Allogene Therapeutics, Inc. (NASDAQ:ALLO) Q3 2020 Earnings Conference Call November 4, 2020 8:30 AM ET Company Participants Christine Cassiano – Chief Communications Officer David Chang – President and Chief Executive Officer Rafael Amado – Executive Vice President-Research and Development and Chief Medical Officer Eric Schmidt – Chief Financial Officer Conference Call Participants Marc Frahm – Cowen Salveen Richter – Goldman Sachs Brian Ayman – Jefferies Tyler Van Buren – Piper Sandler John Newman – Canacc ...

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 September 30, 2020 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 Numbe ...

Allogene Therapeutics, Inc. (NASDAQ:ALLO) Q2 2020 Earnings Conference Call August 5, 2020 8:30 AM ET Company Participants Christine Cassiano – Chief Communications Officer David Chang – President and Chief Executive Officer Rafael Amado – Executive Vice President-Research and Development and Chief Medical Officer Eric Schmidt – Chief Financial Officer Conference Call Participants Phil Nadeau – Cowen and Company Andrea Tan – Goldman Sachs Biren Amin – Jefferies Gavin Scott – JPMorgan Tyler Van Buren – Piper ...

PART I: FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Allogene Therapeutics reported a **$115.5 million** net loss for H1 2020, with cash and investments growing to **$1.1 billion** primarily from a **$595.7 million** public offering [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$1.26 billion** as of June 30, 2020, driven by a **$1.11 billion** rise in cash and investments, with stockholders' equity reaching **$1.16 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $280,379 | $175,126 | | Total current assets | $909,577 | $544,576 | | Total assets | $1,258,544 | $717,802 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $40,895 | $33,079 | | Total liabilities | $95,125 | $88,779 | | Total stockholders' equity | $1,163,419 | $629,023 | | Total liabilities and stockholders' equity | $1,258,544 | $717,802 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net loss increased to **$115.5 million** for the six months ended June 30, 2020, from **$72.8 million** in 2019, driven by higher **$89.3 million** research and development expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $47,296 | $31,774 | $89,337 | $55,177 | | General and administrative | $15,862 | $14,187 | $31,502 | $27,245 | | Loss from operations | $(63,158) | $(45,961) | $(120,839) | $(82,422) | | Net loss | $(60,974) | $(41,243) | $(115,454) | $(72,829) | | Net loss per share | $(0.53) | $(0.41) | $(1.03) | $(0.74) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations was **$67.5 million** for H1 2020, while financing activities provided **$616.8 million** from a public offering, resulting in a **$105.3 million** net cash increase Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(67,530) | $(55,148) | | Net cash (used in) provided by investing activities | $(443,978) | $77,380 | | Net cash provided by financing activities | $616,761 | $920 | | Net change in cash, cash equivalents and restricted cash | $105,253 | $23,152 | - Financing activities were significantly boosted by **$595.7 million** in net proceeds from a public offering and **$14.8 million** from an ATM offering during the first half of 2020[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail significant financing activities, key license agreements, lease commitments, and increased stock-based compensation - In June 2020, the company sold 13,457,447 shares of common stock in a public offering, resulting in net proceeds of approximately **$595.7 million**[19](index=19&type=chunk) - The company has key license agreements with Pfizer, Cellectis, Servier, and Notch, which involve potential aggregate milestone payments of up to **$840.0 million** (Pfizer) and **$2.8 billion** (Cellectis), plus royalties[44](index=44&type=chunk)[49](index=49&type=chunk) - The company has significant lease commitments, including for a new cell therapy manufacturing facility in Newark, California. As of June 30, 2020, total undiscounted future lease payments were **$90.5 million**[74](index=74&type=chunk)[77](index=77&type=chunk) Stock-Based Compensation Expense (in thousands) | Period | Research & Development | General & Administrative | Total | | :--- | :--- | :--- | :--- | | **Three Months Ended June 30, 2020** | $7,979 | $8,791 | $16,770 | | **Three Months Ended June 30, 2019** | $4,747 | $6,740 | $11,487 | | **Six Months Ended June 30, 2020** | $14,636 | $16,349 | $30,985 | | **Six Months Ended June 30, 2019** | $7,478 | $11,876 | $19,354 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses