30, 2023, the company issued **20,288,330 shares** of common stock from its ATM offering, resulting in **net proceeds of $87.9 million**[10](index=10&type=chunk) - The **accumulated deficit** increased from **$(1,236.0) million** at the end of 2022 to **$(1,412.7) million** as of June 30, 2023, reflecting the ongoing **net losses**[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) **Net cash used in operating activities** was **$128.5 million** for H1 2023, offset by **$130.1 million** from **investing activities** and **$91.3 million** from **financing activities** Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($128,496) | ($110,768) | | Net cash provided by investing activities | $130,095 | $31,657 | | Net cash provided by financing activities | $91,255 | $1,838 | | Net change in cash, cash equivalents and restricted cash | $92,854 | ($77,273) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's immuno-oncology business, financial condition, **$544.5 million** **cash runway**, and the ongoing Servier dispute - The company is a clinical-stage immuno-oncology company focused on developing allogeneic T cell product candidates for cancer treatment[17](index=17&type=chunk) - As of June 30, 2023, the company had **$544.5 million** in cash, cash equivalents, and investments, and management expects this to be sufficient to fund operations for at least the next **12 months**[19](index=19&type=chunk)[20](index=20&type=chunk) - A dispute exists with Servier, which discontinued its involvement in the development of CD19 **products** in September 2022. Servier has disputed its obligation to continue development cost contributions and sent notices of **material breach**, which the company is disputing[59](index=59&type=chunk)[61](index=61&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses progress on allogeneic CAR T cell candidates, increased **net loss** for H1 2023, and a **cash runway** into H2 2025 - The company is progressing its pivotal Phase **2** ALPHA2 trial for ALLO-501A in R/R Large B Cell Lymphoma (LBCL) and expects to complete enrollment in H1 2024, with the first data readout by year-end 2024[127](index=127&type=chunk)[136](index=136&type=chunk) - A dispute with Servier over its discontinuation of involvement and cost-sharing for CD19 **products** is ongoing. Servier sent a second notice of **material breach** in July 2023, which Allogene disputes[142](index=142&type=chunk) Financial Results Comparison (in thousands) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Research and development | $142,276 | $117,327 | | General and administrative | $37,408 | $39,406 | | Loss from operations | ($179,588) | ($156,586) | | Net Loss | ($176,693) | ($154,637) | - As of June 30, 2023, the company had **$544.5 million** in cash, cash equivalents, and investments, with an expected **cash runway** to fund operations into the second half of 2025[130](index=130&type=chunk)[174](index=174&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations on its **$544.5 million** in cash and investments, and foreign exchange rates - The primary market risks are interest rate fluctuations on its **$544.5 million** in cash and investments, and foreign exchange risk on Euro-denominated payments related to the Servier agreement[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were effective as of June 30, 2023, with ongoing phased implementation of a new SAP ERP system - Management concluded that disclosure controls and procedures were effective as of the end of the reporting period[197](index=197&type=chunk) - The company is undergoing a phased implementation of a new SAP ERP system, which is expected to result in changes to its internal control over financial reporting[198](index=198&type=chunk) [PART II: OTHER INFORMATION](index=37&type=section&id=PART%20II%3A%20OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) No legal proceedings are expected to have a **material adverse effect** on operations, financial condition, or cash flows - There are currently no pending claims or actions against the company that management believes would have a **material adverse effect**[201](index=201&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) Key risks include a history of **net losses**, unproven allogeneic therapies, partner reliance, the Servier dispute, and the need for substantial financing - The company has a history of **net losses** (**$1.4 billion accumulated deficit** as of June 30, 2023) and expects to incur substantial future **losses**[205](index=205&type=chunk) - A significant risk is the dispute with Servier following its discontinuation of involvement in CD19 **product** development, including disagreements over cost contributions and notices of **material breach** from Servier[216](index=216&type=chunk)[218](index=218&type=chunk) - The business is highly dependent on the success of its lead **product** candidates, which are based on novel technologies, making development time, cost, and regulatory approval difficult to predict[219](index=219&type=chunk)[225](index=225&type=chunk) - The company will need substantial additional financing to complete the development and commercialization of its **product** candidates[293](index=293&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the period - None[436](index=436&type=chunk) [Other Information](index=76&type=section&id=Item%205.%20Other%20Information) David M. Chang was appointed principal financial officer and Jack Chen as principal accounting officer, effective August 3, 2023 - David M. Chang, M.D., Ph.D., President and CEO, was appointed as principal financial officer effective August 3, 2023[437](index=437&type=chunk) - Jack Chen, Vice President and Controller, was appointed as principal accounting officer effective August 3, 2023[438](index=438&type=chunk) [Exhibits](index=78&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents and officer certifications

The Next Revolution in Cell Therapy Leading Today, Creating Tomorrow Legal Disclaimers To the extent statements contained in this Presentation are not descriptions of historical facts regarding Allogene Therapeutics, Inc. (“Allogene,” “we,” “us,” or “our”), they are forward-looking statements reflecting management’s current beliefs and expectations. Forward- looking statements are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels ...

