POSEIDA THERAPEUTICS, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes thereto included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , or 2021 Annual Report, as filed with theSecurities and Exchange Commission , orSEC . Operating results are not necessarily indicative of results that may occur in future periods. This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Special Note Regarding Forward-Looking Statements" in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading "Risk Factors" in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.
Overview
We are a clinical-stage cell and gene therapy company advancing a new class of treatments for patients with cancer and rare diseases. Since our inception, our operations have focused on organizing and staffing our company, business planning, raising capital, in-licensing, developing and acquiring intellectual property rights and establishing and protecting our intellectual property portfolio, developing our genetic engineering technologies, identifying potential product candidates and undertaking research and development and manufacturing activities, including preclinical studies and clinical trials of our product candidates, and engaging in strategic transactions. We do not have any product candidates approved for sale and have not generated any revenue from product sales. We have discovered and are developing a broad portfolio of product candidates in a variety of indications based on our core proprietary platforms, including our non-viral piggyBac DNA Delivery System, Cas-CLOVER Site-specific Gene Editing System and nanoparticle and AAV-based gene delivery technologies. Our core platform technologies have utility, either alone or in combination, across many cell and gene therapeutic modalities and enable us to engineer our portfolio of product candidates that are designed to overcome the primary limitations of current generation cell and gene therapeutics. Within cell therapy, we believe our technologies allow us to create product candidates with engineered cells that engraft in the patient's body and drive lasting durable responses that may have the capacity to result in single treatment cures. Our CAR-T therapy portfolio consists of both autologous and allogeneic, or off-the-shelf, product candidates with an emphasis on allogeneic. We are advancing a broad pipeline and have multiple CAR-T product candidates in the clinical phase in both hematological and solid tumor oncology indications. Within gene therapy, we believe our technologies have the potential to create a new class of therapies that can deliver long-term, stable gene expression that does not diminish over time and that may have the capacity to result in single treatment cures.
Our most advanced investigational clinical programs are:
• P-MUC1C-ALLO1, which is a fully allogeneic CAR-T product candidate for
multiple solid tumor indications. We believe P-MUC1C-ALLO1 has the
potential to treat a wide range of solid tumors derived from epithelial
cells, such as breast, colorectal, lung, ovarian, pancreatic and renal
cancers, as well as other cancers expressing a cancer-specific form of the
Mucin 1 protein, or MUC1-C. P-MUC1C-ALLO1 is the first program for which
clinical product is sourced from our internal pilot manufacturingfacility. We are currently evaluating P-MUC1C-ALLO1 in a Phase 1 clinical
trial and we plan to share an initial clinical data update on the program
at the
Congress , or ESMO I-O, which is taking place inGeneva, Switzerland and online inDecember 2022 .
• P-PSMA-101, which is an autologous CAR-T product candidate targeting
prostate-specific membrane antigen, or PSMA, being developed to treat
patients with metastatic castrate-resistant prostate cancer, or mCRPC, and
salivary gland carcinoma. We have been evaluating P-PSMA-101 in a Phase 1
trial, however we have made the strategic decision to stop further
enrollment. The clinical data from the Phase 1 trial is still being
collected and analyzed and will be utilized to inform other solid tumor
allogeneic programs, including our preclinical allogeneic program,
P-PSMA-ALLO1.
• P-BCMA-ALLO1, which is a fully allogeneic CAR-T product candidatetargeting BCMA, being developed to treat relapsed/refractory multiple
myeloma patients. We are currently evaluating P-BCMA-ALLO1 in a Phase 1
clinical trial and we plan to share an initial clinical data update on the
program at the ESMO I-O, subject to coordination with Roche, as defined
below. While P-BCMA-ALLO1 is currently manufactured at a contract
manufacturing organization, or CMO, we previously announced our plan to
transition manufacturing of P-BCMA-ALLO1 to our internal pilot
manufacturing plant and these transition efforts are ongoing. In July
2022 , we entered into a collaboration and license agreement, or the Roche
Collaboration Agreement, with
exclusively licensed to Roche. Roche will be responsible for a majority of
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--------------------------------------------------------------------------------future development costs for P-BCMA-ALLO1 and will assume future
development activities following the completion of the Phase 1 clinical
trial.
We manufacture these product candidates using our non-viral piggyBac DNA Delivery System. Our fully allogeneic CAR-T product candidates are developed using well-characterized cells derived from a healthy donor as starting material with the goal of enabling treatment of potentially hundreds of patients from a single manufacturing run. Doses are cryopreserved and stored at treatment centers for future off-the-shelf use. In addition, our allogeneic product candidates use our proprietary Cas-CLOVER site-specific Gene Editing System to reduce or eliminate reactivity, as well as our booster molecule technology for manufacturing scalability.
Our most advanced preclinical cell therapy program is:
• P-CD19CD20-ALLO1, which is a fully allogeneic CAR-T product candidate for
B-cell hematological indications. This is our first Dual CAR program,
which contains two fully functional CAR molecules to target cells that
express at least one of the two intended targets. We believe that our
ability to include two fully functional CAR molecules into a T cell could
provide a competitive advantage compared to current therapies. We
anticipate an IND filing and initiation of a Phase 1 clinical trial in thefirst half of 2023. P-CD19CD20-ALLO1 will also be exclusively licensed to
Roche pursuant to the Roche Collaboration Agreement and Roche will be
responsible for a majority of future development costs for
P-CD19CD20-ALLO1 and will assume future development activities following
the completion of the Phase 1 clinical trial.