clinical progress, financial results, and liquidity, noting COVID-19 impacts, increased net loss from higher expenses, and sufficient cash for future operations - The company is a clinical-stage immuno-oncology company developing a pipeline of off-the-shelf allogeneic T cell product candidates. Key programs include ALLO-501A for Non-Hodgkin Lymphoma (NHL) and ALLO-715 for multiple myeloma[108](index=108&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - The COVID-19 pandemic has adversely impacted the business by affecting patient enrollment in clinical trials and causing interruptions in the construction of the Newark, California manufacturing facility[112](index=112&type=chunk) Comparison of Operating Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $47,296 | $31,774 | $15,522 | 49% | | General and administrative | $15,862 | $14,187 | $1,675 | 12% | | **Total operating expenses** | **$63,158** | **$45,961** | **$17,197** | **37%** | - As of June 30, 2020, the company had **$1.1 billion** in cash, cash equivalents, and investments, and believes this is sufficient to fund operations for at least one year from the filing date[145](index=145&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks include interest rate risk on **$1.1 billion** in investments and foreign exchange risk from Euro-denominated payments, with a 10% change in either not materially affecting financials - The company is exposed to interest rate risk on its **$1.1 billion** in cash, cash equivalents, and available-for-sale securities as of June 30, 2020[165](index=165&type=chunk) - Foreign exchange risk exists due to collaboration payments with Servier being denominated in Euros. As of June 30, 2020, the company had **$0.8 million** of receivables denominated in foreign currency[166](index=166&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2020, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of the end of the period covered by the report, the company's disclosure controls and procedures were effective[167](index=167&type=chunk) - No changes in internal control over financial reporting were identified during the quarter ended June 30, 2020, that have materially affected, or are reasonably likely to materially affect, internal controls[168](index=168&type=chunk) PART II: OTHER INFORMATION [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its operations, financial condition, or cash flows - Management believes there are currently no pending claims or actions against the company that could have a material adverse effect on its financial condition[170](index=170&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) Significant risks include limited operating history, accumulated net losses of **$511.6 million**, reliance on partners, COVID-19 impacts on trials and manufacturing, potential for undesirable side effects, and regulatory uncertainties - The company has a limited operating history, has incurred net losses since inception (accumulated deficit of **$511.6 million** as of June 30, 2020), and expects to incur substantial future losses[172](index=172&type=chunk)[174](index=174&type=chunk) - The COVID-19 pandemic is adversely impacting the business by halting or delaying clinical trial enrollment, interrupting supply chains, and delaying construction of the manufacturing facility[179](index=179&type=chunk)[180](index=180&type=chunk) - The business is heavily reliant on partners, particularly Cellectis for its TALEN gene-editing technology, which is critical for manufacturing allogeneic T cell product candidates[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - Product candidates may cause undesirable side effects, such as cytokine release syndrome (CRS), neurotoxicity, and graft-versus-host disease (GvHD), which could halt clinical development or prevent regulatory approval[193](index=193&type=chunk) - The company is building its own manufacturing facility but currently relies on CMOs and faces risks related to scaling up production, process control, and securing specialty raw materials[228](index=228&type=chunk)[284](index=284&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=78&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's October 2018 IPO generated **$343.3 million** in net proceeds, with **$95.8 million** used by June 30, 2020, and remaining funds allocated for clinical development and manufacturing facility construction - The company's IPO in October 2018 generated net proceeds of approximately **$343.3 million**[398](index=398&type=chunk) - Through June 30, 2020, the company has used **$95.8 million** of the IPO proceeds, with the