Financial Data and Key Metrics Changes - The company ended Q1 2023 with $514 million in cash, cash equivalents, and investments, indicating a strong balance sheet [22] - The net loss for Q1 2023 was $98.7 million, or $0.68 per share, which includes $18.8 million in non-cash stock-based compensation [23] - The company expects a decrease in cash, cash equivalents, and investments of approximately $230 million in 2023, with full-year GAAP operating expenses projected to be around $340 million [23] Business Line Data and Key Metrics Changes - Research and development expenses for Q1 2023 were $80.2 million, including $9.2 million of non-cash stock-based compensation [23] - General and administrative expenses were $18.9 million for Q1 2023, which includes $9.6 million of non-cash stock-based compensation [23] Market Data and Key Metrics Changes - The company highlighted the growing demand for CAR T therapies, with an estimated 300,000 patients eligible for autologous CAR T therapy by 2030, yet only about 10% expected to receive treatment [8][9] - The company is focused on addressing the limitations of autologous therapies by providing a one-time infusion of AlloCAR T products, which can start treatment within days of enrollment [9][10] Company Strategy and Development Direction - The company aims to submit a Biologics License Application (BLA) for ALLO-501A upon completion of the ALPHA2 trial and is evaluating manufacturing processes for optimal clinical performance [10] - The addition of Tim Moore as Chief Technical Officer is expected to enhance the company's ability to deliver CAR T products at scale [11] - The company is exploring the potential of Dagger technology to prevent early rejection of AlloCAR T cells, which could lead to a next-generation allogeneic CAR T platform [21][55] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market environment for biotech companies but emphasized that success will be driven by scientific innovation, experience, and financial stewardship [22] - The company remains confident in its clinical data and the impact of its products on patients, despite stock price fluctuations [7][8] Other Important Information - The company has initiated the Phase II EXPAND trial designed to support the licensure of ALLO-647 as a lymphodepleting agent for ALLO-501A in LBCL [16] - The company is focused on reviewing the manufacturing process for ALLO-715 and 605, with plans to potentially resume dosing in 2024 [35][59] Q&A Session Summary Question: Can you provide details on the ASCO update? - Management confirmed that they will present data at ASCO and aim to ensure that key opinion leaders and investigators have access to the data in a peer-reviewed format [26][28] Question: What is the progress of the pivotal ALPHA2 trial? - The study is open to enrollment and is progressing as expected, with completion of enrollment anticipated in the first half of next year [31][32] Question: How are patients being enrolled in the ALPHA2 and EXPAND trials? - Patients being enrolled are those eligible for original autologous CAR T studies, and the company is ensuring that the two studies do not compete for patient enrollment [34][38] Question: What is the expected timeline for data from the EXPAND trial? - Data from the EXPAND trial is expected to be available around the same time as the ALPHA2 trial results [76] Question: What are the plans for Dagger technology? - Dagger technology is being explored for use in both liquid and solid tumor indications, with ongoing development of next-generation constructs [47][55] Question: What is the company's approach to partnerships? - The company is open to partnerships to advance its allogeneic CAR T programs, particularly for BCMA and ALLO-316, to accelerate development [66][72]

Table of Contents 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: 0 ...

Financial Data and Key Metrics - The company ended the year with $576 million in cash, cash equivalents, and investments, with no debt [29] - Full-year 2022 GAAP operating expenses were approximately $350 million, including $90 million in noncash stock-based compensation [30] - Research and development expenses for Q4 2022 were $75.4 million, with full-year expenses totaling $256.4 million [30] - General and administrative expenses for Q4 2022 were $21 million, with full-year expenses at $79.3 million [31] - The company reported a net loss of $332.6 million for 2022, or $2.32 per share [31] Business Line Data and Key Metrics - The CD19 program showed an overall response rate (ORR) of 57% and a complete response rate (CRR) of 58% in the Phase I trials [15] - The ongoing CR rate at 6 months was 50%, with all CRs at 6 months remaining durable at 12 months [15] - The BCMA program (ALLO-715) demonstrated an ORR of 67% and a very good partial response (VGPR) or better rate of 42% in the FCA60 cohort [18] - The median duration of response for ALLO-715 was 9.2 months, with the longest ongoing response at 24 months [18] - The CD70 program (ALLO-316) showed a 100% disease control rate in CD70-positive renal cell carcinoma patients, with 3 out of 9 patients achieving partial responses [22] Market Data and Key Metrics - The company is expanding its Phase II CD19 pivotal trial (ALPHA2) outside the U.S. into additional geographies [34] - The CD70 program is being evaluated for potential expansion into other CD70-expressing solid tumors and hematologic indications [24] - The company is preparing for a Phase III study in earlier-line large B-cell lymphoma, targeting trial initiation in the first half of 2024 [17] Company Strategy and Industry Competition - The company is focusing on executing its Phase II CD19 pivotal trials, evaluating the best path forward for multiple myeloma, and progressing the ALLO-316 trial in solid tumors [29] - The company is prioritizing the ALPHA2 study for ALLO-501A, with plans to potentially start an earlier-line study by 2024 [40] - The company is exploring the use of its Dagger platform, which may be deployed across additional CAR T products in both hematologic and solid tumors [50] Management Commentary on Operating Environment and Future Outlook - The company believes it has the operational capabilities, scientific insight, and capital resources needed to succeed in its endeavors [29] - The company is focused on improving manufacturing processes for its BCMA candidates (ALLO-715 and ALLO-605) to achieve optimal performance [19] - The company expects to present updated datasets on its CD19 and CD70 programs in 2023, with potential updates on the Alloy manufacturing process and BCMA program improvements [68] Other Important Information - The company has developed and validated a diagnostic assay for CD70 expression in renal cell carcinoma patients, which is being used for patient selection in the ALLO-316 study [86] - The company is not