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

Allogene Therapeutics, Inc. (NASDAQ:ALLO) Q4 2019 Earnings Conference Call February 27, 2020 8:30 AM ET Company Participants Christine Cassiano – Chief Communications Officer David Chang – President and Chief Executive Officer Raphael Amado – Executive Vice President of Research and Development and Chief Medical Officer Eric Schmidt – Chief Financial Officer Conference Call Participants Marc Frahm – Cowen and Company Salveen Richter – Goldman Sachs Biren Amin – Jefferies Tyler Van Buren – Piper Sandler Mark ...

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, 2019 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) Q3 2019 Earnings Conference Call November 5, 2019 8:30 AM ET Company Participants Christine Cassiano - Chief Communications Officer David Chang - President and Chief Executive Officer Rafael Amado - Executive Vice President of Research and Development and Chief Medical Officer Eric Schmidt - Chief Financial Officer Conference Call Participants Biren Amin - Jefferies & Company, Inc. Philip Nadeau - Cowen and Company Tyler Van Buren - Piper Jaffray Amanda Murphy - BTI ...

PART I: FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited condensed financial statements for June 30, 2019, show a $72.8 million net loss, increased accumulated deficit, and $650.2 million liquidity [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) As of June 30, 2019, assets decreased to $734.0 million, liabilities increased, and equity decreased to $655.6 million Condensed Balance Sheet Highlights (in thousands) | Account | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $112,584 | $92,432 | | Total investments | $537,609 | $628,918 | | **Total Assets** | **$733,997** | **$773,855** | | **Liabilities & Equity** | | | | Total current liabilities | $38,000 | $29,459 | | **Total Liabilities** | **$78,362** | **$70,691** | | Accumulated deficit | ($284,357) | ($211,528) | | **Total Stockholders' Equity** | **$655,635** | **$703,164** | [Condensed Statements of Operations and Comprehensive Loss](index=3&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net losses for the six months ended June 30, 2019, were $72.8 million, significantly lower than 2018 due to a one-time R&D charge Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $31,774 | $122,486 | $55,177 | $122,486 | | General and administrative | $14,187 | $12,526 | $27,245 | $15,123 | | **Loss from operations** | **($45,961)** | **($135,012)** | **($82,422)** | **($137,609)** | | **Net loss** | **($41,243)** | **($134,902)** | **($72,829)** | **($137,499)** | | Net loss per share | ($0.41) | ($43.82) | ($0.74) | ($9.42) | [Condensed Statements of Cash Flows](index=8&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2019, net cash used in operations was $55.1 million, offset by $77.4 million from investing activities Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($55,148) | ($6,042) | | Net cash provided by (used in) investing activities | $77,380 | ($2,634) | | Net cash provided by financing activities | $920 | $152,603 | | **Net increase in cash, cash equivalents and restricted cash** | **$23,152** | **$143,927** | [Notes to Condensed Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Notes detail the company's immuno-oncology business, accounting policies, financial instruments, and key license and lease disclosures - The company is a clinical-stage immuno-oncology company focused on allogeneic T cell therapies for cancer, having incurred cumulative net losses of **$284.4 million** since inception and expecting to raise additional capital to fund future operations[20](index=20&type=chunk)[22](index=22&type=chunk) - The company has a license agreement with Cellectis for its TALEN gene-editing technology, with potential milestone payments of up to **$185.0 million** per product and tiered royalties in the high single-digit percentages[43](index=43&type=chunk)[46](index=46&type=chunk) - Under an agreement with Servier for anti-CD19 CAR T cell products (including UCART19), Allogene is responsible for **60%** of specified development costs and has potential milestone payment obligations up to **$381.5 million**[52](index=52&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - In February 2019, the company entered into a lease for a **118,000 sq. ft.