remainder intended to fund clinical development and the build-out of its manufacturing facility[399](index=399&type=chunk) [Item 3. Defaults Upon Senior Securities](index=79&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[400](index=400&type=chunk) [Item 4. Mine Safety Disclosures](index=79&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[400](index=400&type=chunk) [Item 5. Other Information](index=79&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - None[400](index=400&type=chunk) [Item 6. Exhibits](index=80&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, a lease amendment, and required officer certifications - The report includes standard corporate governance documents, a second amendment to a lease agreement, and required officer certifications as exhibits[402](index=402&type=chunk)

Financial Data and Key Metrics Changes - As of March 31, 2020, the company reported cash, cash equivalents, and investments totaling $553 million [27] - Research and development expenses for Q1 2020 were $42 million, including $6.6 million of non-cash stock-based compensation [27] - General and administrative expenses were $15.6 million, which included $7.6 million of non-cash stock-based compensation [28] - The net loss for Q1 2020 was $54.5 million or $0.50 per share, including non-cash stock-based compensation expense of $14.2 million [28] - The company expects full-year 2020 net losses to be between $260 million and $280 million, including estimated non-cash stock-based compensation expense of $70 million to $75 million [29] Business Line Data and Key Metrics Changes - The ALLO-501 Phase 1 trial continues to enroll patients, with initial data expected to be shared at the ASCO meeting [19] - The ALLO-715 trial for relapsed/refractory multiple myeloma is ongoing, with initial data expected in Q4 2020 [24] - The company is also advancing its anti-CD70 program, ALLO-316, with an IND submission planned by year-end [26] Market Data and Key Metrics Changes - The company is navigating challenges posed by COVID-19, which has affected recruitment in some studies, but it remains committed to maintaining trial momentum [10][12] - The company has implemented remote monitoring and data entry to adapt to the pandemic's impact on clinical trials [13] Company Strategy and Development Direction - The company aims to achieve five key milestones in 2020, including reporting initial ALLO-501 Phase 1 clinical data and submitting the ALLO-316 IND by year-end [11] - The focus is on optimizing the lymphodepletion strategy and exploring the potential of TurboCAR technology for enhanced efficacy in CAR-T therapies [25] - The company is committed to advancing allogeneic cell therapy as a more convenient and reliable alternative to autologous CAR-T therapy [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenges posed by COVID-19 while maintaining business momentum [10] - The management team emphasized the importance of scientific innovation and collaboration in addressing medical challenges during the pandemic [9] - Future clinical trials are expected to be minimally affected by COVID-19, with a focus on maintaining supply chain integrity [53] Other Important Information - The construction of the GMP cell manufacturing facility in Newark, California, was temporarily interrupted due to COVID-19 but has since resumed [28][29] - The company is exploring the potential of ALLO-647 as a standalone lymphodepletion agent in future studies [73] Q&A Session Summary Question: Can you discuss the ALLO-501 data expected at ASCO? - Management clarified that the data will include the first nine patients treated and additional patients from previously cleared dose levels [33][35] Question: What drove the backfilling of patients in lower doses? - Management explained that this is standard practice in Phase 1 studies to accommodate patient and site needs [40] Question: How will COVID-19 impact CAR T clinical development? - Management indicated that while external factors are being monitored, they are optimistic that planned studies will not be significantly affected [52] Question: Will there be variability in baseline levels of rituximab in ALPHA trial patients? - Management confirmed that they have successfully managed patient selection to minimize issues related to rituximab levels [65] Question: What is the strategy for ALLO-647 as a lymphodepletion agent? - Management expressed interest in exploring ALLO-647's potential as a standalone agent after ensuring adequate lymphodepletion [73]

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, 2020 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 ...