Our gene therapy product candidates have been developed by utilizing our piggyBac technology together with AAV to overcome the major limitations of traditional AAV gene therapy. We believe that our approach can result in integration and long-term stable expression at potentially much lower doses than AAV technology alone, thus also conferring cost and tolerability benefits. Our eventual goal is to completely replace AAV with our non-viral nanoparticle technology, freeing future product development in gene therapy of AAV limitations.
Our most advanced gene therapy programs are:
• P-OTC-101, which is a liver-directed gene therapy combining piggyBac
technology with AAV and nanoparticles for the in vivo treatment of
Ornithine Transcarbamylase, or OTC, deficiency. OTC deficiency is an often
fatal or morbid urea cycle disease caused by congenital mutations in the
OTC gene with a high unmet medical need. We are developing the P-OTC-101
program utilizing a hybrid of non-viral nanoparticle delivery system to
deliver RNA and AAV to deliver DNA and are working on an updated timeline
for the program.
• P-FVIII-101, which is a liver-directed gene therapy combining piggyBac
technology with our nanoparticle delivery technology for the in
vivo treatment of Hemophilia A. Hemophilia A is a bleeding disorder caused
by a deficiency in Factor VIII production with a high unmet need.
P-FVIII-101 utilizes piggyBac gene modification delivered via lipid
nanoparticle that has demonstrated stable and sustained Factor VIII
expression in animal models. Our P-FVIII-101 program is included in the
collaboration and license agreement, or the Takeda Collaboration
Agreement, with
will be responsible for all future development costs. We plan to present
preclinical data from this program at the 64th
Hematology (ASH) Annual Meeting and Exposition being held in
We expect our expenses and losses to increase substantially for the foreseeable
future as we continue our development of, and seek regulatory approvals for, our
product candidates, including P-MUC1C-ALLO1, and begin to commercialize any
approved products. While we anticipate an overall increase in development costs
as we continue to expand the number of product candidates in our pipeline and
pursue clinical development of those candidates, we expect a decrease in our
development costs on a per program basis as we are transitioning to our
allogeneic platform. In addition, all or some of the development costs related
to partnered gene therapy programs and cell therapy programs will be reimbursed
by Takeda and Roche, respectively. We also expect our general and administrative
expenses will increase for the foreseeable future to support our increased
research and development and other corporate activities. Our net losses may
fluctuate significantly from quarter-to-quarter and year-to-year, depending on
the timing of our clinical trials and our expenditures on other research and
development activities.
We do not expect to generate any revenues from product sales unless and until we
successfully complete development and obtain regulatory approval for
P-MUC1C-ALLO1, or any other product candidates, which will not be for at least
the next several years, if ever. If we obtain regulatory approval for any of our
product candidates, we expect to incur significant commercialization expenses
related to product sales, marketing, manufacturing and distribution activities.
Accordingly, until such time, if ever, as we can generate substantial product
revenue, we expect to finance our operations through equity offerings, debt
financings or other capital sources, including potential grants, collaborations,
licenses or other similar arrangements. However, we may not be able to secure
additional financing or enter into such other arrangements in a timely manner or
on favorable terms, if at all. There can be no assurances that we will be able
to secure such additional sources of funds to support our operations, or, if
such funds are available to
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us, that such additional financing will be sufficient to meet our needs. Our
failure to raise capital or enter into such other arrangements when needed would
have a negative impact on our financial condition and could force us to delay,
reduce or terminate our research and development programs or other operations,
or grant rights to develop and market product candidates that we would otherwise
prefer to develop and market ourselves.
The manufacturing process for our allogeneic product candidates is nearly
identical to the process for our autologous product candidates, except for the
gene editing and related steps. We work with a number of third-party contract
manufacturing organizations for production of our product candidates. We also
work with a variety of suppliers to provide our manufacturing raw materials
including media, DNA and RNA components. We have completed construction of an
internal pilot GMP manufacturing facility in San Diego, California adjacent to
our headquarters to develop and manufacture preclinical materials and clinical
supplies of our product candidates for Phase 1 and Phase 2 clinical trials in
the future. We commenced GMP activity in the third quarter of 2021, however we
expect that we will continue to rely on third parties for various manufacturing
needs. In the future, we may also build one or more commercial manufacturing
facilities for any approved product candidates.
