Good afternoon, everyone. Thank you for standing by and welcome to the Atara Biotherapeutics conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please be advised that today's call is being recorded. I'd now like to hand the call over to Eric Hyllengren, Vice President of Investor Relations and Finance at Atara Biotherapeutics. Please go ahead, sir. Thank you, operator. Good afternoon, everyone, and welcome to Atara's strategic manufacturing partnership conference call. Earlier today, we issued a press release announcing that we entered into a strategic manufacturing partnership with Fujifilm. This is an exciting partnership for both Atara and Fujifilm, and the press release and slides are available in the Investors and Media section at atarabio.com. On today's call, we will provide an overview of the partnership, including the strategic rationale as well as additional details of the transaction. Joining me on today's call are Dr. Pascal Touchon, President and Chief Executive Officer, Dr. Jakob Dupont, Executive Vice President and Global Head of Research and Development, Utpal Koppikar, Chief Financial Officer, Dr. Kristin Yarema, Chief Commercial Officer, and Joe Newell, Chief Operations Officer. We will begin with prepared comments from Pascal, then open up the call for your questions. We would like to remind listeners that during the call, the company's management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's press release and the company's SEC filings. These statements are made as of today's date, and the company undertakes no obligation to update these statements. Now, I'd like to turn the call over to Pascal. Pascal? Thank you, Eric, and thank you all for joining us this afternoon. Today, I am very pleased to announce that we have entered into a long-term strategic manufacturing partnership with Fujifilm Diosynth Biotechnologies or FDB, which is a subsidiary of Fujifilm Corporation. Fuji will acquire our cell therapy manufacturing facility in Thousand Oaks called ATOM for $100 million upfront while retaining the current manufacturing and quality staff at the site. At the same time, we are entering into a long-term supply agreement, which could extend up to 10 years. This supply agreement is critical for Atara to continue to access the flexible capacity and capability needed to manufacture clinical and commercial-stage allogeneic cell therapies for maturing and promising pipeline, namely, tabelecleucel, ATA188, ATA3271, and ATA3219. Importantly, we will retain the expertise, staff, and capabilities in manufacturing process development and analytical development to continue to innovate in initial manufacturing and scale-up for allogeneic cell therapies. We are incredibly proud of our world-class ATOM staff and facility and believe that this strategic partnership will meet our long-term manufacturing needs. Our team has developed manufacturing processes for our products, scaled them up, and built inventory for clinical trials and expected commercial launch of tabelecleucel. We believe that now is the right time for a strategic, reasonable, and committed partner such as Fujifilm to provide us with expert manufacturing capabilities when needed. Pursuing a partnership of this nature was a strategic choice for the company and one that garnered a high level of interest from several potential partners during the process. We believe this high level of interest recognized the leading position of our manufacturing capability, including both staff and the ATOM facility. We believe we selected the best possible partner in Fujifilm, and we are very pleased we have reached this agreement today. FDB is a highly respected, quality-focused, industry-leading manufacturing and development organization that shares our pioneering culture and belief that allogeneic cell therapy will transform the future of medicine. We are confident that this will be a successful relationship for years to come. Very importantly, we are confident that this new partnership will not impact the planned pre-approval inspection for the tabelecleucel MAA in Europe or the requirements for the future BLA submission in the U.S. for tabelecleucel. In addition, Atara will continue to leverage our recently established Thousand Oaks-based Atara Research Center, or ARC, which is fully operational and is housing Atara preclinical, translational science, manufacturing process science, and analytical development team to further drive innovation by leveraging our unique and differentiated allogeneic cell therapy platform. Atara will retain a talented technical operations team, including the process science team at our Denver site and also teams that will manage external manufacturing, quality assurance, logistics, and supply chain management. Now, I want to take a moment to get into some of the background of this deal and the strategic rationale behind why we choose to enter into this agreement at this time. We have invested in and have made significant progress in allogeneic T-cell product development. Our success and experience is well established and provide us with significant flexibility. The nature of allogeneic cell therapy means that unlike autologous cell therapy