Allogene Therapeutics(ALLO) - 2021 Q4 - Annual Report

PART I Business 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 genetically engineered allogeneic T cell therapies for cancer, aiming to provide off-the-shelf treatments that are faster, more reliable, scalable, and accessible to more patients[13][15] - The company's development strategy is built on four key pillars: minimizing Graft-versus-Host Disease (GvHD), enabling T cell persistence, establishing a leading manufacturing platform, and leveraging next-generation technologies to enhance CAR T cell functionality[17] - Allogene's pipeline includes lead product candidates such as ALLO-501 and ALLO-501A (targeting CD19 for non-Hodgkin lymphoma), ALLO-715 and ALLO-605 (targeting BCMA for multiple myeloma), and ALLO-316 (targeting CD70 for clear cell renal cell carcinoma)[20][21][23][25] - A clinical hold on Allogene's trials in October 2021, following a chromosomal abnormality in an ALPHA2 study patient, was resolved in January 2022 after investigations concluded it was unrelated to gene editing or manufacturing and had no clinical significance[66][67] - Allogene is building a state-of-the-art cell therapy manufacturing facility in Newark, California, which commenced cGMP manufacturing in 2021, aiming to improve efficiency, reduce reliance on CMOs, and accelerate commercialization[19][32] - The company has strategic agreements with Pfizer (asset acquisition), Cellectis (TALEN gene-editing technology license), Servier (anti-CD19 co-development), Notch Therapeutics (iPSC collaboration), and Allogene Overland Biopharm (joint venture for China, Taiwan, South Korea, and Singapore)[27][121] - Allogene's human capital strategy focuses on a 'One Allogene' culture, diversity, equity, and inclusion (50% women, 66% ethnic/racial minorities among employees), and robust recruitment, development, and retention programs, despite a 22% voluntary attrition rate in 2021[202][207][208][214][217] Overview Allogene Therapeutics is a clinical-stage immuno-oncology company developing off-the-shelf allogeneic T cell therapies from healthy donors - Allogene Therapeutics is a clinical-stage immuno-oncology company pioneering genetically engineered allogeneic T cell therapies for cancer[13] - The company develops off-the-shelf T cell product candidates derived from healthy donors, aiming for faster, more reliable, scalable, and accessible treatments compared to autologous T cells[13][15] Our Approach Allogene's T cell development focuses on minimizing GvHD, enabling persistence, building manufacturing, and leveraging next-gen technologies - Allogene's allogeneic T cell development strategy focuses on four key pillars: minimizing GvHD, creating a window of persistence for T cells, building a leading manufacturing platform, and leveraging next-generation technologies[17] - The company uses Cellectis' TALEN gene-editing technology to inactivate T cell receptors (TCRs) to reduce GvHD risk and the CD52 gene to enhance persistence of allogeneic T cells[18] - Allogene is developing ALLO-647, an anti-CD52 monoclonal antibody, for use in lymphodepletion regimens to protect therapeutic allogeneic T cells from patient immune system rejection[18] - In-house cGMP manufacturing at their Newark, California facility commenced in 2021, supporting fully integrated expertise in engineered T cell manufacturing[19] Our Pipeline Allogene is developing a diverse pipeline of allogeneic CAR T cell candidates, including ALLO-501/501A, ALLO-715/605, and ALLO-316 - Allogene's pipeline includes multiple allogeneic CAR T cell product candidates utilizing protein engineering, gene editing, gene insertion, and advanced T cell manufacturing technologies[20] - ALLO-501 and ALLO-501A target CD19 for relapsed/refractory (R/R) non-Hodgkin lymphoma (NHL), with ALLO-501A designed to facilitate treatment for patients previously treated with rituximab[20][21][22] - ALLO-715 and ALLO-605 target BCMA for R/R multiple myeloma; ALLO-605 is the first product candidate to incorporate TurboCAR technology for improved potency and persistence[23][25] - ALLO-316 targets CD70 for advanced or metastatic clear cell renal cell carcinoma (ccRCC), with potential for other solid tumor and hematologic indications like AML[25] - ALLO-647, an anti-CD52 monoclonal antibody, is a key component of the lymphodepletion regimen used in all clinical trials, designed to enable persistence of allogeneic CAR T cells[26] Our History and Team Allogene was founded in April 2018, acquiring key assets and IP from Pfizer, with a leadership team experienced in immuno-oncology - Allogene was founded in April 2018, acquiring assets from Pfizer Inc., including strategic license and collaboration agreements and intellectual property related to allogeneic CAR T cells[27] - The company has an exclusive collaboration with Servier for ALLO-501 and ALLO-501A, holding commercial rights in the United States, and an exclusive worldwide license from Cellectis for TALEN gene-editing technology for 15 cancer antigens[27] - Allogene's management team, including founders Dr. Arie Belldegrun and Dr. David Chang (formerly of Kite Pharma), possesses significant experience in immuno-oncology and CAR T cell therapy development and commercialization[15][27] Our Strategy Allogene's strategy aims to establish allogeneic T cell therapy as a standard of care through rapid development and global expansion - Allogene's goal is to maintain and build leadership in allogeneic T cell therapy, aiming to make it a standard of care for cancer treatment by delivering faster, more reliable, and scalable therapies[28] - Key strategic elements include advancing anti-CD19 CAR T candidates (ALLO-501A), expanding into other hematologic (BCMA, CD70, FLT3) and solid tumor (CD70, DLL3) indications, and building in-house gene engineering and cell manufacturing capabilities[30][31][32][33] - The company plans to leverage next-generation technologies such as TurboCARs for enhanced potency, induced pluripotent stem cells (iPSCs) for renewable starting material, site-specific integration, multi-specific CARs, and advanced anti-rejection technologies[33] - Global expansion is a priority, with plans to initiate clinical trials in Europe and support the Allogene Overland Biopharm joint venture for development and commercialization in China, Taiwan, South Korea, and Singapore[34] Allogeneic T Cell Therapy Allogeneic T cell therapy engineers healthy donor T cells to target cancer, offering advantages over autologous therapies in