Allogene Therapeutics(ALLO) - 2022 Q1 - Quarterly Report

PART I: FINANCIAL INFORMATION Financial Statements The company reported a net loss of $79.9 million in Q1 2022, primarily due to reduced collaboration revenue Condensed Consolidated Balance Sheets Total assets decreased to $964.6 million by March 31, 2022, mainly due to reduced cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $84,514 | $173,314 | | Total current assets | $469,744 | $471,323 | | Total assets | $964,632 | $1,038,634 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $36,877 | $48,174 | | Total liabilities | $109,402 | $122,228 | | Total stockholders' equity | $855,230 | $916,406 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss increased to $79.9 million in Q1 2022, primarily due to a significant drop in collaboration revenue Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Collaboration revenue | $61 | $38,345 | | Research and development | $60,156 | $55,183 | | General and administrative | $19,897 | $16,363 | | Loss from operations | ($79,992) | ($33,201) | | Net loss | ($79,850) | ($33,015) | | Net loss per share | ($0.56) | ($0.25) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $68.2 million in Q1 2022, reflecting a higher net loss Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($68,237) | ($49,328) | | Net cash (used in) provided by investing activities | ($22,377) | $96,798 | | Net cash provided by financing activities | $1,814 | $6,044 | | Net change in cash, cash equivalents and restricted cash | ($88,800) | $53,514 | Notes to Condensed Consolidated Financial Statements The notes detail the company's immuno-oncology business, financial liquidity, and key collaboration agreements - The company is an immuno-oncology company focused on developing and commercializing genetically engineered allogeneic T cell therapies for cancer[17] - As of March 31, 2022, the company had cash, cash equivalents, and investments of $733.1 million and believes this is sufficient to fund operations for at least one year[18][19] - The company has significant potential future milestone payments, including up to $2.8 billion to Cellectis per the Cellectis Agreement and up to $137.5 million in regulatory milestones to Servier[45][55] - In January 2022, the company entered into a collaboration and license agreement with Antion Biosciences, making a $3.5 million upfront payment and a $3.0 million equity investment[72][75] - Collaboration revenue of $38.3 million was recognized in Q1 2021 related to the license agreement with Allogene Overland, with negligible revenue from this source in Q1 2022[71][102] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2022 net loss from reduced collaboration revenue and higher expenses, confirming capital sufficiency - The company is pioneering the development of allogeneic (off-the-shelf) T cell product candidates, derived from healthy donors for use in any patient, to treat cancer[111] - The company plans to seek FDA agreement to proceed to the Phase 2 portion of the ALPHA2 trial (ALLO-501A) in adult patients with R/R large B-cell lymphoma in mid-2022[113] Results of Operations Comparison (in thousands) | Metric | Q1 2022 | Q1 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $61 | $38,345 | ($38,284) | NM | | Research and development | $60,156 | $55,183 | $4,973 | 9% | | General and administrative | $19,897 | $16,363 | $3,534 | 22% | | Net Loss | ($79,850) | ($33,015) | ($46,835) | 142% | - The decrease in collaboration revenue was due to the one-time recognition of revenue from the license of intellectual property to Allogene Overland in Q1 2021[141] - As of March 31, 2022, the company had $733.1 million in cash, cash equivalents, and investments, which is expected to fund operations for at least one year from the filing date[145] Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate and foreign exchange risks, with management assessing no material impact from a 10% change - The company's primary market risks are interest rate fluctuations on its $733.1 million in cash and investments, and foreign exchange risk from Euro-denominated payments with its partner Servier[162][163][164] - Management concluded that a hypothetical 10% change in interest rates or foreign exchange rates would not materially impact the company's financial statements as of March 31, 2022[163][164] Controls and Procedures Management concluded disclosure controls were effective, with ongoing implementation of a new SAP ERP system - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[166] - The company is undergoing a phased implementation of a new SAP enterprise resource planning (ERP) system, which is expected to result in changes to internal control over financial reporting over time[167] PART II: OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect - There are currently no pending claims or actions against the company that management believes would have a material adverse effect on its business[170] Risk Factors The company faces significant risks including historical losses, novel technology, partner reliance, and regulatory uncertainties - Financial Risk: The company has a history of net losses ($983.2 million accumulated deficit as of March 31, 2022) and will require substantial additional financing to continue operations[174][256] - Technology & Clinical Risk: Product candidates are based on novel allogeneic T cell and gene-editing technologies, which face significant development, manufacturing, and regulatory challenges. Clinical trials may be delayed, fail to show efficacy, or reveal undesirable side effects like CRS, GvHD, or neurotoxicity[177][180][198] - Dependency Risk: The business is heavily reliant on partners, particularly Cellectis for TALEN gene-editing technology and Servier for the development of anti-CD19 candidates. Termination of these agreements would significantly harm the business[186][189][336] - Manufacturing Risk: The company may fail to successfully manufacture its product candidates at scale, operate its new facility, or obtain regulatory approval for it. It also relies on a limited number of third-party suppliers for critical raw materials[231][291][297] - Regulatory Risk: The regulatory pathway for allogeneic cell therapies is complex and uncertain. The FDA may disagree with regulatory plans, require additional trials, or not grant approval for product candidates or the co-developed lymphodepletion agent, ALLO-647[191][303][312] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[384] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[384] Mine Safety Disclosures This item is not applicable to the company - Not applicable[385] Other Information The company reported no other information required to be disclosed under this item - None[385] Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and XBRL data - The report includes standard filings such as officer certifications (31.1, 31.2, 32.1) and XBRL data files[386]