[Part I](index=6&type=section&id=PART%20I) [Business](index=6&type=section&id=Item%201.%20Business) Allogene Therapeutics is a clinical-stage immuno-oncology company developing "off-the-shelf" allogeneic T cell therapies for cancer - Allogene is a clinical-stage immuno-oncology company pioneering the development of off-the-shelf allogeneic T cell therapies derived from healthy donors for cancer treatment[11](index=11&type=chunk) - The company's strategy is built on four pillars: minimizing Graft-versus-Host Disease (GvHD), enabling T cell persistence, building a leading manufacturing platform, and leveraging next-generation technologies[15](index=15&type=chunk) - Allogene utilizes Cellectis's TALEN gene-editing technology to engineer T cells, aiming to reduce GvHD risk by inactivating the T cell receptor (TCR) and enhance persistence by inactivating the CD52 gene[16](index=16&type=chunk) - In February 2019, the company leased a facility in Newark, California, to build its own cell therapy manufacturing plant, with manufacturing expected to commence in 2021[28](index=28&type=chunk) [Our Pipeline](index=7&type=section&id=Item%201.%20Business-Our%20Pipeline) Allogene's clinical pipeline overview details product candidates, targets, indications, and development phases Allogene Therapeutics Clinical Pipeline Overview | Product Candidate | Target | Indication(s) | Development Phase | Key Milestone/Status | | :--- | :--- | :--- | :--- | :--- | | **UCART19** | CD19 | Relapsed/Refractory (R/R) ALL | Phase 1 (CALM & PALL trials) | 67% CR/CRi in interim results; potential registrational trials in 2021 | | **ALLO-501** | CD19 | R/R Non-Hodgkin Lymphoma (NHL) | Phase 1 (ALPHA trial) | Initial data expected in Q2 2020 | | **ALLO-501A** | CD19 | R/R Large B-cell Lymphoma | Phase 1/2 (ALPHA2 trial) | IND cleared; trial initiation planned for Q2 2020 | | **ALLO-715** | BCMA | R/R Multiple Myeloma | Phase 1 (UNIVERSAL trial) | Initial data expected in Q4 2020 | | **ALLO-647** | CD52 | Lymphodepletion Agent | Used in ALPHA & UNIVERSAL trials | Designed to enable expansion and persistence of allogeneic CAR T products | [Product Pipeline and Development Strategy](index=17&type=section&id=Item%201.%20Business-Product%20Pipeline%20and%20Development%20Strategy) This section details clinical progress and strategic development plans for Allogene's key product candidates - **UCART19**, for R/R ALL, showed a **67% CR/CRi rate** in interim data from the CALM and PALL Phase 1 trials[80](index=80&type=chunk)[86](index=86&type=chunk) - **ALLO-501A** is a next-generation anti-CD19 candidate for NHL, with the ALPHA2 Phase 1/2 trial planned to start in Q2 2020[92](index=92&type=chunk)[99](index=99&type=chunk) - **ALLO-715**, targeting BCMA for R/R multiple myeloma, initiated its UNIVERSAL Phase 1 trial in Q3 2019, with initial data expected in Q4 2020[101](index=101&type=chunk)[108](index=108&type=chunk) - Future pipeline expansion includes ALLO-316 (anti-CD70), ALLO-819 (anti-FLT3), an anti-DLL3 candidate, and next-gen technologies like TurboCARs and iPSC-derived cell sources[109](index=109&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) [Strategic Agreements](index=27&type=section&id=Item%201.%20Business-Strategic%20Agreements) Allogene's strategic agreements detail key partnerships for technology and product development - The company was founded on an asset acquisition from Pfizer, which included key license and collaboration agreements[23](index=23&type=chunk)[126](index=126&type=chunk) - Allogene holds an exclusive license from Cellectis for TALEN gene-editing technology and an exclusive collaboration with Servier for UCART19, ALLO-501, and ALLO-501A in the U.S[23](index=23&type=chunk)[126](index=126&type=chunk) - A collaboration with Notch Therapeutics was established to research and develop T cell and NK cell products derived from induced pluripotent stem cells (iPSCs)[115](index=115&type=chunk)[126](index=126&type=chunk) [Competition](index=29&type=section&id=Item%201.%20Business-Competition) Allogene faces intense competition from cell therapy developers and other immuno-oncology platforms - The company faces intense competition from established biopharmaceutical companies with greater resources, including Novartis (Kymriah) and Gilead/Kite (Yescarta) in autologous T cell therapy[135](index=135&type=chunk)[137](index=137&type=chunk) - In the allogeneic T cell therapy space, competitors include Atara Biotherapeutics, CRISPR Therapeutics, Fate Therapeutics, and Precision Biosciences[136](index=136&type=chunk) - Competition also arises from non-cell-based immuno-oncology platforms like bispecific antibodies and antibody-drug conjugates from companies such as Amgen, Roche, and GlaxoSmithKline[138](index=138&type=chunk) [Government Regulation and Product Approval](index=29&type=section&id=Item%201.