availability and manufacturing - Engineered T cell therapy modifies human T cells to express Chimeric Antigen Receptors (CARs) for targeted recognition and destruction of cancer cells[38][39] - Allogeneic therapies, using healthy donor T cells, offer potential advantages over autologous therapies, including off-the-shelf availability, faster treatment delivery, enhanced cell consistency and potency, and streamlined, cost-efficient manufacturing[50][51][52] - The manufacturing process for allogeneic CAR T cells involves three primary steps: (1) collection and transduction of healthy donor T cells, (2) gene editing using Cellectis' TALEN technology to inactivate TCRα (to prevent GvHD) and CD52 (to enable persistence), and (3) purification, formulation, and cryopreservation for long-term storage[54][55][57][58][60][61][63][64] - TALEN technology provides precision, specificity, selectivity, and efficiency in gene editing, allowing targeted genome modifications while minimizing off-target effects[58][59] The Immune System and Cancer T cells are crucial for fighting cancer, but cancer can progress when these cells are insufficient or inhibited by suppressive mechanisms - T cells, a type of white blood cell, are essential for sensing and killing infected or abnormal cells, including cancer cells, and coordinating immune responses[35] - Cancer can progress when cancer-specific T cells are insufficient, of poor quality, or inhibited by suppressive mechanisms or standard treatments like chemotherapy[37] Engineered T Cell Therapies Engineered T cell therapy modifies T cells outside the body to express CARs, enabling targeted destruction of cancer cells - Engineered T cell therapy involves modifying human T cells outside the body to express Chimeric Antigen Receptors (CARs), enabling them to recognize and destroy cancer cells in a targeted manner[38] Chimeric Antigen Receptors (CARs) CARs are engineered molecules on T cell surfaces that recognize specific cancer antigens, comprising binding, transmembrane, and activating domains - CARs are engineered molecules on T cells that recognize specific proteins or antigens on cancer cells, comprising a target binding domain (scFv), a transmembrane domain and hinge, and activating domains (CD3 zeta and 41BB)[39][40][41] - ALLO-715 and ALLO-501 include rituximab-recognition domains (RQR8 for ALLO-501) as an 'off-switch' for cell elimination, while ALLO-501A has removed these domains to potentially facilitate treatment for more patients[42][71] Allogeneic T Cell Therapies: The Next Revolution Allogeneic T cell therapies from healthy donors aim to overcome autologous therapy limitations like lengthy delivery, variable potency, and high costs - Autologous CAR T therapies, while revolutionary, face limitations including lengthy delivery times (up to 31% of patients not receiving treatment), variable potency from compromised patient T cells, manufacturing failures, and high production costs due to individualized processes[45][46][47][48] - Allogeneic engineered T cells, derived from healthy donors and genetically modified to minimize GvHD and enable persistence, offer potential advantages such as off-the-shelf availability, faster treatment (days vs. weeks), enhanced cell consistency, and streamlined, cost-efficient manufacturing[50][51][52] Manufacturing Allogeneic T Cells Allogeneic CAR T cell manufacturing involves collecting and transducing healthy donor T cells, gene editing with TALEN, and cryopreservation for off-the-shelf use - The manufacturing process begins with collecting white blood cells from healthy donors, isolating T cells, and transducing them with a viral vector to integrate the CAR sequence and potentially other genes like TurboCARs for enhanced function[54][55][56] - Cellectis' TALEN gene-editing technology is used to inactivate the TCRα gene to minimize GvHD and the CD52 gene to protect allogeneic T cells from anti-CD52 antibody-mediated depletion during patient lymphodepletion[57][58][60][61] - After engineering, cells are cultured, purified to remove residual TCR-positive cells, formulated in cryopreservation media, and stored in liquid nitrogen for off-the-shelf availability[63][64] Product Pipeline and Development Strategy Allogene is developing multiple allogeneic CAR T cell candidates for blood cancers and solid tumors, advancing anti-CD19, anti-BCMA, and anti-CD70 programs - Allogene is developing multiple off-the-shelf allogeneic CAR T cell product candidates for blood cancers and solid tumors, each targeting specific antigens and engineered with unique attributes[65] - In October 2021, the FDA placed a clinical hold on Allogene's trials due to a chromosomal abnormality in an ALPHA2 study patient, but the hold was removed in January 2022 after investigations confirmed no relation to gene editing or manufacturing and no clinical significance[66][67] Anti-CD19 Development Program Allogene's anti-CD19 program, including ALLO-501 and ALLO-501A for NHL, is progressing to Phase 2 with encouraging interim results and manageable safety - CD19 is a validated target for B cell leukemias and lymphomas, with multiple autologous anti-CD19 CAR T therapies already approved by the FDA[68] - ALLO-501 (ALPHA trial) and ALLO-501A (ALPHA2 trial) are allogeneic CAR T cell product candidates targeting CD19 for R/R NHL. ALLO-501A is a second-generation version without rituximab recognition domains, potentially facilitating treatment for more patients[70][71] Response Rates Across ALPHA and ALPHA2 Trials (December 2021 Interim Results) | Metric | Follicular Lymphoma (FL) - All FL (N=26) | Large B Cell Lymphoma (LBCL) - All LBCL (N=14) | All Patients (N=40) | | :----- | :--------------------------------------- | :--------------------------------------------- | :------------------ | | ORR, n (%) | 21 (81%) | 9 (64%) | 30 (75%) | | CR, n (%) | 15 (58%) | 6 (43%) | 21 (53%) | Safety Profile of ALPHA ALLO-501 (N=49) and ALPHA2 ALLO-501A (N=28) Trials | Adverse Event | ALPHA ALLO-501 (All Gr) | ALPHA ALLO-501 (Gr3+) | ALPHA2 ALLO-501A (All Gr) | ALPHA2 ALLO-501A (Gr3+) | | :------------ | :---------------------- | :-------------------- | :------------------------ | :---------------------- | | IRR* | 63% | 6% | 25% | 0 | | CRS | 29% | 4% | 11% | 0 | | Neurotoxicity | 27% | 4% | 21% | 0 | | GvHD | 0 | 0 | 0 | 0 | | Infection | 63% | 27% | 36% | 7% | | Neutropenia | 82% | 71% | 57% | 57% | | Serious AE | 37% | - | 39% | - | - The safety profile of ALLO-501 and ALLO-501A was manageable, with no dose-limiting