Allogene Therapeutics(ALLO) - 2021 Q3 - Quarterly Report

PART I: FINANCIAL INFORMATION Financial Statements The unaudited condensed consolidated financial statements for the period ended September 30, 2021, reflect decreased total assets and significant net losses Condensed Consolidated Balance Sheets Total assets decreased to $1.08 billion from $1.23 billion as of September 30, 2021, due to reduced short-term investments | Financial Item | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $502,858 | $845,130 | | Total Assets | $1,079,246 | $1,227,829 | | Total Current Liabilities | $53,490 | $94,320 | | Total Liabilities | $109,304 | $148,212 | | Total Stockholders' Equity | $969,942 | $1,079,617 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported a net loss of $78.2 million for Q3 2021 and $182.1 million for the nine-month period | Metric (in thousands, except per share) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Collaboration Revenue | $49 | $— | $38,438 | $— | | Total Operating Expenses | $77,719 | $68,040 | $220,337 | $188,881 | | Loss from Operations | ($77,670) | ($68,040) | ($181,899) | ($188,881) | | Net Loss | ($78,186) | ($66,197) | ($182,137) | ($181,651) | | Net Loss Per Share | ($0.57) | ($0.52) | ($1.35) | ($1.55) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased to $969.9 million, primarily due to a $182.1 million net loss - The accumulated deficit grew from $646.3 million at the end of 2020 to $828.5 million by September 30, 2021, reflecting ongoing net losses from operations[12] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $139.4 million, with investing activities providing $134.4 million | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($139,376) | ($105,118) | | Net cash (used in) provided by investing activities | $134,405 | ($527,333) | | Net cash provided by financing activities | $11,641 | $620,613 | | Net change in cash, cash equivalents and restricted cash | $6,670 | ($11,838) | Notes to Condensed Consolidated Financial Statements The notes detail business operations, accounting policies, and financial arrangements, including the FDA's clinical hold - The company had cash, cash equivalents, and investments of $861.7 million as of September 30, 2021, and expects these funds to be sufficient for at least one year of operations[21][22] - In October 2021, the FDA placed a hold on all of the company's clinical trials, and the timing for the hold's removal cannot be assessed, potentially adversely affecting financial position and prospects[110] - For the nine months ended September 30, 2021, the company recognized $38.4 million of collaboration revenue related to the license and know-how delivery to the Allogene Overland joint venture[74] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, emphasizing the FDA clinical hold, increased expenses, and the company's cash position - In October 2021, the FDA placed a clinical hold on all of the company's trials following a report of a chromosomal abnormality in a patient, with no timeline for resolution[115][116] - As of September 30, 2021, the company had an accumulated deficit of $828.5 million and cash, cash equivalents, and investments of $861.7 million[117] | Expense Category (in millions) | Q3 2021 | Q3 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $58.7 | $51.4 | +$7.3 | | General and administrative | $19.0 | $16.6 | +$2.4 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate fluctuations on its $861.7 million investment portfolio and foreign exchange risk - The company's cash, cash equivalents, and investments of $861.7 million are subject to interest rate risk[168] - Foreign exchange risk exists due to collaboration payments denominated in Euros, with $9.3 million of foreign currency receivables as of September 30, 2021[169] Controls and Procedures Management concluded disclosure controls were effective, noting changes from the ongoing SAP ERP system implementation - Management concluded that disclosure controls and procedures were effective as of the end of the period[170] - The company is implementing a new SAP ERP system, causing changes to its internal control over financial reporting as processes are integrated and upgraded[171][172] PART II: OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings expected to materially affect its financial condition - Management believes there are currently no pending claims or actions against the company that would have a material adverse effect on its financial condition[174] Risk Factors Significant risks include the FDA clinical hold, a history of net losses, and reliance on partners for gene-editing technology - The company's clinical trials are currently on hold by the FDA due to a chromosomal abnormality observed in a patient, with unknown timing and outcome of the review process[178] - The company has a history of net losses, with an accumulated deficit of $828.5 million as of September 30, 2021, and expects to incur substantial future losses[180] - The company is heavily reliant on partners, particularly Cellectis, for access to the TALEN gene-editing technology, which is critical for manufacturing its product candidates[193][196] Unregistered Sales of Equity Securities and Use of Proceeds All $343.3 million in net proceeds from the October 2018 IPO have been fully utilized for product pipeline and corporate purposes - The company raised approximately $343.3 million in net proceeds from its October 2018 IPO[397] - As of September 30, 2021, all net proceeds from the IPO have been fully utilized to fund the product pipeline and for general corporate purposes[398] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period Mine Safety Disclosures This item is not applicable to the company Other Information The company reports no other information for this item Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including certifications by the CEO and CFO - The report includes certifications from the CEO and CFO pursuant to SEC rules and the Sarbanes-Oxley Act of 2002[403]