currently enrolling patients in the ALLO-605 Phase I study as it works on improving the manufacturing process [71] Q&A Session Summary Question: Enrollment and investigator feedback for the CD19 pivotal trial [32] - Enrollment in the ALPHA2 study is continuing according to plan, with expansion into additional geographies [34] - Investigators are enthusiastic about the trial and enrollment [34] Question: Rationale for prioritizing earlier-line large B-cell lymphoma trial [36] - The company sees an opportunity to advance the program to earlier lines, with discussions ongoing about the study design and population [37] Question: Regulatory discussions and pivotal trial status for multiple myeloma [39] - The potential pivotal study for multiple myeloma is likely to be pushed to 2024, with ongoing engagement with regulatory bodies and manufacturing process optimization [41] Question: Alloy process manufacturing and its role in the pivotal trials [43] - The Alloy process is being used in both pivotal trials for ALLO-501A, with all patients dosed using this manufacturing process [45] Question: Dagger platform and its potential deployment across the pipeline [47] - The Dagger platform may be expanded into additional CAR T products, with ongoing work to explore its use in both hematologic and solid tumors [50] Question: Ex-U.S. opportunity for ALLO-501A [52] - The company has the option to opt into ex-U.S. rights for ALLO-501A, with a decision based on financial and developmental factors [53] Question: Patient enrollment and outpatient treatment for pivotal studies [55] - Investigators are leveraging existing infrastructure for outpatient treatment, with patients selected based on their suitability for CAR T therapy [56][57] Question: Manufacturing tweaks for ALLO-605 and ALLO-715 [59] - The company is focusing on optimizing the manufacturing process for both ALLO-605 and ALLO-715, with potential reintroduction into the clinic in 2024 [60] Question: Timing of data readout for the CD19 pivotal trials [62] - The company targets data availability for both ALPHA2 and EXPAND trials at roughly the same time, following completion of enrollment in the first half of 2024 [63] Question: Manufacturing optimization for the BCMA program [65] - The company is reviewing the manufacturing process for both ALLO-715 and ALLO-605, with a decision on which product to take forward expected later [66] Question: 2023 catalysts and updates on the CD19 program and Alloy process [67] - The company plans to present updated datasets on its CD19 and CD70 programs, with potential updates on the Alloy manufacturing process and BCMA program improvements [68] Question: CD70 expression and potential expansion into liquid tumors [81] - CD70 is a target with wide distribution across malignancies, with potential expansion into additional solid tumors and hematologic indications [82][83] Question: Status of CD70 assay development and deployment [85] - The company has developed and validated a diagnostic assay for CD70 expression, which is being used for patient selection in the ALLO-316 study [86]

PART I [Business](index=7&type=section&id=Item%201.%20Business) Allogene Therapeutics develops 'off-the-shelf' allogeneic CAR T cell therapies for hematological and solid tumors, emphasizing GvHD minimization, T cell persistence, and proprietary manufacturing [Overview and Our Approach](index=7&type=section&id=Overview%20and%20Our%20Approach) Allogene develops 'off-the-shelf' allogeneic T cell therapies using TALEN gene-editing to minimize GvHD and enhance persistence, focusing on scalability and reliability - Allogene is a clinical-stage immuno-oncology company developing 'off-the-shelf' allogeneic T cell product candidates derived from healthy donors, aiming to provide treatments that are faster, more reliable, and scalable compared to autologous therapies[14](index=14&type=chunk)[16](index=16&type=chunk) - The company's development strategy has four key pillars: engineering to minimize graft-versus-host disease (GvHD), creating a window of T cell persistence, building a leading manufacturing platform, and leveraging next-generation technologies[18](index=18&type=chunk) - Allogene utilizes Cellectis's TALEN gene-editing technology to engineer T cells, involving knocking out the T cell receptor (TCR) to limit GvHD risk and inactivating the CD52 gene to enhance persistence when used with their proprietary ALLO-647[19](index=19&type=chunk) [Our Pipeline](index=8&type=section&id=Our%20Pipeline) This section provides an overview of Allogene Therapeutics' clinical pipeline, detailing product candidates, targets, indications, and development status Allogene Therapeutics Clinical Pipeline Overview | Product Candidate | Target | Indication | Status | | :--- | :--- | :--- | :--- | | **ALLO-501A** | CD19 | Relapsed/Refractory Large B-Cell Lymphoma (LBCL) | Phase 2 initiated Q4 2022. Enrollment completion expected H1 2024 | | **ALLO-715** | BCMA | Relapsed/Refractory Multiple Myeloma | Phase 1 (UNIVERSAL trial). Enrollment paused for manufacturing process optimization | | **ALLO-605** | BCMA (TurboCAR™) | Relapsed/Refractory Multiple Myeloma | Phase 1 (IGNITE trial). Enrollment paused for manufacturing process optimization | | **ALLO-316** | CD70 | Advanced or Metastatic Clear Cell Renal Cell Carcinoma (ccRCC) | Phase 1 (TRAVERSE trial). Expansion cohort enrollment planned for 2023 | | **ALLO-647** | CD52 | Lymphodepletion Component | Phase 2 (EXPAND trial) to open for enrollment in Q2 2023 | [Our Strategy](index=10&type=section&id=Our%20Strategy) Allogene's strategy focuses on advancing lead candidates, expanding into new indications and solid tumors, building proprietary manufacturing, and accelerating global development - Capitalize on the validated CD19 target by advancing ALLO-501A, with plans to complete the Phase 2 ALPHA2 trial enrollment in **H1 2024** and initiate a Phase 3 trial in an earlier line of therapy for LBCL in **H1 2024**[35](index=35&type=chunk) - Expand leadership in hematologic indications by advancing the BCMA program and developing candidates against other targets like CD70 (ALLO-316) and FLT3 (ALLO-819)[36](index=36&type=chunk) - Build proprietary manufacturing capabilities at its Cell Forge 1 (CF1) facility to improve processes, reduce reliance on CMOs, and accelerate commercialization[37](index=37&type=chunk) - Expand into solid tumors (ccRCC, small cell lung cancer, gastric cancer) and leverage next-generation technologies like Dagger to control immune rejection[38](index=38&type=chunk) - Accelerate global development through planned clinical trials in Europe, Canada, and Australia, and via its joint venture, Allogene Overland Biopharm, in Greater China, Taiwan, South Korea, and Singapore[39](index=39&type=chunk) [Allogeneic T Cell Therapy and Manufacturing](index=11&type=section&id=Allogeneic%20T%20Cell%20Therapy%20and%20Manufacturing) This