that requires manufacturing capacity to be available at all times, one patient, one batch, we can plan on manufacturing runs, campaigns, where one batch may treat hundreds or thousands of patients in advance and build inventory of our off-the-shelf therapies to the right level to meet patient needs. All of this means that we have reached a very exciting point in Atara's journey where we will not need full capacity in-house moving forward and can pivot to a more flexible approach. We have developed the capability to manufacture at scale and store new allogeneic T-cell therapy product candidates designed in our lab. These advances provide Atara with the ability to periodically campaign our production to maintain appropriate levels of finished product inventory that is readily available to deliver to patients in need within three days. Hence, now we can work with a full-scale manufacturing partner who has the technical expertise and the appropriate capacity to build the right amount of product supply when we need it for late-stage clinical trials and commercialization. This partnership with FDB delivers also several strategic benefits for Atara. We retain and will continue to invest in our research, product design, manufacturing, and analytical development for early stage and scale-up phases. This long-term agreement with FDB give us access to an expert cell therapy manufacturing staff, which is in fact currently at Atara, and capacity at ATOM for large-scale product runs when needed in the future. Lastly, we believe this partnership is in line with our vision for the future of allogeneic cell therapy, where manufacturing will be very much like what is happening for traditional biologics, with efficient network of in-house and external capabilities. While we certainly believe this partnership has many strategic benefits, it also comes with several financial benefits for Atara. As a result of FDB acquiring ATOM, Atara will receive an upfront payment of $100 million at the time of deal closing, which we expect to occur in April. We are also entering into a long-term supply agreement with FDB for clinical and commercial product manufacturing. Lastly, but very importantly, the transaction is expected to result in reduced operating expenses for Atara over the term of the agreement. Today, we also announced that we expect to report an ending cash balance at the end of Q4 2021 of approximately $371 million. All in all, upon closing of the deal, the upfront consideration along with the expected reduction in operating expenses, in addition to the Q4 2021 cash balance, is expected to fund Atara planned operation into Q4 2023, which is beyond the anticipated completion date of the randomized placebo-controlled phase II study of ATA188, our investigational off-the-shelf T-cell candidate that has the potential to reverse disability in progressive multiple sclerosis. In summary, this strategic partnership with FDB truly benefits Atara, our investors and patients. For Atara, importantly, it secures supply for potentially transformational products for the long term, reduces our operational costs over time, allows us to continue to increase manufacturing productivity through process development, and therefore, allows us to further focus our capital resources on development and commercialization of our rich pipeline of first-in-kind allogeneic T-cell immunotherapies. Finally, I want to take a moment to thank all Atarians today. I am extremely grateful to them for their immense talent and hard work contributing to the success of the company. I would like also to thank and recognize Joe Newell, our Chief Technical Operations Officer, who has played a key role in establishing this strategic partnership. In connection with it, and after nearly five years at Atara, Joe will transition to a consultant role to support our manufacturing strategy moving forward. We are also particularly thankful for manufacturing and quality staff who will transition to FDB, and we are excited for the future with this new partnership and the opportunities it will bring to themselves and to patients. I'll now turn the call back to the operator to begin the Q&A portion of the call. Operator? Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from Salim Syed of Mizuho. Please proceed with your question. Great. Thanks for the question, guys, and congrats on the sale of the facility. A few from me, if I can. So, Pascal, obviously, we're, you know, the Street's expecting the interim analysis u pdate being read out or some form of being read out in the second quarter, and so this deal is timely. I'm just curious if you could just confirm for us or tell us, you know, to what extent did Fujifilm have access to any of the phase IIa ATA188 BLA data, either blinded or unblinded here? Can you just remind us what sort of data you guys are getting on a blinded basis from the phase II? I just have a follow-up. Thank you. Thank you, Salim, for the question. Let's be clear. Fuji team has no access whatsoever to any data. I mean, they're going to work with us once we close that deal as a contract manufacturer. Contract manufacturer don't have access to any clinical data. We have a plan with them