%20Business-Government%20Regulation%20and%20Product%20Approval) Allogene's cell products are subject to extensive government regulation, including FDA approval and post-market requirements - Allogene's cell products are regulated as biologics by the FDA, requiring clinical trials and an approved Biologics License Application (BLA) for marketing[142](index=142&type=chunk) - The U.S. product development process involves preclinical testing, an Investigational New Drug (IND) application, and three phases of clinical trials (Phase 1, 2, 3) under Good Clinical Practices (GCPs)[144](index=144&type=chunk)[148](index=148&type=chunk) - The FDA offers expedited programs like Fast Track, Priority Review, Accelerated Approval, and Regenerative Medicine Advanced Therapy (RMAT) designation, potentially applicable to Allogene's candidates[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - Post-approval, the company is subject to ongoing FDA regulation, including cGMP compliance, adverse event reporting, and restrictions on off-label promotion, with approved biologics entitled to 12-year marketing exclusivity[167](index=167&type=chunk)[171](index=171&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks due to its limited operating history, net losses, and novel allogeneic T cell therapies - The company has a limited operating history, has incurred net losses since inception (**$184.6 million** in 2019), and anticipates substantial future losses[213](index=213&type=chunk)[215](index=215&type=chunk) - Allogene is heavily reliant on partners, particularly Cellectis for TALEN gene-editing technology and Servier for conducting UCART19 clinical trials, creating dependencies and risks[222](index=222&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) - Product candidates may cause undesirable side effects such as Cytokine Release Syndrome (CRS), neurotoxicity, and Graft-versus-Host Disease (GvHD), which could halt clinical development or prevent regulatory approval[234](index=234&type=chunk)[235](index=235&type=chunk) - The company intends to operate its own manufacturing facility but currently relies on CMOs, facing risks related to scaling up production and potential manufacturing failures[275](index=275&type=chunk)[276](index=276&type=chunk) - The regulatory approval process for novel allogeneic cell therapies is uncertain and complex, potentially delaying or preventing approval due to extensive data requirements or different trial designs[228](index=228&type=chunk)[363](index=363&type=chunk)[376](index=376&type=chunk) [Unresolved Staff Comments](index=78&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - None [Properties](index=78&type=section&id=Item%202.%20Properties) Allogene's corporate headquarters and manufacturing facility are located in South San Francisco and Newark, California, respectively - Corporate headquarters are located in South San Francisco, California, consisting of approximately **68,000 square feet** for office and laboratory space[477](index=477&type=chunk) - In February 2019, the company leased approximately **118,000 square feet** in Newark, California, to develop a state-of-the-art cell therapy manufacturing facility[478](index=478&type=chunk) [Legal Proceedings](index=78&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material litigation or legal proceedings - The company is not currently a party to any material legal proceedings[479](index=479&type=chunk) [Mine Safety Disclosures](index=79&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not applicable [Part II](index=80&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=80&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" since its October 2018 IPO, with no cash dividends paid - The company's common stock has been listed on The Nasdaq Global Select Market under the symbol "**ALLO**" since October 11, 2018[482](index=482&type=chunk) - The company has never declared or paid cash dividends and intends to retain all available funds for operations and growth[487](index=487&type=chunk) - The October 2018 IPO raised net proceeds of approximately **$343.3 million**; these proceeds have not been used and are intended to fund the product pipeline and general corporate purposes[488](index=488&type=chunk)[489](index=489&type=chunk) [Selected Financial Data](index=81&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data reflects significant operating losses, consistent with a clinical-stage biopharmaceutical company Selected Financial Data (in thousands) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | **Statements of Operations Data** | | | | Research and development | $144,535 | $151,860 | | General and administrative | $57,473 | $40,982 | | Loss from operations | $(202,008) | $(192,842) | | Net loss | $(184,594) | $(211,505) | | **Balance Sheet Data (as of Dec 31)** | | | | Cash, cash equivalents and investments | $588,855 | $721,350 | | Total assets | $717,802 | $773,855 | | Accumulated deficit | $(396,122) | $(211,528) | | Total stockholders' equity | $629,023 | $703,164 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=82&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Allogene reported a net loss of $184.6 million in 2019, an improvement from $211.5 million in 2018 Comparison of Operating Expenses (in thousands) | Expense Category | 2019 | 2018 | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $144,535 | $151,860 | $(7,325) | Decrease due to a $109.4M one-time IPR&D expense in 2018, offset by increased pipeline, personnel, and facilities costs in 2019 | | General and administrative | $57,473 | $40,982 | $16,491 | Increase due to higher personnel-related costs (including stock-based compensation) and professional services | - As of December 31, 2019, the company had **$588.9 million** in cash, cash equivalents, and investments, considered sufficient to fund operations for at least the next 12 months[530](index=530&type=chunk) - Operations