Arcellx(ACLX) - 2023 Q2 - Quarterly Report

Financial Performance - The company reported net losses of $51.2 million for the six months ended June 30, 2023, compared to $56.8 million for the same period in 2022, with an accumulated deficit of $370.0 million as of June 30, 2023[135]. - The company has incurred significant operating losses primarily due to research and development activities and general administrative costs, with expectations of continued losses in the foreseeable future[135]. - Net loss for the six months ended June 30, 2023, was $51.2 million, compared to a net loss of $56.8 million in the same period in 2022, a decrease of $5.6 million[161]. - Total operating expenses for the six months ended June 30, 2023, were $92.2 million, up from $57.4 million in the same period in 2022, representing an increase of $34.9 million[161]. - Research and development expenses for the six months ended June 30, 2023, were $61.3 million, an increase of $21.1 million from $40.1 million in the same period in 2022[163]. - General and administrative expenses for the six months ended June 30, 2023, were $31.0 million, up from $17.2 million in the same period in 2022, an increase of $13.8 million[164]. - The company expects to incur substantial additional losses in future periods as it continues the development of its product candidates[166]. Revenue Generation - The company has not generated any revenue from product sales and does not expect to do so in the near future, relying on collaboration agreements for potential revenue recognition[144]. - Collaboration revenue for the six months ended June 30, 2023, was $32.2 million, a significant increase compared to $0 in the same period in 2022[161]. - The company has not recognized any royalty revenue from its collaborative arrangements to date, with revenue recognition timing potentially differing from contract billings[190]. Cash and Funding - As of June 30, 2023, the company had cash and cash equivalents and marketable securities totaling $506.5 million[165]. - The company expects its current cash and cash equivalents to fund operations into 2026, but will require substantial additional funding for product development[138]. - A sales agreement was established for an at-the-market offering program with a potential aggregate offering amount of up to $350.0 million, although no sales have been made as of June 30, 2023[139]. - Net cash provided by operating activities for the six months ended June 30, 2023, was $159.4 million, compared to net cash used of $55.1 million in the same period in 2022[170]. - Net cash used in investing activities for the six months ended June 30, 2023, was $15.5 million, a decrease from $69.9 million in the same period in 2022[171]. - Net cash provided by financing activities for the six months ended June 30, 2023, was $95.6 million, compared to $261.0 million in the same period in 2022[172]. Clinical Development - The company is advancing its lead program, CART-ddBCMA, in a pivotal Phase 2 trial, with preliminary data expected in the second half of 2024[141]. - The FDA lifted a partial clinical hold on the iMMagine-1 trial, allowing the company to resume screening and enrollment of patients[141]. - The company is developing a new class of D-Domain powered cell therapies to address limitations of traditional CAR-T therapies, targeting hematologic cancers and other diseases[133]. - The company plans to increase operating expenses significantly to support ongoing clinical trials and expand its product pipeline, including the ARC-SparX candidates[135]. Accounting and Compliance - The company recognizes revenue when a customer obtains control of promised goods or services, following a five-step model to identify contracts and performance obligations[178]. - Variable consideration is estimated using methods such as the expected value method or the most likely amount method, and adjustments are made at the end of each reporting period if necessary[179]. - The company evaluates milestone payments based on the probability of achievement, with significant revenue reversals considered before including them in the transaction price[187]. - Changes to collaboration agreements are assessed to determine if they represent a modification or a new contract, impacting revenue recognition[182]. - The company maintains a full valuation allowance for its net deferred tax assets, with income tax expense for the six months ended June 30, 2023, related to revenue from the Kite Collaboration Agreement[191]. - The company is currently classified as an emerging growth company, allowing it to delay adopting new accounting standards until it ceases to be classified as such[192]. - The company has effective disclosure controls and procedures, as evaluated by its management, ensuring timely and accurate reporting[198]. - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected the company's controls[199]. - The company is not currently involved in any litigation or legal proceedings that are expected to have a material adverse effect on its business[200]. Market Position - As of June 30, 2023, the aggregate market value of the company's shares held by non-affiliate stockholders exceeded $700 million, transitioning the company to "large accelerated filer" status by December 31, 2023[194].