toxicities (DLTs) or GvHD, and minimal Grade 3 Immune Effector Cell-Associated Neurotoxicity Syndrome (ICANS) or Grade 3 cytokine release syndrome (CRS)[81] - Allogene plans to proceed to the Phase 2 portion of the ALPHA2 trial in adult patients with R/R large B-cell lymphoma in mid-2022, subject to further patient follow-up and FDA discussion[22][85] Anti-BCMA Development Program Allogene's anti-BCMA program targets multiple myeloma with ALLO-715 (UNIVERSAL trial) and next-generation TurboCAR candidate ALLO-605 - BCMA is a promising target for multiple myeloma, with ALLO-715 being an anti-BCMA allogeneic CAR T cell product candidate in the Phase 1 UNIVERSAL trial[86][87] - The UNIVERSAL trial is also assessing ALLO-715 in combination with nirogacestat, an investigational gamma secretase inhibitor, which has shown in preclinical models to enhance BCMA-targeted therapies[24][88] - ALLO-605, a next-generation anti-BCMA product candidate, incorporates TurboCAR technology designed to improve potency, persistence, and delay exhaustion of CAR T cells[25][89] ALLO-715 UNIVERSAL Trial Efficacy (DL3 FCA Cohort, N=24) | Metric | Result | | :----- | :----- | | ORR, n (%) | 17 (71%) | | VGPR+ Rate, n (%) | 11 (46%) | | CR/sCR Rate, n (%) | 6 (25%) | - Interim results from the UNIVERSAL trial showed an overall response rate (ORR) of 71% and a very good partial response or better (VGPR+) rate of 46% in the optimized DL3 cohort, with 92% of VGPR+ patients being Minimal Residual Disease negative[95] - Safety data from the UNIVERSAL trial (N=43) showed no GvHD, manageable Grade 1 and 2 CRS (53%), and infection in 54% of patients (including three Grade 5 infections)[97][98] Anti-CD70 Development Program Allogene is developing ALLO-316, an allogeneic CAR T cell candidate targeting CD70 for ccRCC, with a Phase 1 trial initiated in 2021 - CD70 is an antigen selectively expressed on various cancer cells, including ccRCC, and is a promising target for allogeneic CAR T cell therapies[101] - ALLO-316 is an allogeneic CAR T cell product candidate targeting CD70, engineered to lack TCRα and CD52, and includes rituximab and CD34 recognition domains for control and monitoring[102][103] - The Phase 1 TRAVERSE trial for ALLO-316 in adult patients with advanced or metastatic ccRCC was initiated in the first half of 2021, with future plans to investigate its use in other indications like AML[25][103][106] Future Opportunities Allogene plans to expand its allogeneic platform to new targets and invest in next-generation technologies like TurboCARs and iPSCs - Allogene plans to pursue additional targets such as FLT3 for AML (ALLO-819) and DLL3 for small cell lung cancer, leveraging its allogeneic platform[107] - Next-generation technologies under investigation include TurboCARs to enhance CAR T cell potency and persistence, renewable cell sources from iPSCs (in collaboration with Notch Therapeutics), site-specific integration for homogeneous CAR expression, multi-specific CARs, and advanced anti-rejection technologies (e.g., Antion Biosciences SA collaboration)[107][108][109][110][111][112][113] Our Manufacturing Strategy Allogene is optimizing manufacturing and building a Newark, California facility for cGMP production, while also utilizing third-party CMOs - Allogene is investing in process science, product characterization, and manufacturing to continuously improve its production and supply chain capabilities for allogeneic T cell product candidates[115] - The company initiated cGMP manufacturing of ALLO-501A at its Newark, California facility in 2021 and plans to use this facility for the Phase 2 portion of the ALPHA2 trial, subject to regulatory conditions like comparability[119] - Allogene continues to rely on third-party CMOs for manufacturing and processing of product candidates and raw materials, aiming to create a robust supply chain with both internal and external infrastructure[117][118][120] Strategic Agreements Allogene has key strategic agreements, including a license with Allogene Overland Biopharm for Asian territories and collaborations with Pfizer, Cellectis, and Servier - Allogene entered into a License Agreement with Allogene Overland Biopharm (CY) Limited, a joint venture, for developing, manufacturing, and commercializing allogeneic CAR T cell therapies in Greater China, Taiwan, South Korea, and Singapore[121] - The company's strategic agreements also include an Asset Contribution Agreement with Pfizer, a License Agreement with Cellectis for TALEN gene-editing technology, an Exclusive License and Collaboration Agreement with Servier, and the Notch Collaboration Agreement[121] Intellectual Property Allogene's commercial success relies on robust IP protection, including patents and licenses from Pfizer, Servier, and Cellectis, covering products and technologies - Allogene's commercial success depends on obtaining and maintaining proprietary protection for its product candidates, technologies, and know-how through patents, trademarks, trade secrets, and license agreements[122][123] - The company's intellectual property portfolio includes rights to Cellectis' TALEN gene-editing technology for TCR and CD52 gene knockout, with exclusive worldwide rights for certain antigen targets (BCMA, CD70, FLT3, DLL3) and U.S. rights for CD19[125] - Patent protection covers clinical-stage product candidates (ALLO-501, -501A, -715, -605, -316), CAR constructs, methods of treatment, manufacturing processes, preconditioning methods, dosing regimens, and immune evasion technologies[126] - Patent terms are generally 20 years from the first non-provisional application filing, with potential for extensions up to five years under the Hatch-Waxman Act for FDA-approved drugs[127] Competition Allogene operates in a highly competitive biopharmaceutical industry, facing rivals with greater resources developing various cell and immune oncology therapies - The biopharmaceutical and immuno-oncology industries are intensely competitive, with Allogene facing rivals from major pharmaceutical companies, established biotechnology firms, and research institutions[128][135] - Competition includes existing autologous anti-CD19 CAR T therapies (Kymriah, Yescarta, Breyanzi) and anti-BCMA therapies (Abecma), as well as a growing number of companies developing allogeneic T cell therapies, NK cell therapies, and non-cell based immune oncology platforms (e.g., T cell engagers, antibody-drug conjugates)[128][130][131][132][133][134] - Many competitors have significantly greater financial