Collaboration Agreements
Roche Collaboration Agreement
InJuly 2022 , we entered the Roche Collaboration Agreement with Roche, pursuant to which we granted to Roche: (i) an exclusive, worldwide license under certain of our intellectual property to develop, manufacture and commercialize allogeneic CAR-T cell therapy products from each of our existing P-BCMA-ALLO1 and P-CD19CD20-ALLO1 programs, or each, a Tier 1 Program; (ii) an exclusive option to acquire an exclusive, worldwide license under certain of our intellectual property to develop, manufacture and commercialize allogeneic CAR-T cell therapy products from our existing P-BCMACD19-ALLO1 and P-CD70-ALLO1 programs, or each, a Tier 2 Program; (iii) an exclusive license under certain of our intellectual property to develop, manufacture and commercialize allogeneic CAR-T cell therapy products from the up to six Collaboration Programs, as defined below, designated by Roche; (iv) an option for a non-exclusive, commercial license under certain limited intellectual property to develop, manufacture and commercialize certain Roche proprietary cell therapy products for up to three solid tumor targets to be identified by Roche, or Licensed Products; and (v) the right of first offer for two of our early-stage existing programs within hematologic malignancies. For each Tier 1 Program, we will perform development activities through a Phase 1 dose escalation clinical trial, and Roche is obligated to reimburse a specified percentage of certain costs incurred by us in our performance of such activities, up to a specified reimbursement cap for each Tier 1 Program. For each Tier 2 Program, we will perform research and development activities either through selection of a development candidate for IND-enabling studies or, subject to Roche's election and payment of an option maintenance fee, through completion of a Phase 1 dose escalation clinical trial. In addition, for each Tier 2 Program for which Roche exercises its option for an exclusive license, Roche is obligated to pay us an option exercise fee. For each Tier 1 Program and Tier 2 Program, we will perform manufacturing activities until the completion of a technology transfer to Roche. The parties will conduct an initial two-year research program to explore and preclinically test a specified number of agreed-upon next generation therapeutic concepts relating to allogeneic CAR-T cell therapies. Subject to Roche's election and payment of a fee, the parties would subsequently conduct a second research program of 18 months under which the parties would explore and preclinically test a specified number of additional agreed-upon next generation therapeutic concepts relating to allogeneic CAR-T therapies. Roche may designate up to six heme malignancy-directed, allogeneic CAR-T programs from the two research programs, for each of which we will perform research and development activities through selection of a development candidate for IND-enabling activities, or each, a Collaboration Program. Upon its designation of each Collaboration Program, Roche is obligated to pay a designation fee. After we complete lead optimization activities for a Collaboration Program, Roche may elect to transition such program to Roche with a payment to us or terminate it. Alternatively, Roche may elect, for a limited number of Collaboration Programs, to have us conduct certain additional development and manufacturing activities through the completion of a Phase 1 dose escalation clinical trial, in which case Roche will pay certain milestones and reimburse a specified percentage of our costs incurred in connection with such development and manufacturing activities. For each Collaboration Program, we will perform manufacturing activities until the completion of a technology transfer to Roche. 25 -------------------------------------------------------------------------------- Under the Roche Collaboration Agreement, Roche paid an upfront payment to us of$110.0 million . Subject to Roche exercising its Tier 2 Program options, designating Collaboration Programs, and exercising its option for the Licensed Products commercial license and contingent on, among other things, the products from the Tier 1 Programs, optioned Tier 2 Programs and Collaboration Programs achieving specified development, regulatory, and net sales milestone events, we are eligible to receive certain reimbursements, fees and milestone payments, including the near-term fees and milestone payments described above, in the aggregate up to$6.0 billion , comprised of (i)$1.5 billion for the Tier 1 Programs; (ii)$1.1 billion for the Tier 2 Programs, (iii)$2.9 billion for the Collaboration Programs; and (iv)$415.0 million for the Licensed Products. We are further entitled to receive, on a product-by-product basis, tiered royalty payments in the mid-single to low double digits on net sales of products from the Tier 1 Programs, optioned Tier 2 Programs and Collaboration Programs and in the low to mid-single digits for Licensed Products, in each case, subject to certain customary reductions and offsets. Royalties will be payable, on a product-by-product and country-by-country basis, until the latest of the expiration of the licensed patents covering such product in such country or ten years from first commercial sale of such product in such country. The Roche Collaboration Agreement became effective inSeptember 2022 upon the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and will continue on a product-by-product and country-to-country basis until there is no remaining royalty or other payment obligations. The Roche Collaboration Agreement includes standard termination provisions, including for material breach or insolvency and for Roche's convenience. Certain of these termination rights can be exercised with respect to a particular product or license, as well as with respect to the entire Roche Collaboration Agreement.
Takeda Collaboration Agreement
InOctober 2021 , we entered into the Takeda Collaboration Agreement, pursuant to which we granted to Takeda a worldwide exclusive license under our piggyBac, Cas-CLOVER, biodegradable DNA and RNA nanoparticle delivery technology and other proprietary genetic engineering platforms to research, develop, manufacture and commercialize gene therapy products for certain indications, including Hemophilia A. We collaborate with Takeda to initially develop up to six in vivo gene therapy programs and Takeda also has an option to add two additional programs to the collaboration. We are obligated to lead research activities up to candidate selection, after which Takeda is obligated to assume responsibility for further development, manufacturing and commercialization of each program. Under the Takeda Collaboration Agreement, Takeda made an upfront payment to us of$45.0 million . Takeda is also obligated to provide funding for all collaboration program development costs including our P-FVIII-101 program; provided that we are obligated to perform certain platform development activities at our own cost. Timelines for P-FVIII-101 and other programs subject to the Takeda Collaboration Agreement will be driven by Takeda. Under the Takeda Collaboration Agreement, we are eligible to receive preclinical milestone payments that could potentially exceed$82.5 million in the aggregate if preclinical milestones for all six programs are achieved. We are also eligible to receive future clinical development, regulatory and commercial milestone payments of$435.0 million in the aggregate per target, with a total potential deal value over the course of the collaboration of up to$2.7 billion , if milestones for all six programs are achieved and up to$3.6 billion if the milestones related to the two optional programs are also achieved. We are entitled to receive tiered royalty payments on net sales in the mid-single to low double digits, subject to certain standard reductions and offsets. Royalties will be payable, on a product-by-product and country-by-country basis, until the latest of the expiration of the licensed patents covering such product in such country, ten years from first commercial sale of such product in such country, or expiration of regulatory exclusivity for such product in such country.
