ALLOGENE THERAPEUTICS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

You should read the following discussion of our financial condition and results
of operations in conjunction with our unaudited condensed consolidated financial
statements and the related notes and other financial information included
elsewhere in this Quarterly Report on Form 10-Q and the audited financial
statements and notes thereto as of and for the year ended December 31, 2021 and
the related Management's Discussion and Analysis of Financial Condition and
Results of Operations, both of which are contained in our Annual Report on Form
10-K for the year ended December 31, 2021 (Annual Report), which was filed with
the Securities and Exchange Commission (SEC) on February 23, 2022. Unless the
context requires otherwise, references in this Quarterly Report on Form 10-Q to
the "Company", "Allogene," "we," "us" and "our" refer to Allogene Therapeutics,
Inc., and references to "Servier" collectively refer to Les Laboratoires Servier
SAS and Institut de Recherches Internationales Servier SAS.

In addition to historical financial information, this discussion contains
forward-looking statements based upon current expectations that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those set forth in the section titled "Risk Factors" under Part II,
Item 1A below. In some cases, you can identify forward-looking statements by
terminology such as "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intend," "may," "plan," "potentially," "predict," "should," "will" or
the negative of these terms or other similar expressions.

In addition, statements that "we believe" and similar statements reflect our
beliefs and opinions on the relevant subject. These statements are based upon
information available to us as of the date of this Quarterly Report on Form
10-Q, and while we believe such information forms a reasonable basis for such
statements, such information may be limited or incomplete, and our statements
should not be read to indicate that we have conducted an exhaustive inquiry
into, or review of, all potentially available relevant information. These
statements are inherently uncertain and investors are cautioned not to unduly
rely upon these statements.

Overview

We are a clinical-stage immuno-oncology company pioneering the development of
genetically engineered allogeneic T cell therapies for the treatment of cancer.
We are developing a pipeline of off-the-shelf T cell product candidates that are
designed to target and kill cancer cells. Our engineered T cells are allogeneic,
meaning they are derived from healthy donors for
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intended use in any patient, rather than from an individual patient for that
patient's use, as in the case of autologous T cells. We believe this key
difference will enable us to deliver readily available treatments faster, more
reliably, at greater scale, and to more patients.

We have a deep pipeline of allogeneic chimeric antigen receptor (CAR) T cell
product candidates targeting multiple promising antigens in a host of
hematological malignancies and solid tumors. Pursuant to the Exclusive
Collaboration and License Agreement with Servier (Servier Agreement), we have
exclusive rights to ALLO-501 and ALLO-501A, CAR T cell product candidates
targeting CD19, in the United States, while Servier retains exclusive rights for
these product candidates for all other countries. ALLO-501 and ALLO-501A use
Cellectis S.A. (Cellectis) technologies under which Servier holds an exclusive
worldwide license from Cellectis.

We are conducting long-term follow-up in our Phase 1 clinical trial (the ALPHA
trial) of ALLO-501 in patients with relapsed or refractory (R/R) non-Hodgkin
lymphoma (NHL). We are also progressing the development of the second-generation
version of ALLO-501, known as ALLO-501A. We have removed rituximab recognition
domains in ALLO-501A, which we believe will potentially facilitate treatment of
more patients, as rituximab is a typical part of a treatment regimen for a
patient with NHL. We initiated a Phase 1/2 clinical trial for ALLO-501A (the
ALPHA2 trial) in the second quarter of 2020. We plan to seek agreement with the
U.S. Food and Drug Administration (the FDA) to proceed to Phase 2 on matters
such as chemistry, manufacturing and controls (CMC), including for the use of
ALLO-501A manufactured at our own manufacturing facility, and trial designs to
evaluate both ALLO-501A and ALLO-647. Subject to FDA clearance, we expect to
proceed to the Phase 2 portion of the trial in adult patients with R/R large
B-cell lymphoma in the coming weeks.