resources, R&D expertise, manufacturing, and marketing capabilities, which could lead to them developing superior products or establishing strong market positions before Allogene[135][136] Government Regulation and Product Approval Allogene's biologics require extensive FDA and international approval processes, navigating complex regulations, healthcare laws, and reform initiatives - Allogene's cell products are regulated as biologics, requiring extensive regulation by the FDA and foreign authorities throughout research, development, manufacturing, approval, and commercialization[138][139] - The U.S. product development process involves preclinical testing (GLPs), IND submission, human clinical trials (Phase 1-3 under GCPs and IRB approval), and ultimately a Biologics License Application (BLA) for marketing approval[140][141][143][144][148] - Special FDA programs like Orphan Drug Designation, Fast Track, Accelerated Approval, Regenerative Medicine Advanced Therapy (RMAT), and Breakthrough Therapy Designation can expedite development and review, but do not guarantee approval[156][159][160][162][163] - Post-approval, products are subject to continuous FDA regulation, including cGMP compliance, adverse event reporting, product sampling, distribution requirements, and strict promotion and advertising rules[164][165][167] - Allogene must comply with various U.S. healthcare laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Physician Payments Sunshine Act) and foreign regulations (e.g., EU GDPR, California Consumer Privacy Act) related to fraud, abuse, privacy, and transparency[171][175][177][178][180][200][201] - Healthcare reform initiatives in the U.S. and abroad aim to contain costs and broaden access, potentially impacting product pricing, coverage, and reimbursement, which could adversely affect Allogene's profitability[183][184][185][187][192][193] Human Capital Allogene had 310 employees as of February 2022, fostering a 'One Allogene' culture with strong DEI commitment despite a 22% attrition rate - As of February 1, 2022, Allogene had 310 employees (308 full-time), with 70 holding Ph.D./M.D. degrees and 234 engaged in research, development, and technical operations[202] - The company's 'One Allogene' culture emphasizes teamwork, resilience, excellence, ownership, and mutual respect, with core values integrated into performance reviews[204][205][206] - Allogene is committed to Diversity, Equity, and Inclusion (DEI), with 50% women and 66% ethnic/racial minorities among all employees, and 45% women and 39% ethnic/racial minorities at Director-level and above[207][208] - The company focuses on attracting, developing, and retaining employees through competitive compensation, broad-based stock grants, benefits, training, and promotional opportunities, despite a voluntary attrition rate of 22% in 2021[214][215][216][217] - In response to COVID-19, Allogene implemented safety protocols (facial coverings, temperature checks) and an internal task force to manage timely communication and decision-making[217] Corporate Information Allogene Therapeutics, Inc. was incorporated in Delaware in November 2017, headquartered in South San Francisco, with SEC filings available online - Allogene Therapeutics, Inc. was incorporated in Delaware in November 2017, with its principal executive offices in South San Francisco, California[218] - The company makes its SEC filings, including annual and quarterly reports, available free of charge on its corporate website and the SEC's website[218] Risk Factors Allogene faces significant risks from substantial losses, novel allogeneic T cell development, gene-editing technology, COVID-19, and reliance on third parties - Allogene has incurred substantial net losses since inception ($903.3 million accumulated deficit as of December 31, 2021) and anticipates continued losses due to significant R&D and manufacturing expenses for its novel allogeneic CAR T platform[221][222][446] - The company faces significant challenges with its novel engineered allogeneic T cell product candidates, including manufacturing to specifications, sourcing raw materials, managing donor T cell variability, educating medical personnel on side effects (CRS, neurotoxicity, GvHD, cytopenia), and obtaining regulatory approval for a new technology[224][225] - Gene-editing technology, particularly Cellectis' TALEN, is relatively new and carries risks such as unintended DNA changes (e.g., oncogenesis), potential safety issues, and obsolescence by competing technologies[226][227] - The COVID-19 pandemic has adversely impacted business operations, preclinical studies, and clinical trials through halted enrollment, delays in patient retention, interruptions in key activities, diversion of healthcare resources, and supply chain disruptions[228][230] - Allogene is heavily reliant on partners like Cellectis for gene-editing technology and Servier for co-development, with termination of these agreements or inability to meet obligations posing significant risks to product development[234][235][237][238] - Clinical trials may fail to demonstrate safety and efficacy, or initial/interim data may change, leading to delays, denial of regulatory approval, or limited commercial potential due to undesirable side effects (e.g., GvHD, infections, prolonged cytopenia, neurotoxicity, chromosomal abnormalities)[241][244][246][247][250][253][254] - The company faces intense competition from other biopharmaceutical companies developing various cell therapies and non-cell-based immune oncology platforms, many of which have greater financial and technical resources[286][287] - Allogene's ability to obtain and maintain intellectual property protection is critical, with risks including challenges to licensed IP, unauthorized disclosure of trade secrets, infringement claims by third parties, and changes in patent law[384][387][396][414] Risks Related to Our Business and Industry Allogene faces substantial financial risks from net losses, novel allogeneic T cell development, gene-editing technology, COVID-19, and future financing needs - Allogene has incurred net losses in every period since inception, with a net loss of $257.0 million for the year ended December 31, 2021, and an accumulated deficit of $903.3 million, expecting substantial future losses[221] - The novel approach of engineered allogeneic T cell product candidates presents significant challenges, including manufacturing to specifications, sourcing raw materials, addressing donor T cell variability, managing