section details the allogeneic T cell therapy process, from healthy donor cell collection and gene editing to purification, and highlights next-generation technologies - Allogeneic therapy uses T cells from healthy donors, aiming to overcome limitations of autologous therapy such as lengthy delivery times, variable potency, manufacturing failures, and high costs[49](index=49&type=chunk)[51](index=51&type=chunk) - The manufacturing process involves three main steps: (1) Collection of healthy donor T cells and transduction with a viral vector to integrate the CAR sequence; (2) Gene editing using TALEN technology to inactivate TCRα (to prevent GvHD) and CD52 (to allow for selective lymphodepletion); and (3) Purification, formulation, and cryopreservation for off-the-shelf storage[59](index=59&type=chunk)[62](index=62&type=chunk)[69](index=69&type=chunk) - The company is investigating next-generation technologies like TurboCARs™ to mimic cytokine signaling within CAR T cells, and Dagger™ technology (an anti-CD70 CAR) to destroy host immune cells that could reject the allogeneic therapy[61](index=61&type=chunk) [Product Pipeline and Development Strategy](index=17&type=section&id=Product%20Pipeline%20and%20Development%20Strategy) This section outlines the development strategy for Allogene's product pipeline, including specific programs and the resolution of a prior FDA clinical hold - In October 2021, the FDA placed a clinical hold on all Allogene trials following a report of a chromosomal abnormality in a patient. The hold was lifted in January 2022 after investigations concluded the abnormality was unrelated to TALEN gene editing or the manufacturing process[73](index=73&type=chunk) [Anti-CD19 Development Program (ALLO-501/501A)](index=18&type=section&id=Anti-CD19%20Development%20Program%20(ALLO-501%2F501A)) This program focuses on ALLO-501A, a second-generation anti-CD19 candidate, detailing its design, clinical trial results, safety profile, and ongoing Phase 2 development - ALLO-501A is a second-generation anti-CD19 candidate that removes rituximab recognition domains present in ALLO-501, potentially allowing treatment for more NHL patients recently treated with rituximab[77](index=77&type=chunk) Phase 1 ALPHA/ALPHA2 Trial Results in LBCL (Alloy Process Material) | Metric | Single Dose FCA90 (n=12) | All Alloy Patients (n=33) | | :--- | :--- | :--- | | Overall Response Rate (ORR) | **67%** | **58%** | | Complete Response (CR) | **58%** | **42%** | | 6-Month CR Rate | **50%** | **31%** | | 12-Month CR Rate | **50%** | **28%** | - The safety profile was manageable with no dose-limiting toxicities, no GvHD, and no Grade 3+ cytokine release syndrome (CRS) or neurotoxicity observed in the Single Dose FCA90 cohort[85](index=85&type=chunk)[86](index=86&type=chunk) - The company initiated the Phase 2 portion of the ALPHA2 trial in Q4 2022 for R/R LBCL, with enrollment expected to complete in **H1 2024**. A pivotal Phase 2 EXPAND trial for ALLO-647 is also planned to start in **Q2 2023**[88](index=88&type=chunk)[89](index=89&type=chunk) [Anti-BCMA Development Program (ALLO-715/605)](index=20&type=section&id=Anti-BCMA%20Development%20Program%20(ALLO-715%2F605)) This program details the BCMA-targeting candidates ALLO-715 and ALLO-605, including Phase 1 trial results, safety, and current manufacturing optimization-related enrollment pauses - ALLO-605 is a next-generation version of ALLO-715, incorporating TurboCAR™ technology to enhance potency and persistence by engineering cytokine signaling selectively into the CAR T cells[91](index=91&type=chunk) Phase 1 UNIVERSAL Trial Results (ALLO-715) in R/R Multiple Myeloma | Metric | FCA60 Cohort (n=12) | FCA39 Cohort (n=11) | | :--- | :--- | :--- | | Overall Response Rate (ORR) | **67%** | **64%** | | VGPR+ Rate | **42%** | **54%** | | Median Duration of Response | **9.2 months** | **8.3 months** | - The safety profile was manageable, with no GvHD and low-grade, reversible neurotoxicity. Grade 3+ infections and prolonged cytopenias were observed in **29%** of patients in the expansion cohorts[97](index=97&type=chunk)[98](index=98&type=chunk) - Enrollment in the UNIVERSAL (ALLO-715) and IGNITE (ALLO-605) trials is currently paused while the company reviews and optimizes the manufacturing process for the BCMA program[99](index=99&type=chunk) [Anti-CD70 Development Program (ALLO-316)](index=22&type=section&id=Anti-CD70%20Development%20Program%20(ALLO-316)) This program focuses on ALLO-316, an anti-CD70 candidate for solid tumors like ccRCC, presenting preliminary Phase 1 trial results, safety, and patient selection strategy - ALLO-316 targets CD70, an antigen expressed in clear cell renal cell carcinoma (ccRCC) and other cancers. The program is exploring a solid tumor indication[100](index=100&type=chunk) Preliminary Phase 1 TRAVERSE Trial Results (ALLO-316) in ccRCC | Metric | CD70+ Patients (n=9) | All Patients (n=17) | | :--- | :--- | :--- | | Disease Control Rate (DCR) | **100%** | **82%** | | Overall Response Rate (ORR) | **33%** | **18%** | | Partial Response (PR) | **33%** | **18%** | - The safety profile was generally manageable with no GvHD observed. One dose-limiting toxicity of auto-immune hepatitis occurred. CRS was mostly low grade[106](index=106&type=chunk)[107](index=107&type=chunk) - The company is now using an investigational in vitro diagnostic (IVD) assay to select patients with CD70-expressing tumors and plans to initiate expansion cohort enrollment in 2023[108](index=108&type=chunk)[109](index=109&type=chunk) [Manufacturing, IP, and Competition](index=25&type=section&id=Manufacturing%2C%20IP%2C%20and%20Competition) This section covers Allogene's manufacturing strategy, intellectual property protection, and the competitive landscape within the cell therapy and oncology markets - The company is developing its own manufacturing facility, Cell Forge 1 (CF1), but currently relies on a Contract Manufacturing Organization (CMO) for clinical supply, including for the ALLO-501A Phase 2 trial which uses the 'Alloy' process[118](index=118&type=chunk)[120](index=120&type=chunk) - Intellectual property is protected through a combination of owned and in-licensed patents, trade secrets, and know-how. Key licenses include TALEN gene-editing technology from Cellectis and rights to anti-CD19 products from Servier[123](index=123&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) - The company faces significant competition from developers of autologous CAR T therapies (Novartis, Gilead/Kite, BMS), other allogeneic cell therapy companies (CRISPR Therapeutics, Fate Therapeutics), and non-cell-based platforms like bispecific antibodies[130](index=130&type=chunk)[131](index=131&type=chunk)[134](index=134&type=chunk)[136](index=136&type=chunk) [Government