We are sponsoring two clinical trials in adult patients with R/R multiple
myeloma, a Phase 1 clinical trial (the UNIVERSAL trial) of ALLO-715 and a Phase
1 clinical trial (the IGNITE trial) of ALLO-605, our first product candidate to
incorporate our TurboCAR technology. TurboCAR technology allows cytokine
signaling to be engineered selectively into CAR T cells and has shown the
ability to improve the potency and persistence of the cells and to delay
exhaustion of the cells in preclinical models. As part of the UNIVERSAL trial,
we have made the decision not to advance ALLO-715 in combination with
nirogascestat, provided by SpringWorks Therapeutics, Inc., into dose expansion
cohorts. There was no clear indication that the combination would meaningfully
improve the benefit-risk profile of ALLO-715 as a monotherapy. Our Clinical
Trial Collaboration Agreement with SpringWorks Therapeutics, Inc. is expected to
remain in effect until the data from the combination study are fully analyzed.
We expect to provide a further update on our R/R multiple myeloma program by the
end of 2022. We also continue to advance the Phase 1 clinical trial (the
TRAVERSE trial) of ALLO-316, an allogeneic CAR T cell product candidate
targeting CD70, in adult patients with advanced or metastatic clear cell renal
cell carcinoma (ccRCC). Subject to results from the TRAVERSE trial, we plan to
investigate the use of ALLO-316 for other solid tumor and hematologic
indications.

Enrollment of patients and the ability to conduct patient follow-up has been
adversely impacted by the COVID-19 pandemic. The exact timing of delays and
overall impact of the COVID-19 pandemic to our business, preclinical studies and
clinical trials is currently unknown, and we are monitoring the pandemic as it
continues to evolve.

Since inception, we have had significant operating losses. Our net losses were
$74.8 million and $154.6 million for the three and six months ended June 30,
2022, respectively. As of June 30, 2022, we had an accumulated deficit of $1.1
billion. As of June 30, 2022, we had $686.1 million in cash and cash equivalents
and investments. We expect to continue to incur net losses for the foreseeable
future, and we expect our research and development expenses and general and
administrative expenses will continue to increase.
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Our Research and Development and License Agreements

Asset Contribution Agreement with Pfizer

In April 2018, we entered into an Asset Contribution Agreement (Pfizer
Agreement) with Pfizer pursuant to which we acquired certain assets and assumed
certain liabilities from Pfizer, including agreements with Cellectis and Servier
as described below, and other intellectual property for the development and
administration of CAR T cells for the treatment of cancer. See Note 6 to our
condensed consolidated financial statements included elsewhere in this report
for further description of the Pfizer Agreement.

Research Collaboration and License Agreement with Cellectis

In June 2014, Pfizer entered into a Research Collaboration and License Agreement
with Cellectis. In April 2018, Pfizer assigned the agreement to us pursuant to
the Pfizer Agreement. In March 2019, we terminated the agreement with Cellectis
and entered into a new license agreement with Cellectis. See Note 6 to our
condensed consolidated financial statements included elsewhere in this report
for further descriptions of the prior agreement with Cellectis and the new
license agreement with Cellectis.

Exclusive License and Collaboration Agreement with Servier

In October 2015, Pfizer entered into the Servier Agreement to develop,
manufacture and commercialize certain allogeneic anti-CD19 CAR products,
including UCART19, in the United States with the option to obtain the rights
over certain additional allogeneic anti-CD19 CAR product candidates and for
allogeneic CAR T cell product candidates directed against one additional target.
In April 2018, Pfizer assigned the agreement to us pursuant to the Pfizer
Agreement. In October 2019, we agreed to waive our rights to the one additional
target. See Note 6 to our condensed consolidated financial statements included
elsewhere in this report for further description of the Servier Agreement.

Collaboration and License Agreement with Notch

On November 1, 2019, we entered into a Collaboration and License Agreement (the
Notch Agreement) with Notch Therapeutics Inc. (Notch), pursuant to which Notch
granted us an exclusive, worldwide, royalty-bearing, sublicensable license under
certain of Notch's intellectual property to develop, make, use, sell, import,
and otherwise commercialize therapeutic gene-edited T cell and/or natural killer
cell products from induced pluripotent stem cells directed at certain CAR
targets for initial application in NHL, ALL and multiple myeloma. In addition,
Notch has granted us an option to add certain specified targets to our exclusive
license in exchange for an agreed upon per-target option fee.