potential side effects (CRS, neurotoxicity, GvHD, prolonged cytopenia), and obtaining regulatory approval[224][225] - Gene-editing is a relatively new technology, and its use in product candidates carries risks such as unintended DNA changes (e.g., oncogenesis), potential safety issues, and the possibility of becoming obsolete[226][227] - The COVID-19 pandemic has adversely impacted business operations, preclinical studies, and clinical trials, leading to potential disruptions in enrollment, key activities, supply chains, and employee resources[228][230] - The business is highly dependent on the success of lead product candidates (ALLO-501A, ALLO-715), and any failures or delays in their clinical development, approval, or commercialization would significantly harm the company[242][243] - Product candidates may cause undesirable side effects (e.g., serious infections, prolonged cytopenia, GvHD, neurotoxicity, chromosomal abnormalities), which could halt clinical development, prevent regulatory approval, or limit commercial potential[244][245][246][247][248][249] - Allogene will need substantial additional financing to develop and commercialize its products, and failure to obtain this funding could lead to delays, scaling back, or discontinuation of development plans[301][303][304][305] - The company faces significant cybersecurity risks, including threats to its information technology systems and data, which could lead to operational interruptions, reputational harm, fines, and legal liabilities[306][308][309][311][312] Risks Related to Our Reliance on Third Parties Allogene heavily relies on third parties for clinical trials, manufacturing, and raw materials, posing risks of delays, quality issues, and supply shortages - Allogene relies on independent investigators, CROs, and strategic partners to conduct preclinical and clinical trials, and their failure to comply with GCPs or meet deadlines could delay regulatory approval and commercialization[333][334][335] - The company depends on third parties to manufacture and store clinical product supplies, and potential issues with identifying suitable manufacturers, ensuring quality, or managing supply chain logistics could adversely affect clinical trials and commercial viability[337][338][339][341][342] - Reliance on T cells from healthy donors for manufacturing poses risks related to obtaining adequate supply, managing donor material variability, and screening for new risks like viruses or chromosomal abnormalities[344][345] - The availability of specialty raw materials, including viral vectors, is critical, and reliance on single or limited suppliers, especially during events like the COVID-19 pandemic, could lead to delays or supply shortages[346][347][348][349] - Improper handling of hazardous substances by Allogene or its third-party suppliers could result in liabilities, fines, and business interruptions[350] Risks Related to Government Regulation Allogene faces complex, uncertain regulatory approval for novel biologics, risks from evolving requirements, public opinion, and healthcare reform impacts - The FDA regulatory approval process for Allogene's novel biological product candidates is lengthy, time-consuming, and uncertain, with potential for significant delays in clinical development and approval[352][353][355] - The regulatory landscape for gene and cell therapies is still developing, leading to complex and potentially changing requirements that could delay or discontinue product development or increase costs[357][358][360] - The FDA may disagree with Allogene's regulatory plan, potentially requiring additional or comparative trials, which could significantly delay development timelines and increase resource needs[362] - Obtaining regulatory approval for ALLO-647, used in lymphodepletion, is critical, and any delays or failures could impede the approval or commercialization of allogeneic T cell product candidates[367][368] - While RMAT and Fast Track designations have been granted for some candidates, they do not guarantee faster development, review, or approval, nor do they increase the likelihood of marketing approval[369] - Allogene may be unable to obtain or maintain orphan drug designation for its product candidates, which could result in the loss of associated benefits, including market exclusivity[370][372][373] - Negative public opinion and increased regulatory scrutiny of genetic research and gene-editing therapies could damage public perception of Allogene's products and adversely affect its ability to conduct business or obtain approvals[374][375] - Market acceptance and adequate coverage and reimbursement from third-party payors are uncertain for novel cell therapies, potentially limiting sales and profitability if approved[379][380][381][382] - Ongoing healthcare reform initiatives, including those aimed at cost containment, could negatively impact Allogene's ability to sell products profitably and affect anticipated revenue[383] Risks Related to Our Intellectual Property Allogene's business relies on IP, facing risks of license termination, inadequate protection, infringement claims, and changes in patent law - Allogene is dependent on intellectual property licensed from third parties (Pfizer, Servier, Cellectis), and termination of any of these licenses could result in the loss of significant rights and harm the ability to commercialize product candidates[384][385][386] - Efforts to protect proprietary intellectual property through patents, trade secrets, and confidentiality agreements may be inadequate, potentially allowing competitors to duplicate technologies or gain access to confidential information[387][394] - The company faces risks of third-party claims of intellectual property infringement, which could prevent or delay product development and commercialization, lead to substantial litigation expenses, damages, or the need to obtain costly licenses[396][397][398][399][400] - Obtaining and maintaining patent protection requires compliance with various procedural and fee requirements, and non-compliance could lead to abandonment or lapse of patent rights[407][408] - The lives of Allogene's patents may not be sufficient to effectively protect its products, potentially leading to competition from biosimilar or generic medications once patent life expires[409] - Changes in U.S. patent law could diminish the value of patents, and difficulties in protecting intellectual property rights globally, particularly in developing countries, could hinder