Regulation](index=28&type=section&id=Government%20Regulation) This section details the extensive government regulations impacting Allogene's biologic products, including FDA approval processes, expedited designations, healthcare laws, and recent reforms - Allogene's cell products are regulated as biologics by the FDA, requiring extensive preclinical and clinical trials and submission of a Biologics License Application (BLA) for marketing approval[140](index=140&type=chunk) - The company has received expedited program designations from the FDA, including Regenerative Medicine Advanced Therapy (RMAT) for ALLO-715 and ALLO-501A, and Fast Track designation for ALLO-605 and ALLO-316[165](index=165&type=chunk) - The business is subject to numerous U.S. healthcare laws, including the Anti-Kickback Statute, False Claims Act, HIPAA, and the Physician Payments Sunshine Act, as well as international regulations like the EU GDPR[172](index=172&type=chunk)[199](index=199&type=chunk) - Recent healthcare reforms, such as the Inflation Reduction Act of 2022 (IRA), introduce measures like Medicare drug price negotiation and inflation rebates, which could create downward pressure on pricing and reimbursement for future products[192](index=192&type=chunk)[193](index=193&type=chunk) [Human Capital](index=40&type=section&id=Human%20Capital) This section describes Allogene's human capital, including employee count, organizational culture, diversity statistics, and strategies for recruitment, development, and retention - As of February 1, 2023, the company had **361 total employees**, with **279 engaged in research, development, and technical operations**[203](index=203&type=chunk) - The company emphasizes a 'One Allogene' culture focused on teamwork, resilience, excellence, ownership, and mutual respect[204](index=204&type=chunk) Employee Diversity Statistics (as of Feb 1, 2023) | Group | All Employees | Director-Level & Above | | :--- | :--- | :--- | | Women | **52%** | **45%** | | Ethnic/Racial Minorities | **67%** | **48%** | - The company focuses on recruitment, development, and retention through competitive compensation, training programs, and promotional opportunities. The voluntary attrition rate in 2022 was less than **15%**[214](index=214&type=chunk)[216](index=216&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) Allogene faces substantial risks including ongoing net losses, development and manufacturing challenges for novel therapies, reliance on third parties, clinical trial failures, and intense competition [Risks Related to Our Business and Industry](index=43&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) This section details business and industry risks, including historical net losses, partner disputes, potential product side effects, manufacturing challenges, and intense market competition - The company has a history of significant net losses (**$332.6 million** in 2022) and an accumulated deficit of **$1.24 billion** as of year-end 2022, with expectations of continued substantial losses[221](index=221&type=chunk) - Servier's discontinuation of its involvement in the development of CD19 products has led to disputes over development cost contributions and the timeframe for exercising ex-U.S. rights, which may have adverse consequences[232](index=232&type=chunk) - Product candidates may cause undesirable side effects such as cytokine release syndrome (CRS), neurotoxicity, and GvHD, which could halt clinical development or prevent regulatory approval[242](index=242&type=chunk)[243](index=243&type=chunk) - The company may fail to successfully manufacture its product candidates, particularly in scaling up production and transferring processes to its own facility (CF1), which could adversely affect clinical trials and commercial viability[279](index=279&type=chunk)[280](index=280&type=chunk) - The business faces significant competition from major pharmaceutical and biotechnology companies with greater resources, including those developing autologous CAR T, other allogeneic therapies, and non-cell-based treatments[289](index=289&type=chunk)[290](index=290&type=chunk) [Risks Related to Our Reliance on Third Parties](index=63&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) This section outlines risks associated with reliance on third parties for clinical trials, contract manufacturing, and the supply of critical raw materials like healthy donor T cells - The company depends on third parties such as CROs and medical institutions to conduct clinical trials, and any failure by these parties to perform their duties could delay or compromise trial results[336](index=336&type=chunk)[337](index=337&type=chunk) - Reliance on a limited number of Contract Manufacturing Organizations (CMOs) for clinical product supply exposes the company to risks of manufacturing failures, delays, and quality control issues[340](index=340&type=chunk)[343](index=343&type=chunk) - Manufacturing depends on a supply of T cells from qualified healthy donors and other specialty raw materials (e.g., viral vectors), which may not be available in sufficient quantity or quality[346](index=346&type=chunk)[349](index=349&type=chunk) [Risks Related to Government Regulation](index=66&type=section&id=Risks%20Related%20to%20Government%20Regulation) This section addresses risks from the lengthy and uncertain FDA regulatory approval process, potential disagreements with regulatory plans, and challenges in market acceptance and reimbursement - The FDA regulatory approval process for novel allogeneic T cell therapies is lengthy, complex, and uncertain, with a risk of significant delays or failure to obtain approval[355](index=355&type=chunk)[356](index=356&type=chunk) - The FDA may disagree with the company's regulatory plan, potentially requiring additional or comparative trials, which would significantly delay development and increase costs[365](index=365&type=chunk) - Even if approved, products may not gain market acceptance among physicians and patients, and obtaining adequate coverage and reimbursement from payors is uncertain and critical for commercial success[381](index=381&type=chunk)[384](index=384&type=chunk) [Risks Related to Our Intellectual Property](index=72&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section details intellectual property risks, including reliance on third-party licenses, potential inadequacy of patent protection, and exposure to infringement claims - The company is heavily dependent on intellectual property licensed from third parties like Pfizer, Servier, and Cellectis; termination of these licenses could result in the loss of significant rights[389](index=389&type=chunk) - Efforts to protect proprietary technology through patents and trade secrets may be inadequate, and patents may be challenged, invalidated, or circumvented by competitors[392](index=392&type=chunk)[395](index=395&type=chunk) - The