In-License Agreements
Below is a summary of our key license agreements. For a more detailed description of these and our other license agreements, see the section titled "Business-In-License Agreements" and Note 11 to our annual consolidated financial statements included in our 2021 Annual Report.
• 2017 Commercial License Agreement with
Amgen Inc.), or the 2017 TeneoBio Agreement, pursuant to which we obtained
exclusive worldwide rights to use and develop pharmaceutical products
comprising allogeneic T-cells expressing a CAR molecule containing certain
heavy chain sequences provided by TeneoBio for the treatment of human
disease. We use this heavy-chain-only binder in our P-BCMA-ALLO1 product
candidate.
• 2018 Commercial License Agreement with TeneoBio, or the 2018 TeneoBio
Agreement, for the development and use of TeneoBio's human
heavy-chain-only antibodies in CAR-T cell therapies. Under the terms of
the 2018 TeneoBio Agreement, we have the option to obtain exclusive rights
to research, develop and commercialize up to a certain number of targets,
including but not limited to the binders used in our P-CD19CD20-ALLO1 and
P-PSMA-ALLO1 product candidates.
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• License Agreement with
to
obtained an exclusive worldwide license under certain patents and a
non-exclusive worldwide license under certain know-how controlled by Xyone
to research, develop and commercialize pharmaceutical products
incorporating CAR cells expressing antibodies and derivatives thereof
targeting MUC1-C, or a Xyone licensed product, and a non-exclusive
worldwide license under certain patents and know-how controlled by Xyone
to research, develop and commercialize companion diagnostics for thetreatment, prevention and palliation of human diseases and conditions. We
use a Xyone antibody or derivative thereof targeting MUC1-C as a binder in
our P-MUC1C-ALLO1 product candidate.
CIRM Grant Funding
In 2017, we were granted an award in the amount of$19.8 million fromCalifornia Institute of Regenerative Medicine , or CIRM, to support our clinical trial for P-BCMA-101. To date we have received a total of$19.7 million from this grant and we may receive up to$0.1 million in future grant payments upon closeout of our clinical trial for this program. In the fourth quarter of 2021 we made the decision to wind down clinical development of the P-BCMA-101 program and derecognized the liability related to amount of the award previously received. In 2018, we were granted an additional award in the amount of$4.0 million from CIRM to support our preclinical studies for P-PSMA-101, of which we have received all proceeds from this grant. The terms of these awards include an option to repay the grant or convert it to a royalty obligation upon commercialization of the program. Based upon the terms of the grant agreements, we initially record proceeds as a liability when received and subsequently reassess based on our intention to repay the amounts associated with awards or convert them to a royalty obligation.
Components of Our Results of Operations
Revenues
Collaboration Revenue
Collaboration revenue consists of revenue recognized from our collaboration and license agreements with Roche and Takeda and reflects the timing and pattern in which we deliver the contractual deliverables to our partners.
Operating Expenses
Research and Development
Research and development expenses consist primarily of external and internal costs incurred for our research and development activities, including development of our platform technologies, our drug discovery efforts and the development of our product candidates.
External costs include:
• expenses incurred in connection with the preclinical and clinical
development of our product candidates and research programs, including
under agreements with third parties, such as consultants, contractors and
contract research organizations, or CROs;
• the cost of developing and scaling our manufacturing process and
manufacturing drug products for use in our preclinical studies andclinical trials, including under agreements with third parties, such as
consultants, contractors and contract manufacturing organizations, or
CMOs;
• payments made under third-party licensing agreements;
• the cost of manufacturing clinical materials for use in our preclinical
studies and clinical trials; and
• laboratory supplies and research materials.
Internal costs include:
• personnel-related expenses, consisting of employee salaries, related
benefits and stock-based compensation expense for employees engaged in
research, development and manufacturing functions;
• the cost to develop manufacturing capability at our
manufacture of cell therapies for use in clinical trials; and
• facilities, depreciation and other expenses, consisting of direct and
allocated expenses for rent and maintenance of facilities and insurance.
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We expense research and development costs as incurred. External expenses are
recognized based on an evaluation of the progress to completion of specific
tasks using information provided to us by our service providers or our estimate
of the volume of service that has been performed at each reporting date. Upfront
payments and milestone payments made for the licensing of technology are related
to clinical stage programs and expensed as research and development in the
period in which they are incurred. Advance payments that we make for goods or
services to be received in the future for use in research and development
activities are recorded as prepaid expenses or other long-term assets. These
amounts are expensed as the related goods are delivered or the services are
performed.