commercial advantage[414][415][416] Risks Related to Ownership of Our Common Stock Allogene's common stock faces price volatility, no dividends, anti-takeover provisions, and risks from ineffective internal controls - The price of Allogene's common stock has been and may continue to be volatile, influenced by factors such as clinical trial results, regulatory decisions, competition, and overall market performance, potentially leading to investment losses[419][420] - Allogene does not intend to pay dividends on its common stock, meaning any returns for stockholders will be limited to the appreciation of their stock[423][439] - Anti-takeover provisions in the company's charter documents and Delaware law could delay or prevent a change of control or changes in the board of directors, potentially limiting the market price of common stock[424][425][426] - Failure to establish and maintain effective internal control over financial reporting could result in material misstatements, failure to meet reporting obligations, and a decline in stock price[421][422] General Risk Factors Allogene is exposed to general risks including unstable market conditions, potential stock price depression from share sales, and adverse analyst opinions - Unstable market and economic conditions could adversely impact Allogene's business, financial condition, and stock price by making debt or equity financing more difficult and costly, and affecting service providers[427] - Sales of a substantial number of common stock shares by existing stockholders in the public market could depress the market price and impair the company's ability to raise additional capital[428] - Adverse or misleading opinions from securities or industry analysts regarding Allogene's stock or business could cause its stock price and trading volume to decline[429] Unresolved Staff Comments As of the filing date, Allogene Therapeutics, Inc. has no unresolved comments from the SEC staff - There are no unresolved staff comments from the SEC[431] Properties Allogene's properties include a 68,072 sq ft South San Francisco headquarters and a 118,000 sq ft Newark, California manufacturing facility - Allogene's corporate headquarters in South San Francisco consists of approximately 68,072 square feet of office and laboratory space, with an additional 47,566 square feet expansion commencing April 1, 2022, extending the lease to March 31, 2032[431] - The company also leases approximately 14,943 square feet of additional office and laboratory space in South San Francisco, with its term extended to be co-terminus with the headquarters lease[431] - A state-of-the-art cell therapy manufacturing facility in Newark, California, spanning approximately 118,000 square feet, commenced its 15-year and eight-month lease in November 2020[432] Legal Proceedings Allogene is not currently involved in any material litigation, but acknowledges potential costs and resource diversion from legal actions - Allogene is not currently involved in any litigation or legal proceedings deemed to have a material adverse effect on its business[433] - The company recognizes that litigation, even if successfully defended, can result in significant defense and settlement costs and divert management resources[433] Mine Safety Disclosures This item is not applicable to Allogene Therapeutics, Inc - Mine Safety Disclosures are not applicable to Allogene Therapeutics, Inc.[433] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Allogene's common stock trades on Nasdaq under 'ALLO', with 62 holders as of February 2022, no dividends, and no issuer equity purchases - Allogene's common stock has been listed on The Nasdaq Global Select Market under the symbol "ALLO" since October 11, 2018[435] - As of February 23, 2022, there were approximately 62 holders of record of the company's common stock[436] Stock Performance (October 11, 2018 - December 31, 2021) | Index | 10/11/2018 | 12/31/2021 | | :---- | :--------- | :--------- | | Allogene Therapeutics, Inc. | $100.00 | $67.82 | | S&P 500 | $100.00 | $171.64 | | Nasdaq Biotechnology | $100.00 | $135.56 | | Nasdaq Composite | $100.00 | $211.76 | - The company has never declared or paid any cash dividends on its capital stock and does not intend to for the foreseeable future, prioritizing funds for business development and expansion[439][440] - There were no purchases of equity securities by the issuer or affiliated purchasers[440] Reserved This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations This section details Allogene's financial condition, operational results, liquidity, capital resources, and key accounting policies, highlighting losses and financing needs - Allogene is a clinical-stage immuno-oncology company focused on genetically engineered allogeneic T cell therapies, with a pipeline targeting hematological malignancies and solid tumors[442][445] - The company has incurred significant operating losses, with a net loss of $257.0 million for 2021 and an accumulated deficit of $903.3 million as of December 31, 2021[446] - As of December 31, 2021, Allogene had $809.5 million in cash, cash equivalents, and investments, which is expected to fund operations for at least the next 12 months[446][477] - Revenue in 2021 was $38.5 million, exclusively from a collaboration and license agreement with Allogene Overland HK, compared to zero in prior years[471] Operating Expenses and Net Loss (2019-2021, in thousands) | Metric | 2021 | 2020 | 2019 | | :----- | :--- | :--- | :--- | | Research and Development | $220,176 | $192,987 | $144,535 | | General and Administrative | $74,105 | $65,256 | $57,473 | | Total Operating Expenses | $294,281 | $258,243 | $202,008 | | Net Loss | $(257,005) | $(250,221) | $(184,594) | - Cash used in operating activities was $184.8 million in 2021, primarily due to net loss, partially offset by non-cash charges like stock-based compensation ($80.8 million)[484] - The company's financing activities in 2020 included $595.7 million net proceeds from a public offering and $26.2 million from ATM offerings, contributing significantly to capital resources[478][479][480] Overview Allogene is a clinical-stage immuno-oncology company developing off-the-shelf allogeneic T cell therapies for cancer, with $809.5 million in cash as of December 2021 - Allogene is a clinical-stage immuno-oncology company focused on developing genetically engineered allogeneic T cell therapies for cancer, aiming for off-the-shelf treatments[442] - The company's pipeline includes ALLO-501/501A for