company may face third-party claims of intellectual property infringement, which could lead to costly litigation, substantial damages, or the inability to commercialize products[400](index=400&type=chunk)[403](index=403&type=chunk) [Risks Related to Ownership of Our Common Stock](index=77&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) This section highlights risks for common stock ownership, including stock price volatility, anti-takeover provisions, and the company's policy of not paying dividends - The stock price has been and may continue to be highly volatile due to factors such as clinical trial results, regulatory decisions, and broader market fluctuations[420](index=420&type=chunk) - Anti-takeover provisions in the company's charter documents and under Delaware law could delay or prevent a change of control, potentially limiting the market price of the common stock[427](index=427&type=chunk) - The company does not intend to pay dividends, so any returns for stockholders will be limited to the appreciation of their stock[426](index=426&type=chunk) [Properties](index=80&type=section&id=Item%202.%20Properties) Allogene's properties include corporate headquarters in South San Francisco and a leased 118,000 square foot cell therapy manufacturing facility in Newark, California - The company's corporate headquarters are in South San Francisco, California, with leases for office and laboratory space totaling over **130,000 square feet**, expiring in **March 2032**[434](index=434&type=chunk) - Allogene leases an approximately **118,000 square foot** cell therapy manufacturing facility in Newark, California. The lease commenced in November 2020 and has an initial term of **15 years and eight months**[435](index=435&type=chunk) [Legal Proceedings](index=81&type=section&id=Item%203.%20Legal%20Proceedings) Allogene is not currently involved in any legal proceedings expected to materially adversely affect its business - As of the report date, Allogene is not a party to any legal proceedings that management believes are likely to have a material adverse effect on the business[437](index=437&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=82&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Allogene's common stock trades on Nasdaq under 'ALLO'; the company has never paid dividends and intends to retain earnings for future growth - The company's common stock has been listed on The Nasdaq Global Select Market under the symbol 'ALLO' since **October 11, 2018**[439](index=439&type=chunk) - The company has never declared or paid cash dividends and intends to retain all available funds for operations and growth for the foreseeable future[443](index=443&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=83&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Allogene reported a net loss of **$332.6 million** in 2022, driven by increased R&D and G&A expenses and decreased collaboration revenue, ending the year with **$576.5 million** in liquidity [Results of Operations](index=88&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of Allogene's financial results, highlighting changes in collaboration revenue, research and development, and general and administrative expenses Comparison of Financial Results (Years Ended Dec 31, in thousands) | (In thousands) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Collaboration Revenue | **$243** | **$38,489** | **$0** | | Research & Development | **$256,387** | **$220,176** | **$192,987** | | General & Administrative | **$79,305** | **$74,105** | **$65,256** | | **Loss from Operations** | **($335,449)** | **($255,792)** | **($258,243)** | | **Net Loss** | **($332,632)** | **($257,005)** | **($250,221)** | - R&D expenses increased by **$36.2 million** in 2022 compared to 2021, primarily due to a **$15.7 million** increase in facility costs and a **$15.3 million** increase in personnel-related costs[478](index=478&type=chunk) - G&A expenses increased by **$5.2 million** in 2022 compared to 2021, mainly from a **$4.7 million** increase in personnel costs and a **$2.8 million** increase in corporate communications expenses[480](index=480&type=chunk) - Collaboration revenue decreased by **$38.2 million** in 2022, as the prior year's revenue was primarily from the one-time recognition of licensing intellectual property and know-how to the Allogene Overland joint venture in Q1 2021[477](index=477&type=chunk) [Liquidity and Capital Resources](index=89&type=section&id=Liquidity%20and%20Capital%20Resources) This section details Allogene's liquidity position, including cash, cash equivalents, and investments, and analyzes cash flow trends from operating, investing, and financing activities - As of December 31, 2022, the company had **$576.5 million** in cash, cash equivalents, and investments. Management believes this is sufficient to fund operations for at least the **next 12 months**[483](index=483&type=chunk) Summary of Cash Flows (Years Ended Dec 31, in thousands) | (In thousands) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | **($220,519)** | **($184,812)** | **($115,093)** | | Net cash provided by (used in) investing activities | **$106,159** | **$163,655** | **($505,123)** | | Net cash provided by financing activities | **$2,950** | **$11,963** | **$633,591** | - Cash used in operating activities increased to **$220.5 million** in 2022 from **$184.8 million** in 2021, primarily due to a higher net loss[490](index=490&type=chunk)[491](index=491&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=92&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section outlines Allogene's critical accounting policies and estimates, focusing on accrued R&D, revenue recognition, and stock-based compensation - The company identifies its critical accounting policies and estimates as those associated with accrued research and development expenditures, revenue recognition, R&D expenses, stock-based compensation, and leases[501](index=501&type=chunk) - For stock-based compensation, the company uses the Black-Scholes or lattice option-pricing models, which require subjective assumptions for expected term, volatility, and risk-free interest rate[509](index=509&type=chunk)[510](index=510&type=chunk) - Revenue recognition for collaboration agreements involves identifying distinct performance obligations, determining the transaction price (including constraining variable consideration like milestones), and allocating the price based on standalone selling prices[505](index=505&type=chunk)[506](index=506&type=chunk) [Financial Statements and Supplementary Data](index=95&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Allogene's audited consolidated financial statements for 2020-2022, including balance sheets, statements of operations, and comprehensive notes, along with the auditor's report [Consolidated Balance