The Notch Agreement includes a research collaboration to conduct research and
pre-clinical development activities to generate engineered cells directed to our
exclusive targets, which will be conducted in accordance with an agreed research
plan and budget under the oversight of a joint development committee. In
connection with the execution of the Notch Agreement, we made an upfront payment
to Notch of $10.0 million. In addition, we made a $5.0 million investment in
Notch's series seed convertible preferred stock, resulting in us having a 25%
ownership interest in Notch's outstanding capital stock on a fully diluted basis
immediately following the investment. In February 2021, we made an additional
$15.9 million investment in Notch's Series A preferred stock. In October 2021,
we made an additional $1.8 million investment in Notch's common stock.
Immediately following this transaction, our share in Notch was 23.0% on a voting
interest basis. See Note 6 to our condensed consolidated financial statements
included elsewhere in this report for further description of the Notch
Agreement.

Strategic Alliance with The University of Texas MD Anderson Cancer Center

On October 6, 2020, we entered into a strategic five-year collaboration
agreement with The University of Texas MD Anderson Cancer Center (MD Anderson)
for the preclinical and clinical investigation of allogeneic CAR T cell product
candidates. See Note 6 to our consolidated financial statements included
elsewhere in this report for further description of the agreement with MD
Anderson.

License Agreement with Allogene Overland

On December 14, 2020, we entered into a License Agreement with Allogene Overland
Biopharm (CY) Limited (Allogene Overland), a joint venture established by us and
Overland Pharmaceuticals (CY) Inc. (Overland), pursuant to a Share Purchase
Agreement, dated December 14, 2020, for the purpose of developing, manufacturing
and commercializing certain allogeneic CAR T cell therapies for patients in
greater China, Taiwan, South Korea and Singapore (the JV Territory). Allogene
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Overland subsequently assigned the Licensed Agreement to a wholly-owned
subsidiary, Allogene Overland BioPharm (HK) Limited (Allogene Overland HK). On
April 1, 2022, Allogene Overland HK assigned the License Agreement to Allogene
Overland Biopharm (PRC) Co., Limited. See Note 6 to our condensed consolidated
financial statements included elsewhere in this report for further description
of the License Agreement and Share Purchase Agreement with Allogene Overland.

Collaboration and License Agreement with Antion

On January 5, 2022, we entered into an exclusive collaboration and global
license agreement (Antion Agreement) with Antion Biosciences SA (Antion) for
Antion's miRNA technology (miCAR), to advance multiplex gene silencing as an
additional tool to develop next generation allogeneic CAR T products. Pursuant
to the agreement, Antion will exclusively collaborate with us on oncology
products for a defined period. We will also have exclusive worldwide rights to
commercialize products incorporating Antion technology developed during the
collaboration. See Note 6 to our condensed consolidated financial statements
included elsewhere in this report for further description of the Antion
Agreement.

Components of Results of Operations

Revenues

As of June 30, 2022, our revenue has been exclusively generated from our
collaboration and license agreement with Allogene Overland Biopharm (PRC) Co.,
Limited. See Note 6 to our financial statements appearing elsewhere in this
Quarterly Report for more information related to our recognition of revenue and
the Allogene Overland Biopharm (PRC) Co., Limited agreement.

In the future, we may generate revenue from a combination of product sales,
government or other third-party funding, marketing and distribution arrangements
and other collaborations, strategic alliances and licensing arrangements or a
combination of these approaches. We expect that any revenue we generate will
fluctuate from quarter to quarter as a result of the timing and amount of
license fees, milestones and other payments, and the amount and timing of
payments that we receive upon the sale of our products, to the extent any are
successfully commercialized. If we fail to complete the development of our
product candidates in a timely manner or obtain regulatory approval of them, our
ability to generate future revenue, and our results of operations and financial
position, will be materially adversely affected.

Operating Expenses

Research and Development

To date, our research and development expenses have related primarily to
discovery efforts, preclinical and clinical development, and manufacturing of
our product candidates. Research and development expenses for the three and six
months ended June 30, 2022 included costs associated with our clinical and
preclinical stage pipeline candidates and research into newer technologies. The
most significant research and development expenses for the year relate to costs
incurred for the development of our most advanced product candidates and
include:

•expenses incurred under agreements with our collaboration partners and third-party contract organizations, investigative clinical trial sites that conduct research and development activities on our behalf, and consultants;

•costs related to production of clinical materials, including fees paid for raw materials and to contract manufacturers;

•laboratory and vendor expenses related to the execution of preclinical and clinical trials;

•employee-related expenses, which include salaries, benefits and stock-based compensation;

•facilities and other expenses, which include expenses for rent and maintenance of facilities, depreciation and amortization expense and supplies; and

•other significant research and development costs including overhead costs.