At any one time, we are working on multiple research programs. We track external
costs by the stage of program, clinical or preclinical. Our internal resources,
employees and infrastructure are not directly tied to any one program and are
typically deployed across multiple programs. As such, we do not track internal
costs on a specific program basis.
Product candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development,
primarily due to CRO activity and manufacturing expenses. We expect that our
research and development expenses will increase substantially in connection with
our planned preclinical and clinical development activities in the near term and
in the future, including in connection with our Phase 1 trial of P-BCMA-ALLO1
for the treatment of patients with relapsed/refractory multiple myeloma and
Phase 1 trial of P-MUC1C-ALLO1 for the treatment of patients with solid tumor
cancers and additional clinical programs expected to commence as we expand our
pipeline of drug candidates. We cannot accurately estimate or know the nature,
timing and costs of the efforts that will be necessary to complete the
preclinical and clinical development of any of our product candidates. Our
development costs may vary significantly based on factors such as:
• the number and scope of preclinical and IND-enabling studies;
• per patient trial costs;
• the number of trials required for approval;
• 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 number of patients that participate in the trials;
• the drop-out or discontinuation rates of patients;
• potential additional safety monitoring requested by regulatory agencies;
• the duration of patient participation in the trials and follow-up; • the cost and timing of manufacturing our product candidates; • the phase of development of our product candidates; • the efficacy and safety profile of our product candidates; • the extent to which we establish additional licensing agreements; and
• whether we choose to partner any of our product candidates and the terms
of such partnership.
A change in the outcome of any of these variables with respect to the
development of any of our product candidates could significantly change the cost
structure and timing associated with the development of respective product
candidates. We may never succeed in obtaining regulatory approval for any of our
product candidates. We may obtain unexpected results from our clinical trials
and preclinical studies.
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--------------------------------------------------------------------------------General and Administrative
General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, and accounting and audit services. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates, including P-BCMA-ALLO1 and P-MUC1C-ALLO1, and begin to commercialize any approved products. Other Income (Expense) Interest Expense Interest expense consists of interest expense on outstanding borrowings under our loan agreement and amortization of debt discount and debt issuance costs. Given the environment of increasing interest rates, we expect our interest expense to increase incrementally to reflect market rates.
Other Income (Expense), Net
Other income (expense), net consists of interest income and miscellaneous income and expense unrelated to our core operations. Interest income is comprised of interest earned on our available-for-sale securities.
Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations (in thousands):
Three Months Ended September 30,
2022 2021 Change
Revenues:
Collaboration revenue $ 116,306 $ - $ 116,306
Total revenue 116,306 - 116,306
Operating expenses:
Research and development 35,137 32,524 2,613
General and administrative 9,389 9,066 323
Total operating expenses 44,526 41,590 2,936
Income (loss) from operations 71,780 (41,590 ) 113,370
Other income (expense):
Interest expense (1,775 ) (837 ) (938 )
Other income (expense), net 656 3 653
Net income (loss) before income tax 70,661 (42,424 ) 113,085
Income tax expense (252 ) - (252 )
Net income (loss) $ 70,409 $ (42,424 ) $ 112,833
Collaboration Revenue
Collaboration revenue of $116.3 million for the three months ended September 30,
2022 represents revenue recognized from the research services performed under
the Takeda Collaboration Agreement that we entered into in the fourth quarter of
2021 and the Roche Collaboration Agreement which became effective in the third
quarter of 2022.
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--------------------------------------------------------------------------------Research and Development Expenses
The following table summarizes our research and development expenses (in
thousands):
Three Months Ended September 30,
2022 2021 Change
External costs:
Clinical stage programs(1) $ 8,630 $ 10,151 $ (1,521 )
Preclinical stage programs and other
unallocated expenses 7,570 8,317 (747 )
Internal costs:
Personnel 15,010 11,200 3,810
Facilities and other 3,927 2,856 1,071
Total research and development expenses $ 35,137 $
32,524
(1) Clinical stage programs include costs primarily related to P-BCMA-ALLO1,
P-MUC1C-ALLO1, and P-PSMA-101 programs for the three months ended September
30, 2022 and costs related to P-BCMA-ALLO1, P-BCMA-101 and P-PSMA-101
programs for the three months ended
Research and development expenses were$35.1 million for the three months endedSeptember 30, 2022 , compared to$32.5 million for the three months endedSeptember 30, 2021 . The increase in research and development expenses of$2.6 million was primarily due to an increase of$3.8 million in personnel expenses as a result of increased headcount and an increase of$1.1 million in facilities expense, offset by a decrease of$1.5 million in external costs related to our clinical stage programs, driven mainly by the wind-down of our clinical development activities associated with the P-BCMA-101 program, as announced in the fourth quarter of 2021, partially offset by increases in the number of ongoing clinical trials, including enrollment and manufacturing for the P-PSMA-101, P-BCMA-ALLO1, and the P-MUC1C-ALLO1 Phase 1 clinical trials, and a$0.7 million decrease in external costs related to our preclinical stage programs, driven mainly by the transition of the P-BCMA-ALLO1 and P-MUC1C-ALLO1 programs to clinical stage.