Sheets](index=97&type=section&id=Consolidated%20Balance%20Sheets) This section provides a summary of Allogene's consolidated balance sheets as of December 31, 2022 and 2021, detailing assets, liabilities, and equity Consolidated Balance Sheet Summary (as of Dec 31, in thousands) | (In thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Cash, cash equivalents, and investments | **$576,500** | **$809,481** | | **Total Assets** | **$817,079** | **$1,038,634** | | Total Liabilities | **$151,209** | **$122,228** | | **Total Stockholders' Equity** | **$665,870** | **$916,406** | [Consolidated Statements of Operations and Comprehensive Loss](index=98&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section presents a summary of Allogene's consolidated statements of operations and comprehensive loss for the years ended December 31, 2020-2022 Consolidated Statement of Operations Summary (Year Ended Dec 31, in thousands) | (In thousands) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Collaboration Revenue | **$243** | **$38,489** | **$0** | | Total Operating Expenses | **$335,692** | **$294,281** | **$258,243** | | **Net Loss** | **($332,632)** | **($257,005)** | **($250,221)** | | Net Loss Per Share | **($2.32)** | **($1.89)** | **($2.08)** | [Notes to Consolidated Financial Statements](index=101&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes to the consolidated financial statements, covering significant accounting policies, collaboration agreements, and stock-based compensation - The company's license agreement with Servier for CD19 products is under dispute following Servier's notice of discontinuation in September 2022 regarding its involvement and cost-sharing obligations[611](index=611&type=chunk)[612](index=612&type=chunk) - In June 2022, the company commenced a stock option exchange program, accepting **3.67 million** eligible options for cancellation and granting new options with a new exercise price and vesting schedule. The modification resulted in an incremental expense of **$5.2 million**[659](index=659&type=chunk)[660](index=660&type=chunk) - The company has established a full valuation allowance against its net deferred tax assets of **$316.6 million** as of December 31, 2022, due to the uncertainty of realizing these assets given its history of operating losses[685](index=685&type=chunk)[688](index=688&type=chunk) [Controls and Procedures](index=128&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with an unqualified auditor opinion - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[697](index=697&type=chunk) - Based on an assessment using the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2022[699](index=699&type=chunk) - The independent registered public accounting firm, Ernst & Young LLP, audited and issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[699](index=699&type=chunk)[704](index=704&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=131&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides biographical information for Allogene's Board of Directors and executive officers, including co-founders Dr. Arie Belldegrun and Dr. David Chang - The Board of Directors includes key figures from the biotechnology and investment sectors, such as co-founders Dr. Arie Belldegrun (Executive Chair) and Dr. David Chang (President & CEO), both formerly of Kite Pharma[712](index=712&type=chunk)[714](index=714&type=chunk) - The executive team includes Eric Schmidt, Ph.D. as Chief Financial Officer, Alison Moore, Ph.D. as Chief Technical Officer, and Zachary Roberts, M.D., Ph.D. as Executive Vice President, Research and Development[725](index=725&type=chunk)[727](index=727&type=chunk)[728](index=728&type=chunk) - The company has adopted a Code of Business Conduct and Ethics applicable to all directors, officers, and employees, which is available on its website[729](index=729&type=chunk) [Executive Compensation, Security Ownership, and Other Matters](index=134&type=section&id=Item%2011%2C%2012%2C%2013%2C%2014) Information for executive compensation, security ownership, related transactions, and accounting fees is incorporated by reference from the 2023 Proxy Statement - Information required for Items 11, 12, 13, and 14 is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[730](index=730&type=chunk)[731](index=731&type=chunk)[732](index=732&type=chunk)[733](index=733&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=135&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists exhibits filed with the Annual Report, including corporate governance documents, material contracts, and officer certifications - The financial statements are located in Part II, Item 8 of the report. All other financial statement schedules have been omitted as they are not required or the information is included elsewhere[735](index=735&type=chunk) - The exhibit list includes key corporate governance documents, material contracts, and certifications required by the Sarbanes-Oxley Act[736](index=736&type=chunk)[737](index=737&type=chunk)

Company Overview - Allogene has treated over 175 patients with AlloCAR T™ product candidates, more than any other allogeneic CAR T company[3] - The company held $637 million in cash, cash equivalents, and investments as of September 30, 2022[3] - Allogene operates a fully-integrated GMP facility with a projected capacity of approximately 20,000 patients annually[65] Clinical Programs & Data - Approximately 97% of patients treated with ALLO-501/ALLO-501A received treatment within 2-5 days of study enrollment[43] - The 6-month Complete Response (CR) rate for ALLO-501/501A in LBCL (mITT) was in the range of high 20s to 40%[43] - In the UNIVERSAL trial, approximately 90% of patients were treated within 5 days of study enrollment, obviating the need for bridging therapy[47] - In the UNIVERSAL trial, a 71% overall response rate and 46% VGPR+ was observed at the 320M cell dose of ALLO-715[48] - 92% of VGPR+ responses were MRD negative in the UNIVERSAL trial[48] Pipeline & Future Development - Allogene plans to initiate a potentially pivotal Phase 2 trial of ALLO-501A in r/r LBCL in mid-2022[64] - The company is developing ALLO-316, a CD70-targeted AlloCAR T for solid tumors, currently in Phase 1 (TRAVERSE trial)[65] - Doses from 40 million to 360 million cells are being tested in the TRAVERSE trial[60]

Allogene Therapeutics, Inc. (NASDAQ:ALLO) Q3 2022 Earnings Conference Call November 2, 2022 5:00 PM ET Company Participants Christine Cassiano - CCO David Chang - President and CEO Rafael Amado - EVP, Research & Development and CMO Eric Schmidt - CFO Conference Call Participants Andrea Tan - Goldman Sachs Michael Yee - Jefferies Tyler Van Buren - Cowen Asthika Goonewardene - Truist Raju Prasad - William Blair Reni Benjamin - JMP Securities Mark Breidenbach - Oppenheimer John Newman - Canaccord Genuity Micha ...