We expense all research and development costs in the periods in which they are
incurred. We accrue for costs incurred as the services are being provided by
monitoring the status of the project and the invoices received from our external
service providers. We adjust our accrual as actual costs become known. Where
contingent milestone payments are due to third parties under research and
development arrangements or license agreements, the milestone payment
obligations are expensed when the milestone results are achieved.

We are required to reimburse Servier for 60% of the costs associated with the
prior development of UCART19, including for the long-term follow-up of patients
in the CALM and PALL clinical trials of UCART19. We accrue for costs
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incurred by monitoring the status of clinical trials and the invoices received
from Servier. We adjust our accrual as actual costs become known. Servier is
required to reimburse us for 40% of the costs associated with the development of
ALLO-501 and ALLO-501A. Collaboration expenses and cost reimbursement are
recorded on a net basis as a research and development expense in our condensed
consolidated statements of operations and comprehensive loss.

Research and development activities are central to our business model. Product
candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development,
primarily due to the increased size and duration of later-stage clinical trials.
We expect our research and development expenses to increase in the future as our
clinical programs progress and as we seek to initiate clinical trials of
additional product candidates. The cost of advancing our manufacturing process
as well as the cost of manufacturing product candidates for clinical trials are
included in our research and development expense. We also expect to incur
increased research and development expenses as we selectively identify and
develop additional product candidates. However, it is difficult to determine
with certainty the duration and completion costs of our current or future
preclinical programs and clinical trials of our product candidates.

The duration, costs and timing of clinical trials and development of our product
candidates will depend on a variety of factors that include, but are not limited
to, the following:

•per patient trial costs;

•biomarker analysis costs;

•the cost and timing of manufacturing for the trials;

•the number of patients that participate in the trials;

•the number of sites included in the trials;

•the countries in which the trials are conducted;

•the length of time required to enroll eligible patients;

•the total number of cells that patients receive;

•the drop-out or discontinuation rates of patients;

•potential additional safety monitoring or other studies requested by regulatory agencies, including to resolve any future clinical hold;

•the duration of patient follow-up; and

•the efficacy and safety profile of the product candidates.

In addition, the probability of success for each product candidate will depend
on numerous factors, including safety, efficacy, competition, manufacturing
capability and commercial viability. We will determine which programs to pursue
and how much to fund each program in response to the scientific and clinical
success of each product candidate, as well as an assessment of each product
candidate's commercial potential.

Because our product candidates are still in clinical and preclinical development
and the outcome of these efforts is uncertain, we cannot estimate the actual
amounts necessary to successfully complete the development and commercialization
of product candidates or whether, or when, we may achieve profitability.

General and Administrative

General and administrative expenses consist primarily of salaries and other
staff-related costs, including stock-based compensation for options and
restricted stock units granted. Other significant costs include costs relating
to facilities and overhead costs, legal fees relating to corporate and patent
matters, insurance, investor relations costs, fees for accounting and consulting
services, information technology, costs and support for our board of directors
and board committees, and other general and administrative costs. General and
administrative costs are expensed as incurred, and we accrue for services
provided by third parties related to the above expenses by monitoring the status
of services provided and receiving estimates from our service providers, and
adjusting our accruals as actual costs become known.

We expect our general and administrative expenses to increase over the next
several years to support our continued research and development activities,
manufacturing activities, potential commercialization of our product candidates
and the increased costs of operating as a public company, including additional
compliance-related expenses as a result of no longer being an emerging growth
company. These increases are anticipated to include increased costs related to
the hiring of additional
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personnel, developing commercial infrastructure, fees to outside consultants,
lawyers and accountants, and increased costs associated with being a public
company such as expenses related to services associated with maintaining
compliance with Nasdaq listing rules and SEC requirements, complying with and
advancing environmental, social and governance matters, and insurance and
investor relations costs.

Interest and Other Income, Net

Interest and other income, net consists of interest earned on our cash and cash
equivalents and investments, as well as investment gains and losses recognized
during the period.