General and Administrative Expenses
General and administrative expenses were$9.4 million for the three months endedSeptember 30, 2022 , compared to$9.1 million for the three months endedSeptember 30, 2021 . The increase in general and administrative expenses of$0.3 million was primarily due to an increase of$0.3 million in personnel expenses as a result of an increase in headcount which included a$0.1 million increase in stock-based compensation expense.
Interest Expense
Interest expense was$1.8 million for the three months endedSeptember 30, 2022 , compared to$0.8 million for the three months endedSeptember 30, 2021 and consisted of interest on the principal balance outstanding under our term loans withOxford Finance LLC , or Oxford. The increase in interest expense of$0.9 million was primarily due to an increase in principal outstanding related to the modification of the terms of our loan pursuant to the 2022 Loan Agreement, as defined below, which we entered into inFebruary 2022 .
Other Income (Expense), Net
Other income, net was$0.7 million for the three months endedSeptember 30, 2022 , compared to less than$0.1 million for the three months endedSeptember 30, 2021 . The increase in other income, net of$0.7 million was driven by an increase in interest income, as a result of higher interest rates available and a higher cash balance in the respective periods. 30 --------------------------------------------------------------------------------
Comparison of the Nine Months Ended
The following table summarizes our results of operations (in thousands):
Nine Months Ended September 30,
2022 2021 Change
Revenues:
Collaboration revenue $ 120,441 $ - $ 120,441
Total revenue 120,441 - 120,441
Operating expenses:
Research and development 118,995 97,627 21,368
General and administrative 28,171 26,306 1,865
Total operating expenses 147,166 123,933 23,233
Loss from operations (26,725 ) (123,933 ) 97,208
Other income (expense):
Interest expense (4,395 ) (2,518 ) (1,877 )
Other income (expense), net 688 8 680
Net loss before income tax (30,432 ) (126,443 ) 96,011
Income tax expense (252 ) - (252 )
Net loss $ (30,684 ) $ (126,443 ) $ 95,759
Collaboration Revenue
Collaboration revenue of $120.4 million for the nine months ended September 30,
2022 represents revenue recognized from the research services performed under
the Takeda Collaboration Agreement that we entered into in the fourth quarter of
2021 and the Roche Collaboration Agreement which became effective in the third
quarter of 2022.
Research and Development Expenses
The following table summarizes our research and development expenses (in
thousands):
Nine Months Ended September 30,
2022 2021 Change
External costs:
Clinical stage programs(1) $ 40,287 $ 33,098 $ 7,189
Preclinical stage programs and other
unallocated expenses 23,391 23,776 (385 )
Internal costs:
Personnel 44,419 32,192 12,227
Facilities and other 10,898 8,561 2,337
Total research and development expenses $ 118,995 $ 97,627 $ 21,368 (1) Clinical stage programs include costs primarily related to P-BCMA-ALLO1,
P-MUC1C-ALLO1, and P-PSMA-101 programs for the nine months ended September
30, 2022 and costs related to P-BCMA-ALLO1, P-BCMA-101 and P-PSMA-101
programs for the nine months ended September 30, 2021 .
31-------------------------------------------------------------------------------- Research and development expenses were$119.0 million for the nine months endedSeptember 30, 2022 , compared to$97.6 million for the nine months endedSeptember 30, 2021 . The increase in research and development expenses of$21.4 million was primarily due to an increase of$12.2 million in personnel expenses as a result of an increase in headcount which included a$1.1 million increase in stock-based compensation expense, an increase of$7.2 million in external costs related to our clinical stage programs from an increase in the number of ongoing clinical trials, including enrollment and manufacturing for the P-PSMA-101 Phase 1, the P-BCMA-ALLO1 Phase 1, and the P-MUC1C-ALLO1 Phase 1 clinical trials, and a$2.3 million increase in internal facilities and other costs, offset by a$0.4 million decrease in preclinical stage programs and other unallocated expenses. The increase in external costs related to our clinical stage programs is partially offset by the wind-down of our clinical development activities associated with the P-BCMA-101 program. The increase in facility and other of$2.3 million was primarily due to an additional lease entered into in 2022 to support continued headcount growth.
General and Administrative Expenses
General and administrative expenses were$28.2 million for the nine months endedSeptember 30, 2022 , compared to$26.3 million for the nine months endedSeptember 30, 2021 . The increase in general and administrative expenses of$1.9 million was primarily due to an increase of$1.6 million in personnel expenses as a result of an increase in headcount which included a$0.9 million increase in stock-based compensation expense, and a$0.3 million increase in legal and other professional fees. Interest Expense Interest expense was$4.4 million for the nine months endedSeptember 30, 2022 , compared to$2.5 million for the nine months endedSeptember 30, 2021 and consisted of interest on the principal balance outstanding under our term loans with Oxford. The increase in interest expense of$1.9 million was primarily due to an increase in principal outstanding related to the modification of the terms of our loan pursuant to the 2022 Loan Agreement, as defined below, which we entered into inFebruary 2022 .
