| Item 1.01 |
Entry into a Material Definitive Agreement. |
On January 3, 2024, Allogene Therapeutics, Inc. (the “Company”) entered into a Strategic Collaboration Agreement (the “Agreement”) with Foresight Diagnostics, Inc. (“Foresight”). Pursuant to the Agreement, the parties have agreed to collaborate on a non-exclusive basis in the development of Foresight’s minimal residual disease (“MRD”) assay as an in vitro diagnostic to identify the MRD+ patient population to be enrolled in the Company’s planned ALPHA3 trial of cemacabtagene ansegedleucel (formerly known as ALLO-501A), or cema-cel, for the treatment of large B cell lymphoma (“LBCL”), which trial is described in further detail under Item 8.01, below.
Under the Agreement, the Company has agreed to use its commercially reasonable efforts to obtain regulatory approval of cema-cel, and Foresight has agreed to use its commercially reasonable efforts to obtain regulatory approval of an MRD assay for use as an in vitro diagnostic with cema-cel. The Company has agreed to fund approximately $26 million in MRD assay development costs, milestone payments for regulatory submissions and assay utilization to process clinical samples.
Each party will retain ownership to their own background intellectual property and will own any improvements made to their respective intellectual property during the course of the collaboration.
Either party may terminate the Agreement (i) in the event of the other party’s material breach, subject to a cure period, (ii) in the event of the other party’s insolvency, and (iii) if a regulatory authority determines not to grant regulatory approval of cema-cel or Foresight’s MRD assay for use as an in vitro diagnostic with cema-cel. In addition, the Company may terminate the Agreement for convenience upon advance notice to Foresight, subject to paying Foresight a termination payment associated with certain activities of Foresight.
| Item 2.05 |
Costs Associated with Exit or Disposal Activities. |
On January 4, 2024, the Company’s Board of Directors approved a reduction in the Company’s workforce of approximately 22% of the Company’s employees in connection with the Company’s pipeline prioritization and clinical development strategy. The reduction in workforce is expected to be substantially completed by the end of January 2024.
The Company estimates that it will incur charges of approximately $5.0 million to $5.5 million for severance payments and employee benefits, primarily in the first quarter of 2024. Substantially all of the estimated charges are expected to result in future cash expenditures. The estimated charges that the Company expects to incur are subject to a number of assumptions, and actual results may differ materially from these estimates. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, its reduction in workforce.
On January 4, 2024, the Company announced its intention to commence a Phase 2, pivotal clinical trial of cema-cel as part of the first line (“1L”) treatment plan for newly diagnosed and treated LBCL patients who are likely to relapse and need further therapy (such trial, the “ALPHA3 trial”). The Company intends to initiate the ALPHA3 trial mid-2024. The trial design contemplates randomizing approximately 230 patients who are MRD+ at the end of 1L therapy to either consolidation with cema-cel or the current standard of care (observation). The design, with a primary endpoint of event free survival, includes two lymphodepletion arms: one with standard fludarabine and cyclophosphamide plus ALLO-647 and one without ALLO-647. The outcome of this pivotal trial could allow cema-cel to be embedded in the 1L setting to boost cure rates, potentially rendering later-line treatment obsolete, and making cema-cel available in community centers where most earlier line patients seek care.
Given the vision for cema-cel as part of 1L treatment, the Company expects the CD19 CAR T market in second line (“2L”) and third line (“3L”) could be significantly diminished. Accordingly, the Company plans to focus cema-cel clinical development resources into the ALPHA3 trial and deprioritize its currently enrolling 3L trials (ALPHA2 and EXPAND).
Forward-Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based upon current expectations or beliefs, as well as a number of assumptions about future events. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which they are based are reasonable, the Company can give no assurance that such expectations and assumptions will prove to be correct. Forward-looking statements include all statements that are not historical facts and can generally be identified by terms such as “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” or “will” or similar expressions and the negatives of those terms. These statements include, but are not limited to, statements regarding the expectations related to the costs, timing, and estimated financial impacts of the reduction in workforce, including the estimated expenditures associated with the reduction in