Other Expense

Other expense consists of non-operating expenses, including our share of equity investments' net losses for the period.

Results of Operations

Comparison of the Three Months Ended June 30, 2022 and 2021

The following sets forth our results of operations for the three months ended June 30, 2022 and 2021 (dollars in thousands):

                                                     Three Months Ended June 30,                        Change
                                                       2022                  2021                $                 %
Collaboration revenue - related party            $           86          $      44          $     42                     *
Operating expenses:
Research and development                                 57,171             52,290             4,881                  9  %
General and administrative                               19,509             18,783               726                  4  %
Total operating expenses                                 76,680             71,073             5,607                  8  %
Loss from operations                                    (76,594)           (71,029)           (5,565)                 8  %
Other income (expense), net:
  Interest and other income, net                            315                624              (309)               (50) %
  Other income (expenses)                                 1,492               (531)            2,023                     *
Total other income (expense), net                         1,807                 93             1,714                     *
Net Loss                                         $      (74,787)         $ (70,936)         $ (3,851)                 5  %

* - Percentage is not meaningful

Collaboration revenue - related party

Collaboration revenue was less than $0.1 million for the three months ended
June 30, 2022 and 2021. Revenue recognized in the three months ended June 30,
2022 and 2021 was due to the delivery of the know-how performance obligations
related to the License Agreement entered into with Allogene Overland on December
14, 2020.

Research and Development Expenses

Research and development expenses were $57.2 million and $52.3 million for the
three months ended June 30, 2022 and 2021, respectively. The increase of $4.9
million was driven primarily by an increase in personnel related costs of $6.1
million, of which $2.5 million was stock-based compensation expense, an increase
in facilities costs and depreciation expense of $5.5 million, offset by a $7.7
million decrease in external costs relating to the advancement of our product
candidates primarily due to the timing of development activities and
manufacturing runs.

General and Administrative Expenses

General and administrative expenses were $19.5 million and $18.8 million for the
three months ended June 30, 2022 and 2021, respectively. The increase of $0.7
million was primarily due to an increase in expenses related to corporate
communications of $0.8 million.
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Interest and Other Income, Net

Interest and other income, net was $0.3 million and $0.6 million for the three months ended June 30, 2022 and 2021, respectively.

Comparison of the Six Months Ended June 30, 2022 and 2021

The following sets forth our results of operations for the six months ended June 30, 2022 and 2021 (dollars in thousands):

                                                         Six Months Ended June 30,                            Change
                                                         2022                    2021                 $                   %
Collaboration revenue - related party            $          147              $   38,389          $ (38,242)                     *
Operating expenses:
Research and development                                117,327                 107,473              9,854                   9  %
General and administrative                               39,406                  35,146              4,260                  12  %
Total operating expenses                                156,733                 142,619             14,114                  10  %
Loss from operations                                   (156,586)               (104,230)           (52,356)                 50  %

Other income (expense), net:

  Interest and other income, net                            807                   1,135               (328)                (29) %
  Other income (expenses)                                 1,142                    (856)             1,998                      *
Total other income (expense), net                         1,949                     279              1,670                      *
Net Loss                                         $     (154,637)             $ (103,951)         $ (50,686)                 49  %

* - Percentage is not meaningful

Collaboration revenue - related party

Collaboration revenue was $0.1 million and $38.4 million for the six months
ended June 30, 2022 and 2021, respectively. The decrease of $38.2 million was
due to the revenue recognized related to the license of intellectual property
and delivery of the know-how performance obligation, which was delivered in the
first quarter of 2021, under the License Agreement entered into with Allogene
Overland in December 2020.

Research and Development Expenses

Research and development expenses were $117.3 million and $107.5 million for the
six months ended June 30, 2022 and 2021, respectively. The increase of $9.9
million was driven primarily by an increase in personnel related costs of $12.6
million, of which $5.6 million was stock-based compensation expense, and an
increase in facilities costs and depreciation expense of $9.7 million, offset by
a $14.4 million decrease in external costs relating to the advancement of our
product candidates due to the timing of development activities and manufacturing
runs.