Other Income (Expense), Net
Other income, net was
Liquidity and Capital Resources
We were incorporated inDecember 2014 and subsequently spun out from Transposagen, a company that has been developing genetic engineering technologies since 2003. Since our inception in 2014, we have incurred significant operating losses and negative cash flows from operations and have relied on our ability to fund our operations primarily through equity and debt financings and strategic collaborations. For the nine months endedSeptember 30, 2022 we have incurred a net loss of$30.7 million , and negative cash flows from operations of$29.2 million . We expect to continue to incur net losses and negative cash flows from operations for at least the next several years. As ofSeptember 30, 2022 , we had an accumulated deficit of$437.5 million . Our operations have focused on organizing and staffing our company, business planning, raising capital, in-licensing and acquiring intellectual property rights and establishing and protecting our intellectual property portfolio, developing our genetic engineering technologies, identifying potential product candidates and undertaking research and development and manufacturing activities, including preclinical studies and clinical trials of our product candidates, and engaging in strategic transactions. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, 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. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all. We have funded our operations primarily through the sale of equity, debt financings and strategic collaborations. Since our inception, we have raised$304.5 million of gross proceeds from the sale of our common stock in our public offerings,$334.3 million of gross proceeds from the sale of shares of our redeemable convertible preferred stock, received$60.0 million of gross proceeds from borrowings under our loan agreement and received an aggregate of$23.8 million in grant funding from CIRM. In 2021, we entered into the Takeda Collaboration Agreement and received an upfront payment of$45.0 million . InSeptember 2022 , the Roche Collaboration Agreement became effective and Roche paid an upfront payment to us of$110.0 million and we earned an additional$35.0 million in milestone revenue. We expect that our cash, cash equivalents and short-term investments as ofSeptember 30, 2022 , of$279.0 million will be sufficient to fund our operations for at least the next twelve months from the date of issuance of the financial statements included in this Quarterly Report on Form 10-Q. In the long term, we will need additional financing to support our continuing operations and pursue our business strategy. 32 --------------------------------------------------------------------------------
Loan Agreement
In 2017, we entered into a loan and security agreement with Oxford, as subsequently amended, or Amended Loan Agreement, pursuant to which we drew a Term A loan in the amount of$20.0 million and a Term B loan, in the amount of$10.0 million for a total outstanding balance of$30.0 million . InFebruary 2022 , we entered into a new Loan and Security Agreement, or the 2022 Loan Agreement, with Oxford. Pursuant to the terms of the 2022 Loan Agreement we borrowed$60.0 million in term loans, a portion of which was used to repay the balance outstanding under the Amended Loan Agreement. Under the 2022 Loan Agreement the initial interest-only period is throughApril 1, 2025 , followed by 23 equal monthly payments of principal and applicable interest. InSeptember 2022 , a qualifying equity event, as defined in the Amended Loan Agreement, was achieved which extended the interest-only period throughApril 1, 2026 , followed by 11 equal monthly payments of principal and applicable interest. As a result, all amounts outstanding under the 2022 Loan Agreement will mature onFebruary 1, 2027 . The balance outstanding under the 2022 Loan Agreement bears interest at a floating per annum rate equal to 7.83% plus the greater of (a) the 30-dayU.S. Dollar (USD) LIBOR rate and (b) 0.11%. As ofSeptember 30, 2022 , the interest rate applicable to our Term Loans borrowing was 10.38%. In connection with the repayment of the balance outstanding under the Amended Loan Agreement, we incurred amendment and final payment fees of$1.5 million previously due on the earlier of (i) the maturity date, (ii) acceleration of any Term A or Term B loans, or (iii) the prepayment of the Term A or Term B loans. We have an option to repay the outstanding debt under the 2022 Loan Agreement at any time in increments of$5.0 million , subject to a prepayment fee of 1.0% if the term loans are prepaid on or prior toFebruary 22, 2024 , after which no prepayment penalty would be applied. Consistent with the Amended Loan Agreement, there is a 7.5% final payment fee payable on the earlier of (i) the new maturity date, (ii) acceleration of the new loan, or (iii) the prepayment of the new loan. OnNovember 30, 2020 ,ICE Benchmark Administration , with the support of the United States Federal Reserve and theFCA , announced plans to consult on ceasing publication of USD LIBOR onDecember 31, 2021 for only the one week and two-month USD LIBOR tenors, and onJune 30, 2023 for all other USD LIBOR tenors. Various central bank committees and working groups continue to discuss replacement of benchmark rates, the process for amending existing LIBOR-based contracts, and the potential economic impacts of different alternatives. The Alternative Reference Rates Committee has identified the Secured Overnight Financing Rate, or SOFR, as its preferred alternative rate for USD LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized byU.S. Treasury securities, and is based on directly observableU.S. Treasury -backed repurchase transactions. Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents (in thousands): Nine Months Ended September 30, 2022 2021 Cash used in operating activities$ (29,175 ) $ (111,016 ) Cash provided by (used in) investing activities (117,444 ) 222,579 Cash provided by financing activities 105,101 2,282
Net increase (decrease) in cash and cash equivalents
Cash Used in Operating Activities
During the nine months endedSeptember 30, 2022 , net cash used in operating activities was$29.2 million , primarily resulting from our net loss of$30.7 million and a net cash decrease from changes in our operating assets and liabilities of$17.1 million , partially offset by non-cash expenses of$18.6 million . Net cash decrease from changes in our operating assets and liabilities for the nine months endedSeptember 30, 2022 consisted primarily of a$38.5 million increase in accounts receivable and decreases of$5.5 million in accounts payable,$3.8 million in operating lease liabilities and$1.5 million in accrued expenses and other liabilities, partially offset by a$28.3 million increase in deferred revenue and a$3.6 million decrease in operating lease right-of-use assets. Non-cash charges consisted primarily of$14.4 million in stock-based compensation,$3.8 million in depreciation and amortization expense,$0.6 million in accretion of discount on issued term debt, and$0.2 million from loss on disposal of property and equipment, partially offset by$0.5 million in accretion on investment securities, net. During the nine months endedSeptember 30, 2021 , net cash used in operating activities was$111.0 million , primarily resulting from our net loss of$126.4 million , combined with non-cash expenses of$16.3 million , and net cash decrease from changes in our operating assets and liabilities of$0.9 million . Non-cash charges consisted primarily of$12.4 million in stock-based compensation and$3.4 million in depreciation and amortization expense. Net cash decrease from changes in our operating assets and liabilities for 33 -------------------------------------------------------------------------------- the nine months endedSeptember 30, 2021 consisted primarily of a$2.1 million increase in prepaid expenses and other current assets and by a$1.9 million decrease in accrued expenses and other liabilities, partially offset by a$2.9 million increase in accounts payable.