in terms of manufacturing needs that we are planning for not only tab-cel commercialization but also ATA188 further development into phase III and beyond, but they have no access to data. Now, your questions on, which is not related to the deal I understand, on the data are blinded today. We do not have access to data. Only the DSMB has access to data on a regular basis to look at the safety. But we don't have access to data ourselves at this stage. We'll have access to data at the time of the interim analysis in Q2 of this year. Does it answer your question? Yes. You don't have access at all to any aggregated or blended data? No. Just, I guess, as follow-up, how much of the economics here for Fujifilm was driven by the various products that are in the supply agreement? You know, again, I'm gonna focus on ATA188, but without the data in hand and what they'll be supplying you with, how is that economics determined? Maybe you can start and it follow my chime if you need. I think the ultimate value that we have here in that deal is around the facility and the people. The facility is state-of-the-art facility for cell therapy. The people are very well talented and trained people that are already today manufacturing allogeneic cell therapy. You know, there is no other company that is as advanced as we are in allogeneic cell therapy manufacturing. When considering that from the Fujifilm point of view, it basically means that since they wanted to enter into that space, they don't have any cell therapy manufacturing today. They are very advanced in different type of therapies, but not in cell therapy. They look at this opportunity as having access to a particular unit as well as people. I would say the value is really in the team and the experience that we have. What is great for us at Atara is that this team will continue to make Atara product as per our plan. There is absolutely no change in our plans in terms of having access to what we will need. What is important for Fujifilm is to have access to this facility and the people. Got it. Super helpful. Thanks so much, Pascal. Congrats again. Thank you. Our next question is from Tessa Romero of J.P. Morgan. Please proceed with your question. Hey, Pascal and team. Thanks so much for taking our question. First question here is, you note a long-term supply agreement that could extend to 10 years. What are the levers to go into 10 years, and what is the length under the existing agreement with Fujifilm? The length of the existing agreement is five years. That could be going over 10 years. We have the full flexibility in that agreement. Of course, we have organized this agreement around our plans, and we need a certain level of supply to fill up our inventory. By the way, to be clear, the inventory of product belongs to Atara. They just manufactured inventory for us. We have plans in terms of what we will need and what we need to commercialize that sale, to develop further ATA188, which is so exciting for us to move into phase III and beyond, to be able to go to the clinic with ATA3271 and ATA3219. We have a manufacturing plan, but we have the flexibility within that manufacturing plan. By the way, this is not an exclusive agreement. If needed, we can work with others, or we can also, if we have a partner, tech transfer to a partner. This is something very important, this agreement. Not only it offers an access to what we need when we need it, but with the flexibility to be able to do whatever we think is best for the patient and for value creation. Okay. That's helpful, Pascal. I guess, you know, I kinda have to ask the question again, I guess. Do you feel that right now was the right time to sell because this agreement gave you that flexibility that you might need looking out into the future? Or any other color you'd provide on kind of why now? Yeah. I think maybe I could give you another aspect to better understand what's happening. The more our team is making progress in manufacturing productivity, the less we need full-time manufacturing capacity. Think about it. We've said in the past that our current tab-cel manufacturing process allows us to make 400 doses in one batch. We have also said that with ATA2271 and ATA3219, we believe we can go with our new steel tank bioreactor technology, go to 20,000 doses per one batch. The more we make progress, the less batch we need. The less batch we need, the less capacity we need. Therefore, it makes sense to be able to optimize access to capacity when we need it with that type of strategic partnering with the flexibility that we need. This is good and visionary, I would say, in terms of allogeneic cell therapy. It's exactly what's happening with many companies working on monoclonal antibodies today. I mean, they have exactly the same type of situation. You don't need to have, if you have a monoclonal antibody, to have your in-house manufacturing commercial units to make monoclonal antibodies. The same is going to happen in allogeneic cell therapy, and we are a leader here. So that's really where we are going, is to have that flexibility and to build inventory when we need to have inventory. Don't forget that these cells can stay many years. I mean, we