General and Administrative Expenses

General and administrative expenses were $39.4 million and $35.1 million for the six months ended June 30, 2022 and 2021, respectively. The increase of $4.3 million was primarily due to an increase in personnel related costs of $4.1 million, of which $1.6 million was stock-based compensation expense, mainly driven by our increased headcount.

Interest and Other Income, Net

Interest and other income, net was $0.8 million and $1.1 million for the six months ended June 30, 2022 and 2021, respectively.

Liquidity and Capital Resources

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To date, we have incurred significant net losses and negative cash flows from
operations. As of June 30, 2022, we had $686.1 million in cash and cash
equivalents and investments. We anticipate that the aggregate of our current
cash and cash equivalents and investments available for operations will enable
us to maintain our operations for a period of at least one year from the date
this Quarterly Report on Form 10-Q is filed with the SEC.

Our operations have been financed primarily by net proceeds from the sale and
issuance of our convertible preferred stock, the issuance of convertible
promissory notes, net proceeds from our IPO, our at-the-market (ATM) offerings,
our June 2020 underwritten public offering, and upfront cash payment of $40.0
million received in December 2020 pursuant to our License Agreement with
Allogene Overland. In connection with our IPO in 2018, we sold an aggregate of
20,700,000 shares of our common stock (inclusive of 2,700,000 shares of common
stock pursuant to the over-allotment option granted to the underwriters) at a
price of $18.00 per share and received approximately $343.3 million in net
proceeds. In November 2019, we entered into a sales agreement with Cowen and
Company, LLC (Cowen) under which we may from time to time issue and sell shares
of our common stock through Cowen in ATM offerings for an aggregate offering
price of up to $250.0 million. As of June 30, 2022, $167.3 million remains
available for sale under the sales agreement with Cowen.

In June 2020, we sold 13,457,447 shares of our common stock, which included
1,755,319 shares sold pursuant to the full exercise of the underwriters' option
to purchase additional shares, in an underwritten public offering at a price of
$47.00 per share, which resulted in net proceeds of approximately $595.7 million
after deducting the underwriting discounts and commissions and other expenses.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

                                                                          Six Months Ended June 30,
                                                                           2022                    2021
                                                                               (In thousands)
Net cash (used in) provided by:
Operating activities                                              $     (110,768)              $ (90,498)
Investing activities                                                      31,657                 121,392
Financing activities                                                       1,838                   9,258

Net increase (decrease) in cash, cash equivalents and restricted cash

$      (77,273)              $  40,152

Operating Activities

During the six months ended June 30, 2022, cash used in operating activities of
$110.8 million was attributable to a net loss of $154.6 million, partially
offset by non-cash charges of $58.8 million and an increase of $14.9 million in
our net operating assets and liabilities. The non-cash charges consisted
primarily of stock-based compensation expense of $45.2 million, depreciation of
$7.4 million, our share of equity investments' net losses for the period of $2.3
million, net amortization and accretion on investment securities of $2.2
million, and non-cash rent expense of $1.6 million. The change in operating
assets and liabilities was primarily due to a $8.5 million increase in prepaid
expenses and other current assets, a $3.3 million decrease in accrued and other
current liabilities, a $2.8 million increase in other long-term assets, and a
$1.6 million decrease in other long-term liabilities, offset by a $0.9 million
increase in accounts payable and a $0.4 million increase in deferred revenue.

Investing Activities

During the six months ended June 30, 2022, net cash provided by investing
activities of $31.7 million was related to cash provided by investment
maturities of $185.8 million, offset by cash used in purchases of investments of
$150.9 million and cash used in the purchase of property and equipment of $3.3
million.

Financing Activities

During the six months ended June 30, 2022, cash provided by financing activities
of $1.8 million was related to $1.5 million of cash provided by the sale of
common stock through our employee stock purchase plan and $0.3 million of cash
provided by the issuance of common stock upon exercise of stock options.
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Material Cash Commitments and Requirements

Our primary use of cash is for operating expenses, which consist primarily of
clinical manufacturing and research and development expenditures related to our
lead product candidates, other research efforts, and to a lesser extent, general
and administrative expenditures. Cash used to fund operating expenses is
impacted by the timing of when we pay these expenses, as reflected in the change
in our outstanding accounts payable and accrued expenses and other current
liabilities.