[PART I: FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%3A%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company reported a net loss of $83.1 million in Q3 2022, with total assets decreasing and an accumulated deficit of $1.1 billion [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $887.6 million from $1.04 billion, driven by reduced cash, while liabilities increased and equity declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $74,357 | $173,314 | | Total current assets | $569,061 | $471,323 | | Total assets | $887,572 | $1,038,634 | | Total current liabilities | $48,872 | $48,174 | | Total liabilities | $147,611 | $122,228 | | Total stockholders' equity | $739,961 | $916,406 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net loss increased to $83.1 million in Q3 2022 and $237.8 million for the nine months, primarily due to higher R&D expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $49 | $49 | $196 | $38,438 | | Research and development | $63,641 | $58,720 | $180,968 | $166,193 | | General and administrative | $18,897 | $18,999 | $58,303 | $54,144 | | Loss from operations | ($82,489) | ($77,670) | ($239,075) | ($181,899) | | Net loss | ($83,148) | ($78,186) | ($237,785) | ($182,137) | | Net loss per share | ($0.58) | ($0.57) | ($1.67) | ($1.35) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations increased to $158.4 million for the nine months, while investing activities provided $56.6 million Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($158,423) | ($139,376) | | Net cash provided by investing activities | $56,562 | $134,405 | | Net cash provided by financing activities | $2,904 | $11,641 | | Net change in cash, cash equivalents and restricted cash | ($98,957) | $6,670 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business, accounting policies, and financial arrangements, including capital sufficiency, collaboration agreements, and a significant milestone payment - The company is an immuno-oncology firm focused on allogeneic T cell therapies and has incurred cumulative net losses of **$1.1 billion** since inception through September 30, 2022[16](index=16&type=chunk)[17](index=17&type=chunk) - Management expects current cash, cash equivalents, and investments of **$637.3 million** are sufficient to fund operations for at least one year from the filing date[17](index=17&type=chunk)[18](index=18&type=chunk) - In September 2022, partner Servier discontinued its involvement in the development of CD19 products (UCART19, ALLO-501, ALLO-501A), granting Allogene the option to license these products outside the U.S.[56](index=56&type=chunk) - Total stock-based compensation expense was **$21.1 million** for Q3 2022 and **$66.4 million** for the first nine months of 2022[105](index=105&type=chunk) - Subsequent to the quarter's end, the company initiated the Phase 2 clinical trial of ALLO-501A, which requires an **$8.0 million** milestone payment to Servier, expected to be recognized in Q4 2022[116](index=116&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses clinical progress, financial results, and liquidity, highlighting increased R&D expenses and sufficient cash reserves for the next year [Overview](index=24&type=section&id=Overview) Allogene, a clinical-stage CAR T cell therapy company, initiated a Phase 2 trial and faces strategic changes with Servier's CD19 program discontinuation - The company is progressing its pipeline, having initiated the Phase 2 ALPHA2 trial for ALLO-501A in R/R large B cell lymphoma (LBCL) and planning the EXPAND trial to demonstrate the contribution of its lymphodepletion agent, ALLO-647[121](index=121&type=chunk)[123](index=123&type=chunk) - Servier discontinued its involvement in the development of CD19 Products, giving Allogene the right to elect a license for these products outside the United States. This would cease Servier's **40% development cost reimbursement**[120](index=120&type=chunk) - As of September 30, 2022, the company had an accumulated deficit of **$1.1 billion** and cash, cash equivalents, and investments of **$637.3 million**[126](index=126&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q3 2022 R&D expenses increased by $4.9 million due to higher personnel and facilities costs, while collaboration revenue significantly decreased Comparison of Operating Results (Three Months Ended Sep 30, in thousands) | Account | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $63,641 | $58,720 | $4,921 | 8% | | General and administrative | $18,897 | $18,999 | ($102) | (1)% | | Loss from operations | ($82,489) | ($77,670) | ($4,819) | 6% | - The **$4.9 million** increase in Q3 R&D expenses was driven by a **$5.9 million** rise in personnel costs and a **$4.3 million** increase in facilities/depreciation, offset by a **$5.9 million** decrease in external development and manufacturing costs[153](index=153&type=chunk) - Collaboration revenue for the nine months ended September 30, 2022, was **$0.2 million**, a sharp decrease from **$38.4 million** in the same period of 2021. The 2021 revenue was primarily from the license of intellectual property and delivery of know-how to Allogene Overland in Q1 2021[157](index=157&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds $637.3 million in cash and investments, sufficient for over a year, with primary commitments tied to license agreements - The company anticipates its cash and investments of **$637.3 million** as of September 30, 2022, will be sufficient to maintain operations for at least one year from the filing date of this report[161](index=161&type=chunk) Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in Operating activities | ($158,423) | ($139,376) | | Net cash provided by Investing activities | $56,562 | $134,405 | | Net cash provided by Financing activities | $2,904 | $11,641 | - Material cash commitments include potential milestone payments under license agreements with Pfizer, Cellectis, Servier, and Notch, as well as obligations under a collaboration with MD Anderson and a solar power agreement[170](index=170&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk on its $637.3 million cash and investments, and foreign exchange risk from Euro-denominated payments - The company is exposed to interest rate risk on its cash and investment portfolio of **$637.3 million**[179](index=179&type=chunk) - Foreign exchange risk exists due to collaboration payments denominated in Euros with its partner Servier. As of September 30, 2022, the company had **$4.3 million** of receivables denominated in foreign currency[180](index=180&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, while a new SAP system implementation is expected to change internal controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the reporting period[181](index=181&type=chunk) - The company is implementing a new SAP enterprise resource planning system in phases, which is expected to cause changes to its internal control over financial reporting[182](index=182&type=chunk) [PART II: OTHER INFORMATION](index=36&type=section&id=PART%20II%3A%20OTHER%20INFORMATION) [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no pending legal claims or actions that would materially adversely affect its financial condition or operations - Management believes there are currently no pending legal proceedings that could have a material adverse effect on the company[185](index=185&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including financial losses, challenges in novel therapy development, reliance on partners, clinical trial failures, and complex manufacturing - **Financial Risk:** The company has a history of net losses (**$1.1B** accumulated deficit) and will require substantial additional financing to continue operations and develop its products[190](index=190&type=chunk)[275](index=275&type=chunk) - **Clinical & Development Risk:** The company's allogeneic T cell product candidates are a novel approach with significant challenges, including the risk of undesirable side effects, and clinical trials may fail to demonstrate safety and efficacy[194](index=194&type=chunk)[214](index=214&type=chunk)[221](index=221&type=chunk) - **Third-Party Reliance Risk:** The business is heavily reliant on partners, particularly Cellectis for TALEN gene-editing technology. Servier's discontinuation of its involvement in the CD19 programs introduces uncertainty and potential adverse consequences[204](index=204&type=chunk)[206](index=206&type=chunk) - **Manufacturing & Operational Risk:** The company may fail to successfully manufacture its product candidates at scale, operate its own facility, or obtain regulatory approval for its manufacturing processes, which could harm clinical trials and commercial viability[246](index=246&type=chunk) - **Regulatory Risk:** The regulatory approval process for novel cell therapies is lengthy, complex, and uncertain. The company may face substantial delays or may not be able to conduct trials on expected timelines[208](index=208&type=chunk)[228](index=228&type=chunk)[324](index=324&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the current reporting period - There were no unregistered sales of equity securities in the quarter[401](index=401&type=chunk) [Exhibits](index=75&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents and officer certifications