** manufacturing facility in Newark, CA, with total undiscounted lease payment commitments of **$36.2 million**[67](index=67&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the immuno-oncology pipeline, decreased R&D expenses from a prior year charge, and $650.2 million in liquidity - The company is advancing its pipeline, with the FDA clearing an IND for ALLO-715 in multiple myeloma in May 2019 and plans to initiate the UNIVERSAL trial in 2019[92](index=92&type=chunk) - As of June 30, 2019, the company had **$650.2 million** in cash, cash equivalents, and investments, which management believes is sufficient to fund operations for at least one year[94](index=94&type=chunk)[123](index=123&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Total operating expenses decreased by $55.2 million for the six months ended June 30, 2019, driven by a $67.3 million R&D reduction Comparison of Operating Results (in thousands) | Metric | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $55,177 | $122,486 | ($67,309) | (55)% | | General and administrative | $27,245 | $15,123 | $12,122 | 80% | | **Total operating expenses** | **$82,422** | **$137,609** | **($55,187)** | **(40)%** | | **Net Loss** | **($72,829)** | **($137,499)** | **$64,670** | **(47)%** | - The decrease in R&D expenses for the six months ended June 30, 2019, was primarily due to a **$109.4 million** expense in 2018 for acquired in-process R&D assets from Pfizer, partially offset by a **$42.0 million** increase in other R&D costs[119](index=119&type=chunk) [Liquidity, Capital Resources and Plan of Operations](index=25&type=section&id=Liquidity%2C%20Capital%20Resources%20and%20Plan%20of%20Operations) As of June 30, 2019, the company held $650.2 million in cash and investments, used $55.1 million in operations, and needs more financing Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Operating activities | ($55,148) | ($6,042) | | Investing activities | $77,380 | ($2,634) | | Financing activities | $920 | $152,603 | - In February 2019, the company entered into a lease for a cell therapy manufacturing facility in Newark, California, with a term of **15 years and 8 months**, expected to commence in May 2020[134](index=134&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks are interest rate fluctuations on the $650.2 million investment portfolio and foreign exchange rate risk - The company is exposed to interest rate risk on its cash and investment portfolio of **$650.2 million** as of June 30, 2019[144](index=144&type=chunk) - Foreign exchange risk exists due to collaboration payments with Servier, with **$5.3 million** of liabilities denominated in foreign currencies as of June 30, 2019[145](index=145&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2019, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of the end of the quarter, the company's disclosure controls and procedures were effective[146](index=146&type=chunk) - No material changes to the company's internal control over financial reporting were identified during the quarter ended June 30, 2019[147](index=147&type=chunk) PART II: OTHER INFORMATION [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no current legal proceedings that would materially adversely affect its financial condition or operations - Management believes there are currently no pending claims or actions against the company that could have a material adverse effect on its business[149](index=149&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) Extensive risks include limited operating history, reliance on novel technologies and partners, clinical development, manufacturing, and funding needs - The company's allogeneic T cell product candidates represent a novel approach with significant challenges, including manufacturing, managing potential side effects like GvHD, and navigating an uncertain regulatory landscape[155](index=155&type=chunk) - The business is heavily reliant on partners for key technologies (Cellectis's TALEN gene-editing) and for the clinical development of lead candidates UCART19 and ALLO-501 (Servier)[158](index=158&type=chunk)[160](index=160&type=chunk) - The company faces substantial financial risk, having incurred significant net losses since inception (**$284.4 million** accumulated deficit) and anticipating the need for substantial additional financing to complete development and commercialization[153](index=153&type=chunk)[231](index=231&type=chunk) - The company intends to operate its own manufacturing facility but faces risks in completing the build-out, scaling production, and gaining regulatory approval, which could impact clinical trials and commercial viability[201](index=201&type=chunk)[202](index=202&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details the use of $343.0 million net IPO proceeds from October 2018, unused and held in cash and investments as of June 30, 2019 - The company completed its IPO in October 2018, raising approximately **$343.0 million** in net proceeds[379](index=379&type=chunk)[380](index=380&type=chunk) - Through June 30, 2019, the company has not used any of the net proceeds from its IPO, which are being held in cash, cash equivalents, and investments[381](index=381&type=chunk) [Other Items (3, 4, 5, 6)](index=67&type=section&id=Other%20Items) The company reports no defaults on senior securities, no mine safety disclosures, and no other information, with Item 6 listing exhibits - The company reports no defaults upon senior securities, no mine safety disclosures, and no other information for the period[382](index=382&type=chunk)[383](index=383&type=chunk)