are going, of course, to progressively have the shelf life extended, but these cryopreserved cells, the final product, can remain available for many, many years. So that's also another aspect of inventory buildup for this type of therapy. Does it answer your question, Tess? Yes, definitely does. Thanks so much. Yeah, congrats on the deal. Thanks for taking our question. Yeah, no, thank you for that. Maybe to build up, sorry, about why is the right time now? Because, I mean, reducing a burn rate to be able to continue the development, accelerate the development of all the transformative therapy that we are developing makes a lot of sense. That's something that we should really look at. When you look at all the cell therapy companies, you can see that cell therapy manufacturing is costing a significant amount. Therefore, if you have a way to optimize that and reduce the burn rate and reduce over time your operating expenses, this makes a lot of sense for capital resource allocation. Yep. Thanks so much. Thanks, Pascal. Our next question is from John Newman of Canaccord. Please proceed with your question. Hey, guys. Thanks for taking my question and congrats on a nice deal here. Pascal, just first wanted to ask, you know, I think from Fujifilm's perspective, they're free to manufacture other products at this facility, potentially many other products. I just wanted to clarify that. If that's the case, is it correct to assume that they really didn't view this as a transaction specifically focused on Atara's asset? This was a transaction for them that gave them very useful capacity in the cell therapy market. Just curious as to your thoughts there. That's certainly what they are saying in terms of rationale for the deal on their side, which is to access a facility with the potential for expansion in terms of capacity, as well as a team with a lot of talent, that it could further expand to be able to make in that facility other type of cell therapy. Their first customer will be Atara, but certainly we understand that they intend to have, potentially other customers. By the way, an important thing to have in mind, we are not transferring any IP to them. The IP remains Atara's IP and remains under our control. Okay, great. It sounds like the level of capacity that the ATOM facility allows, in your mind, is not necessary for Atara to explore initial clinical work with a number of your assets that this facility was constructed mainly for commercial production. Is that the right way to think about it? I think the right way, and maybe I'll ask Joe Newell to say a few words about that, is it's a different phase. When we started at Atara to do clinical trials, it was with tab-cel made at Cognate BioServices in Memphis. It is with AQ and AK8 made in Fujifilm Diosynth Biotechnologies in Australia. The company built ATOM and started develop ATOM for clinical trials and future commercial use. In some ways, what we have is the ability to have our inventory of clinical type of product and in the future, commercial type of product to be able to deliver to patients. That's being maintained by Atara. This deal allows us to have a partner that will be able to make what we need when we need it. Joe, anything else to add to that? You summarized it well, Pascal. John, we built ATOM four and a half years ago with the flexibility to grow the capacity that we need based on the demand that we were having at the time. We've done such a nice job in expanding the productivity and volume of cells that we're making, that capacity that we built into that flexibility is just not needed at this point. Good use of capital, good success on the technology platform. Okay, great. That said, one additional question. I don't believe that this is the case, but, are there any manufacturing activities going on at ATOM at the moment which, are involved with the tab-cel FDA filing? I don't believe that there are, but just wanted to double-check that. The cell, the CTL, are being made for the pivotal trial in the early commercial inventory at Cognate BioServices. The reagent, the virus, is being made at ATOM. The EBV virus, which is used as a reagent into the manufacturing process for intended commercial use, is being made at ATOM. Both sites, the CTL Cognate site in Memphis and the ATOM site in Thousand Oaks are being part of the manufacturing supply chain of tab-cel for commercial use. Okay. Thank you. Our next question is from Phil Nadeau of Cowen and Company. Please proceed with your question. Good afternoon. Congrats on the deal and thanks for taking our questions. A couple detail questions on the deal itself, and then one broader question. On the deal itself, are there any volume requirements or spend that you'd have to give to Fujifilm over the next five years? Are you contractually obligated to minimums? Yeah. In fact, we have a typical type of supply agreement with them, which is having some plan and some minimum commitment at a lower level than our plans, and then to have the flexibility within this plan to move from one product to the other and so on. Ultimately, again, another important aspect, this type of manufacturing plan is allowing us, over time, to reduce operating