have been financed primarily by proceeds from convertible preferred stock, convertible notes, the 2018 IPO (**$343.3 million** net), and a late 2019 at-the-market (ATM) stock offering (**$54.2 million** net)[531](index=531&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Category | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(137,350) | $(44,653) | | Net cash provided by (used in) investing activities | $164,084 | $(632,798) | | Net cash provided by financing activities | $58,960 | $771,182 | [Quantitative and Qualitative Disclosures About Market Risk](index=95&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily interest rate risk and foreign currency exchange rate risk - The company's primary market risk is interest rate risk on its **$588.9 million** in cash, cash equivalents, and investments; a 10% change in interest rates is not expected to have a material effect[563](index=563&type=chunk) - Foreign currency exchange risk exists due to collaboration payments with Servier denominated in euros; as of December 31, 2019, liabilities were **$2.4 million**, and a 10% rate change is not expected to be material[564](index=564&type=chunk) [Financial Statements and Supplementary Data](index=96&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited financial statements for 2019, 2018, and the inception period - The financial statements were audited by Ernst & Young LLP, which issued an unqualified opinion[569](index=569&type=chunk)[570](index=570&type=chunk) - A critical audit matter identified was the estimation of accrued research and development costs, involving significant management judgment regarding work completed by partners and third-party service providers[573](index=573&type=chunk)[574](index=574&type=chunk) [Notes to Financial Statements](index=104&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data-Notes%20to%20Financial%20Statements) Notes to financial statements detail accounting policies, strategic agreements, and other financial components - The April 2018 asset acquisition from Pfizer was accounted for as an asset acquisition, with total consideration of **$113.9 million**, of which **$109.4 million** was allocated to in-process research and development (IPR&D) and expensed immediately[651](index=651&type=chunk)[652](index=652&type=chunk)[654](index=654&type=chunk) - The company has significant potential future milestone payments: up to **$840.0 million** to Pfizer, up to **$2.8 billion** to Cellectis, and up to **$215.5 million** to Servier[658](index=658&type=chunk)[664](index=664&type=chunk)[675](index=675&type=chunk) - Total stock-based compensation expense was **$46.1 million** in 2019 and **$18.6 million** in 2018; as of December 31, 2019, there was **$148.6 million** of total unrecognized stock-based compensation[558](index=558&type=chunk)[726](index=726&type=chunk) - The company has significant operating lease obligations, primarily for its headquarters and manufacturing facility, with total undiscounted lease payments of **$93.3 million**[544](index=544&type=chunk)[691](index=691&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=135&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes or disagreements with its accountants on accounting or financial disclosure matters - None [Controls and Procedures](index=135&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, 2019 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2019[755](index=755&type=chunk) - Management assessed the effectiveness of internal control over financial reporting and concluded it was effective as of December 31, 2019, based on the COSO framework[757](index=757&type=chunk) - Ernst & Young LLP issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2019[758](index=758&type=chunk)[762](index=762&type=chunk) [Other Information](index=138&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None [Part III](index=139&type=section&id=PART%20III) [Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, Certain Relationships and Related Transactions, and Principal Accounting Fees and Services](index=139&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%20and%2014) Information for Items 10-14 is incorporated by reference from the 2020 Proxy Statement - Information regarding Directors, Executive Officers, and Corporate Governance will be provided in the 2020 Proxy Statement and is incorporated by reference[770](index=770&type=chunk) - Information regarding Executive Compensation will be provided in the 2020 Proxy Statement and is incorporated by reference[772](index=772&type=chunk) - Information regarding Security Ownership, Certain Relationships and Related Transactions, and Principal Accounting Fees and Services will be provided in the 2020 Proxy Statement and is incorporated by reference[773](index=773&type=chunk)[775](index=775&type=chunk)[776](index=776&type=chunk) [Part IV](index=140&type=section&id=PART%20IV) [Exhibits, Financial Statement Schedules](index=140&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements from Item 8 and provides an index of all exhibits filed with the Form 10-K - This item contains the list of financial statements and an index of exhibits filed with the Form 10-K[778](index=778&type=chunk)[779](index=779&type=chunk) [Form 10-K Summary](index=142&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no information for this item - None