Our product candidates are still in the early stages of clinical and preclinical
development and the outcome of these efforts is uncertain. Accordingly, we
cannot estimate the actual amounts necessary to successfully complete the
development and commercialization of our product candidates or whether, or when,
we may achieve profitability. Until such time, if ever, as we can generate
substantial product revenue, we expect to finance our cash needs through a
combination of equity or debt financings and collaboration and license
arrangements. If, and when, we do raise additional capital through public or
private equity offerings, the ownership interest of our existing stockholders
will be diluted, and the terms of these securities may include liquidation or
other preferences that adversely affect our stockholders' rights. If we raise
additional capital through debt financing, we may be subject to covenants
limiting or restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures or declaring dividends. If we are
unable to raise capital when needed, we will need to delay, reduce or terminate
planned activities to reduce costs. Doing so will likely harm our ability to
execute our business plans.

Our commitments primarily consist of obligations under our agreements with
Pfizer, Cellectis, Servier and Notch. Under these agreements we are required to
make milestone payments upon successful completion of certain regulatory and
sales milestones on a target-by-target and country-by-country basis. The payment
obligations under the license agreements are contingent upon future events such
as our achievement of specified development, regulatory and commercial
milestones and we will be required to make development milestone payments and
royalty payments in connection with the sale of products developed under these
agreements. As of June 30, 2022, we were unable to estimate the timing or
likelihood of achieving the milestones or making future product sales. For
additional information regarding our agreements, see Note 6 to our condensed
consolidated financial statements included elsewhere in this report.

Additionally, we have entered into agreements with third-party contract
manufacturers for the manufacture and processing of certain of our product
candidates for clinical testing purposes, and we have entered and will enter
into other contracts in the normal course of business with contract research
organizations for clinical trials and other vendors for other services and
products for operating purposes. These agreements generally provide for
termination or cancellation, other than for costs already incurred. As of
June 30, 2022, the Company had non-cancellable purchase commitments of
$3.7 million.

On October 6, 2020, we announced we entered into a strategic five-year
collaboration agreement with MD Anderson for the preclinical and clinical
investigation of allogeneic CAR T cell product candidates. We and MD Anderson
are collaborating on the design and conduct of preclinical and clinical studies
with oversight from a joint steering committee. Under the terms of the
agreement, we have committed up to $15.0 million of funding for the duration of
the agreement. Payment of this funding is contingent on mutual agreement to
study orders in order for any study to be included under the alliance. We made
an upfront payment of $3.0 million to MD Anderson in the year ended December 31,
2020. We are obligated to make further payments to MD Anderson each year upon
the anniversary of the agreement effective date through the duration of the
agreement term. The agreement may be terminated by either party for material
breach by the other party. Individual studies may be terminated for, among other
things, material breach, health and safety concerns or where the institutional
review board, the review board at the clinical site with oversight of the
clinical study, requests termination of any study. Where any legal or regulatory
authorization is finally withdrawn or terminated, the relevant study will also
terminate automatically.

In July 2020, we entered into a Solar Power Purchase and Energy Services
Agreement for the installation and operation of a solar photovoltaic generating
system and battery energy storage system at our manufacturing facility in
Newark, California. The agreement has a term of 20 years and is expected to
commence in the second half of 2022. We are obligated to pay for electricity
generated from the system at an agreed rate for the duration of the agreement
term. Termination of the agreement by us will result in a termination payment
due of approximately $4.3 million. In connection with the agreement, we maintain
a letter of credit for the benefit of the service provider in the amount of $4.3
million.

We also have a Change in Control and Severance Plan that require the funding of
specific payments, if certain events occur, such as a change of control and the
termination of employment without cause.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results
of operations is based on our condensed consolidated financial statements, which
have been prepared in accordance with United States generally accepted
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accounting principles. The preparation of these condensed consolidated financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the condensed consolidated financial
statements, as well as the reported expenses incurred during the reporting
periods. Our estimates are based on our historical experience and on various
other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.

We believe that the assumptions and estimates associated with accrued research and development expenditures and stock-based compensation have the most significant impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in the section titled "Management's Discussion and Analysis of Financial Condition and Operations" included in our Annual Report.

Recent Accounting Pronouncements

There have been no new accounting pronouncements issued or effective that are expected to have a material impact on our unaudited condensed financial statements.

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