expenses. Got it. Maybe on that latter point, without the fixed costs being worked into cost of goods, will this also, in addition to the operating expenses, but will this improve margins on the product? The gross margins as well? Yeah. I think there are two aspects. One is tab-cel is a very unique case because we've already made inventory. We have more than one year of inventory available for launch already. So that has been already expensed. So basically it means at the beginning we'll have zero cost of goods. Then progressively we'll have a cost of goods linked with the overall cost of making that. And we're not going to get into specific details at the time, but ultimately it's going to lead to a reduction in operating expenses. Got it. Okay. I think, I guess one complication we've seen from other people who have outsourced manufacturing of complicated processes is, sometimes things change, and they can't get the slots they need when they need them. Are you given primacy in requesting manufacturing runs through Fujifilm? Or will you ultimately have to get in line with everyone else who wants to use their capacity? Yeah. I think there are two things to have in mind which makes this deal very, very different from any other story you might have heard about companies that are using contractors, contract manufacturing. First of all, do not forget that this is Atara people are going to make these, or ex-Atara people when they move to Fuji. The same people, the same place, the same process, everything is the same. Doesn't change. There's no risk about tech transfer or whatever. The second aspect is that the long-term agreement we have dedicated suite in terms of manufacturing for Atara. We have a typical type of situation of any CDMO where we have reserved dedicated suite for Atara. There is absolutely no risk that we cannot make for Fuji what we need to have in terms of inventory. Perfect. I'm sorry, just two more questions from us. One is you mentioned people, and that's one thing we're curious about. It seems like there's a lot of expertise in that group. Is Fujifilm committed to keeping those people? Are they gonna do something to lock them up post the acquisition to ensure that they maintain working at the facility? Yes, of course. I mean, as we said, a key value aspect of this partnership is one of the people. We are interested for the people to remain, and they are interested as well for the people to remain, and they want to develop these people and make sure that they feel well treated in Fujifilm as they felt well treated in Atara. Great. Maybe the last question, a general question is, you talked a bit about the strategic rationale for why you did this deal. We've heard other companies talk about cell therapy manufacturing as a strategic capability and one that they thought that they could themselves monetize should they not need all their own capacity. I'm guessing that that's something that you looked into when you were doing this transaction, maybe being a contract manufacturer for others. Why'd you decide on the sale of the facility rather than turning it into a business for Atara itself? Yeah, I think that's a good question. I mean, we look at that, of course, and we thought that it was not in the best interest of our shareholders. Because at the end of the day, the margins that are existing in that business are very different. Our investors are investing in Atara to create new product, create significant value in transforming medicine, and that's where we want to maintain our focus and our capability and our expertise. One thing that is important when you mention this other company, most of them are autologous CAR T companies or autologous company like Gilead. That's very, very different because again, and I've been in that activity in the past, you need to have all the time capacity available, because if you don't have capacity at the time of demand, you lose that patient, which is bad for the patient, and of course you lose the revenue, if you are at the commercial stage. Again, that's nothing to do with allogeneic cell therapy. We have inventory that is ready to use when the patient needs that. Now, the other aspect of your question is what we believe is truly strategic is to be able to to create the manufacturing process that is needed to start with and to scale up that manufacturing process. This particular expertise is staying at Atara. These particular talents, activities, people, facilities and that are staying at Atara. That's where we create value. That's not in making batches to fulfill inventories. Perfect. That is very reasonable. Thanks for taking our question. Our next question is from Ben Burnett of Stifel. Please proceed with your question. Hey, thank you very much. I wanted to ask, apologies if I missed this, but have you given the specific terms for procuring tab-cel from Fujifilm just in terms of cost to Atara? No, we've not. Utpal, do you want to address that? Yeah. Thanks for the question. We have laid that out and it's part of the agreement, and we're not gonna be, you know, getting into any details on that at this point in time. Okay. Understood. I appreciate the commentary around kind of the