R/R non-Hodgkin lymphoma, ALLO-715/605 (with TurboCAR technology) for R/R multiple myeloma, and ALLO-316 for advanced or metastatic clear cell renal cell carcinoma[443][444][445] - Allogene has incurred significant operating losses, with a net loss of $257.0 million for 2021 and an accumulated deficit of $903.3 million as of December 31, 2021[446] - As of December 31, 2021, the company held $809.5 million in cash, cash equivalents, and investments[446] Our Research and Development and License Agreements Allogene has key R&D and license agreements with Pfizer, Cellectis, Servier, Notch Therapeutics, MD Anderson, and Allogene Overland Biopharm - Allogene acquired assets and assumed liabilities from Pfizer in April 2018, including agreements with Cellectis and Servier, and intellectual property for CAR T cell development[449] - The company holds an exclusive worldwide license from Cellectis for TALEN and electroporation technology for CAR T products targeting specific antigens (BCMA, FLT3, DLL3, CD70)[450][603] - Allogene has an exclusive license with Servier to develop, manufacture, and commercialize anti-CD19 CAR T cell product candidates (UCART19, ALLO-501, ALLO-501A) in the United States[451][612] - A Collaboration and License Agreement with Notch Therapeutics Inc. grants Allogene an exclusive worldwide license for gene-edited T/NK cell products from induced pluripotent stem cells (iPSCs) for NHL, ALL, and multiple myeloma[452][618] - Allogene entered a strategic five-year collaboration agreement with The University of Texas MD Anderson Cancer Center for preclinical and clinical investigation of allogeneic CAR T cell product candidates[454][624] - A License Agreement with Allogene Overland Biopharm (CY) Limited, a joint venture, grants exclusive rights to develop, manufacture, and commercialize certain allogeneic CAR T cell candidates in Greater China, Taiwan, South Korea, and Singapore[455][627][629] Components of Results of Operations Allogene's revenue comes from collaboration agreements, with operating expenses categorized as R&D and G&A, and other income from investments - Revenue has been exclusively generated from the collaboration and license agreement with Allogene Overland HK, with future revenue expected from product sales, funding, and other collaborations[457] - Research and development expenses primarily cover discovery, preclinical and clinical development, and manufacturing of product candidates, including costs for collaboration partners, clinical trial sites, raw materials, and employee-related expenses[458] - General and administrative expenses consist mainly of salaries, stock-based compensation, facilities, legal, accounting, investor relations, and other public company operating costs[464][465][466] - Other (expense) income, net, includes interest earned on cash, cash equivalents, and investments, as well as the company's share of net losses from equity investments[467][468] Results of Operations Allogene reported $38.5 million in 2021 collaboration revenue, with R&D and G&A expenses increasing, and net interest income decreasing Collaboration Revenue (2019-2021, in thousands) | Metric | 2021 | 2020 | 2019 | | :----- | :--- | :--- | :--- | | Collaboration revenue - related party | $38,489 | $— | $— | - Collaboration revenue of $38.5 million in 2021 was primarily from the grant of license and delivery of know-how under the License Agreement with Allogene Overland[471] Research and Development Expenses (2019-2021, in thousands) | Metric | 2021 | 2020 | 2019 | | :----- | :--- | :--- | :--- | | Research and development expenses | $220,176 | $192,987 | $144,535 | - R&D expenses increased by $27.2 million in 2021 (primarily due to $23.1 million in personnel costs, including $8.3 million in stock-based compensation, and $10.8 million in facilities costs) and by $48.5 million in 2020 (due to $28.9 million in personnel costs, including $11.9 million in stock-based compensation, and $16.1 million in external costs)[472][473] General and Administrative Expenses (2019-2021, in thousands) | Metric | 2021 | 2020 | 2019 | | :----- | :--- | :--- | :--- | | General and administrative expenses | $74,105 | $65,256 | $57,473 | - G&A expenses increased by $8.8 million in 2021 (primarily due to $10.0 million in personnel costs, including $7.3 million in stock-based compensation) and by $7.8 million in 2020 (due to $8.4 million in personnel costs, including $7.3 million in stock-based compensation)[474][475] Interest and Other Income, Net (2019-2021, in thousands) | Metric | 2021 | 2020 | 2019 | | :----- | :--- | :--- | :--- | | Interest and other income, net | $1,714 | $9,164 | $17,351 | - Interest and other income, net, decreased by $7.5 million in 2021 and $8.2 million in 2020, primarily due to lower overall investment balances and reduced yields[476] Liquidity, Capital Resources and Plan of Operations Allogene has $809.5 million in cash as of December 2021, but requires substantial additional financing for product development and commercialization - Allogene had $809.5 million in cash, cash equivalents, and investments as of December 31, 2021, expected to fund operations for at least the next 12 months[477] - Operations have been financed through net proceeds from convertible preferred stock, convertible promissory notes, IPO ($343.3 million net proceeds in 2018), ATM offerings ($26.2 million in 2020), a June 2020 public offering ($595.7 million net proceeds), and a $40.0 million upfront payment from Allogene Overland[478][480] - Primary cash use is for operating expenses, particularly clinical manufacturing and R&D expenditures for lead product candidates[481] - The company will require substantial additional financing for product development, commercial production, and registration trials, which may involve equity or debt financings, potentially diluting stockholders or imposing covenants[482] Net Cash Flows (2019-2021, in thousands) | Activity | 2021 | 2020 | 2019 | | :------- | :--- | :--- | :--- | | Operating activities | $(184,812) | $(115,093) | $(137,350) | | Investing activities | $163,655 | $(505,123) | $164,084 | | Financing activities | $11,963 | $633,591 | $58,960 | - Cash used in operating activities increased to $184.8 million in 2021, driven by net loss offset by non-cash charges (e.g., $80.8 million stock-based compensation) and changes in operating assets and liabilities[484] - Investing activities provided $163.7 million in 2021 (maturities of investments offset by purchases and property/equipment) and used $505.1 million in 2020 (purchases of investments and property/equipment)[488] - Financing activities provided $11.9 million in 2021 (stock option exercises, ESPP) and $633.6 million in 2020 (public offering, ATM offerings, stock option exercises, ESPP)[490] Contractual Obligations and Commitments Allogene's material cash commitments include contingent milestone payments, $3.7 million in purchase commitments, and a $15.0 million MD Anderson funding commitment - Allogene has contingent milestone payment obligations under license agreements (Pfizer, Cellectis, Servier, Notch) upon successful completion of regulatory and sales milestones, which are not estimable in timing or likelihood as of December 31, 2021[492] - Non-cancellable purchase commitments totaled $3.7 million as of December 31, 2021, primarily with third-party contract manufacturers and CROs[493] - The company committed up to $15.0 million in funding for a five-year strategic collaboration agreement with MD Anderson Cancer Center for preclinical and clinical investigation[494] - Allogene entered a Solar Power Purchase and Energy Services Agreement for its Newark facility, with a 20-year term and a termination payment of approximately $4.3 million[496] Critical Accounting Policies and Significant Judgments and Estimates Allogene's financial statements rely on significant estimates for R&D expenditures, revenue recognition, stock-based compensation, and leases - Critical accounting policies and estimates include accrued research and development expenditures, revenue recognition, research and development expenses, stock-based compensation, and leases[499] - Accrued research and development expenditures are estimated based on the work completed by collaboration partners and third-party service providers, with adjustments made as actual costs become known[500][501] - Revenue recognition involves assessing collaboration arrangements under ASC 808 and ASC 606, identifying distinct performance obligations, determining transaction price (including variable consideration), and allocating it based on standalone selling prices[504][505] - Stock-based compensation is recognized based on the estimated fair value of awards using the Black-Scholes option-pricing model, which requires subjective assumptions like fair value of common stock, expected term, volatility, and risk-free interest rate[507][508][510] - For long-term operating leases, right-of-use assets and lease liabilities are recognized on the balance sheet, determined by the present value of future lease payments using an estimated incremental borrowing rate[512] Recent Accounting Pronouncements Allogene adopted ASU No. 2020-01 on January 1, 2021, with no significant financial statement impact, and continues to monitor new pronouncements - Allogene adopted ASU No. 2020-01 on January 1, 2021, which clarifies interactions between accounting for equity securities and equity method investments, with no significant impact on its financial statements[583] - The company continues to monitor new accounting pronouncements and does not anticipate any material impact from those issued through the report date[584] Quantitative and Qualitative Disclosures About Market Risk Allogene's primary market risks are interest rate and foreign currency exchange rate risks, neither of which are currently material - Allogene's cash, cash equivalents, and investments totaled $809.5 million as of December 31, 2021, exposing the company to interest rate risk[515] - A 10% change in interest rates as of December 31, 2021, would not have a material effect on the fair market value of the company's cash equivalents and available-for-sale securities[515] - The company faces foreign currency exchange rate risk due to collaboration payments denominated in euros, but a 10% change in applicable foreign exchange rates would not have a material effect on its consolidated financial statements[516][517] Financial Statements and Supplementary Data This section presents Allogene's consolidated financial statements for 2019-2021, with an unqualified auditor's opinion and detailed notes - The consolidated financial statements for the years ended December 31, 2021, 2020, and 2019 are presented, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and cash flows[519] - Ernst & Young LLP issued an unqualified opinion on Allogene's consolidated financial statements and the effectiveness of its internal control over financial reporting as of December 31, 2021[522][523][701] - Accrued Clinical Trial Expenses were identified as a critical audit matter due to the complexity of estimating unpaid research and development costs[528] Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2021 | December 31, 2020 | | :----- | :---------------- | :---------------- | | Cash and cash equivalents | $173,314 | $183,351 | | Short-term investments | $283,988 | $644,559 | | Long-term investments | $352,179 | $204,208 | | Total assets | $1,038,634 | $1,227,829 | | Total liabilities | $122,228 | $148,212 | | Total stockholders' equity | $916,406 | $1,079,617 | Consolidated Statements of Operations and Comprehensive Loss Highlights (in thousands) | Metric | 2021 | 2020 | 2019 | | :----- | :--- | :--- | :--- | | Collaboration revenue - related party | $38,489 | $— | $— | | Research and development expenses | $220,176 | $192,987 | $144,535 | | General and administrative expenses | $74,105 | $65,256 | $57,473 | | Net loss | $(257,005) | $(250,221) | $(184,594) | | Net loss per share, basic and diluted | $(1.89) | $(2.08) | $(1.83) | Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | 2021 | 2020 | 2019 | | :------- | :--- | :--- | :--- | | Net cash used in operating activities | $(184,812) | $(115,093) | $(137,350) | | Net cash provided by (used in) investing activities | $163,655 | $(505,123) | $164,084 | | Net cash provided by financing activities | $11,963 | $633,591 | $58,960 | - Subsequent to December 31, 2021, Allogene entered into an exclusive collaboration and global license agreement with Antion Biosciences SA for miRNA technology, involving an upfront payment of $3.3 million and a $3.0 million investment in Antion's preferred stock[688][689] Notes to Consolidated Financial Statements These notes detail Allogene's accounting policies, investments, agreements, commitments, equity, stock compensation, and tax information - Allogene has incurred cumulative net losses of $903.3 million since inception through December 31, 2021, and expects to require additional capital to fund future operat