Cash Provided by (Used in) Investing Activities
During the nine months ended
During the nine months endedSeptember 30, 2021 , net cash provided by investing activities was$222.6 million , consisting primarily of proceeds from maturities of short-term investments of$225.0 million , partially offset by purchases of property and equipment of$2.4 million . The timing of purchases and sales of our short-term investments is driven by available cash balance and maturity of existing investments. The purchase of property and equipment for all periods related to equipment purchases as we expanded our research and development and manufacturing activities, in addition to corporate office space.
Cash Provided by Financing Activities
During the nine months endedSeptember 30, 2022 , net cash provided by financing activities was$105.1 million , consisting of$75.3 million of net proceeds from our public offering of common stock,$28.6 million of proceeds from the 2022 Loan Agreement, net of debt issuance costs and repayment of the Amended Loan Agreement, and$1.3 million of proceeds from purchases under our ESPP and exercises of stock options. During the nine months endedSeptember 30, 2021 , net cash provided by financings activities was$2.3 million , representing proceeds from the exercises of stock options and purchases under our 2020 Employee Stock Purchase Plan.
Contractual Obligations and Commitments
We enter into contracts in the normal course of business with contract research organizations, CMOs and other third parties for preclinical research studies, clinical trials and testing and manufacturing services. These contracts do not contain minimum purchase commitments and are cancelable by us upon prior written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to one year after the date of cancellation. The amount and timing of such payments are not known. We have also entered into several license agreements under which we are obligated to make aggregate milestone payments upon the achievement of specified preclinical, clinical and regulatory milestones as well as royalty payments. The payment obligations under these license agreements are contingent upon future events, such as our achievement of specified milestones or generating product sales. We record these milestone payments when they are estimable and probable to be achieved. Estimating the timing or likelihood of achieving these milestones or generating future product sales requires significant judgment and is subject to uncertainty. During the nine months endedSeptember 30, 2022 , except for modification of our term loan disclosed in Note 8 and the lease commitments disclosed in Note 11 to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q, there were no significant changes to our contractual obligations and commitments described under Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Annual Report. 34 --------------------------------------------------------------------------------
Critical Accounting Policies and Significant Judgments and Estimates
Management's discussion and analysis of our financial condition and results of operations are based upon our financial statements, which are prepared in accordance with accounting principles that are generally accepted inthe United States . The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, related disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of expenses and other income during the reporting period. We continually evaluate our estimates and judgments, the most critical of which are those related to revenue recognition, preclinical and clinical study accruals and stock-based compensation costs. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known. There were no significant changes during the nine months endedSeptember 30, 2022 to the items that we disclosed as our critical accounting policies and estimates in Note 2 to our audited consolidated financial statements included in our 2021 Annual Report. JOBS Act We are an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. The JOBS Act permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to use this the extended transition period under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. The JOBS Act also allows up to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including relief from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, less extensive disclosure obligations regarding executive compensation in our registration statements, periodic reports and proxy statements, exemptions from the requirements to hold a nonbinding advisory vote on executive compensation, and exemptions from stockholder approval of any golden parachute payments not previously approved. We may also elect to take advantage of other reduced reporting requirements in future filings. As a result, our stockholders may not have access to certain information that they may deem important and the information that we provide to our stockholders may be different than, and not comparable to, information presented by other public reporting companies. We will remain an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year in which we have more than$1.235 billion in annual revenue; (2) the date we qualify as a "large accelerated filer," with at least$700.0 million of equity securities held by non-affiliates; (3) the date on which we have issued more than$1.0 billion in non-convertible debt securities during the prior three-year period; and (4)December 31, 2025 . We are also a smaller reporting company, as defined in the Securities Exchange Act of 1934. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) our voting and non-voting common stock held by non-affiliates is less than$250.0 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue is less than$100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than$700.0 million measured on the last business day of our second fiscal quarter.
Recent Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially
impact our financial position, results of operations or cash flows is disclosed
in Note 2 to our condensed consolidated financial statements.
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