cash burn and the impact this will have on OpEx and so forth. I guess, can you quantify the level of OpEx savings that you would expect? I guess just in terms of the model, anything you can say about when you expect to realize those differences? It sounds like maybe from a prior question or discussion point that with the year's worth of inventory of tab-cel, that maybe this hits the model in years sort of two plus. Is that right? Yeah. Happy to give you color on that. You know, the thing that you wanna think about in terms of modeling for year one is, we still have filings to do in EMA and hopefully FDA before too long as well. So that activity has to continue to take place. There's a fair amount of transition activity that has to happen from Atara to Fuji to make sure that the plant continues to run without a hitch. The savings that we refer to in our release, it's happening beyond, if you will, only a portion of the savings happening during the cash runway, and there's further savings beyond that over the five-year term and further. It's a bit hard to paint that picture for you as to how much more efficient we're gonna be, but there's no doubt about it, we're gonna be more efficient running the model this way. Okay. Excellent. Maybe just one quick question regarding the $100 million upfront payment. I guess just are there any contingencies around the approval of tab-cel? No. Got it. Okay, great. Thanks very much. Appreciate it. Our next question is from Salveen Richter of Goldman Sachs. Please proceed with your question. Hey, good evening. This is Elizabeth on for Salveen. Thanks for taking our question. You just gave some details on the agreement, noting there would be minimum commitments. You know, we're just wondering if there's any additional color on the structure of the long-term supply agreement you could provide. Utpal, do you want to give, to start, and I'll chime in? Yeah, sure. What you've heard already from Pascal is, there's a profile of, you know, manufacturing that we need over the 5-year term, and what we've committed to is something that's a little bit below that. We have to obviously, you know, commit to doing that, and we think our demand is gonna be above that level, so we're completely safe there. There's flexibility from a product perspective as well. We have many products in our pipeline, obviously tab-cel and ATA188, and we're looking forward to, at the right point in time, ATA3219 and ATA3271, our CAR Ts as well. There's an ability to flex from one product to another, depending on what makes the most sense. That's how we're thinking about what we've reserved with Fujifilm. Yeah. I think it's a very traditional type of supply agreement, except that, again, it give us access to the people that will have been trained by Atara and the facility that we know well and the process that we know well that are going to be implemented, the Atara process going to be implemented in this facility by these ex-Atara people and going to deliver what we need when we need it. The flexibility and the access reserve suite of manufacturing, the access to capacity as we need it, all that is baked into this agreement. That's all what we can say at that time. Got it. Thank you. Our next question is from Yigal Nochomovitz of Citi. Please proceed with your question. Hi. Thanks. Thanks Pascal, for taking the question. I know you mentioned that you're not transferring the IP to FDB, but given the facility is no longer under Atara ownership and FDB is, as you say, using the facility to service other cell manufacturing clients, I'm curious, what's the safeguards that are in place to protect your IP? No, thank you for your question. What we can say at this stage, we don't want to go into too many details there, but IP could be used to make Atara product, but that's it. We have a number of very specific known IP that are not being transferred at all to Fujifilm. Only what's needed to make the Atara product as per the process we design. Okay. I just had a question on the deal terms. I'm curious, how did you determine that this facility was worth $100 million? What was your valuation method? Utpal, do you want to take that one? Yeah, sure. You know, I think the typical way you look at it is what kind of contract does a facility bring in terms of captive customer. If you're looking at it from the Fujifilm perspective, it's what business we were gonna give them. There isn't a second party here, where there's a book of business where you typically value this at, you know, potentially higher. You might have heard from one of the other questions as asked by someone else in the call, why did we decide not to, you know, become a contract manufacturer? We just don't think that was the right use of our time or our focus to sign up any further business. You can see facilities being sold for more money when there's a larger book of business. It's the Atara book of business that they're getting, and when we look at it relative to what we invested in it, we've made actually a very nice return. Got it. Thank you. This concludes our question and answer session for today. Thank you for joining the Atara Biotherapeutics conference call. You may now disconnect.