Autolus Therapeutics plc

Current report

Our business is subject to numerous risks. You should carefully consider and evaluate each of the following factors as well as the other information in this Quarterly Report on Form 10-Q, including our financial statements, and related notes, the risk factors discussed in our Annual Report on Form 10-K, which we filed with the SEC on March 21, 2024, in evaluating our business and prospects. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business operations. If any of the following risks actually occur, our business and financial results could be harmed. In that case, the trading price our ADSs could decline. You should also consider the more detail description of our business contained in our Annual Report on Form 10-K.

Current report

We are an early commercial stage biopharmaceutical company and have incurred significant losses since our inception. We expect to continue to incur losses for the foreseeable future.

Current report

We are an early commercial stage biopharmaceutical company with a limited operating history, and we have incurred significant net losses since our inception in 2014. We have incurred losses of $208.4 million,$148.8 million and $142.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, we had an accumulated deficit of$878.6 million. We have funded our operations to date primarily with proceeds from the sale of our equity securities, including ADSs, licensing and collaboration arrangements and strategic financing.

Current report

We currently have one product, AUCATZYL (obe-cel), approved for commercial sale, and while we have generated revenue from licensing, we are devoting substantially all of our financial resources and efforts to manufacturing and commercializing AUCATZYL and for the research and development of our other programmed T cell product candidates and T cell programming technologies. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront operating and capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable.

Current report

Should we be unsuccessful in our commercialization efforts for AUCATZYL or if the rates of market acceptance do not meet our expectations, we may not generate sufficient revenue. We expect that it could take several years until any of our other product candidates receive marketing approval and are commercialized, and we may never be successful in obtaining marketing approval and commercializing any of our other product candidates, including obe-cel in additional indications. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. These net losses will adversely impact our shareholders’ equity and net assets and may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase substantially as we:

Current report

•expand our sales, marketing and distribution infrastructure to commercialize AUCATZYL/obe-cel and any other product candidate for which we may obtain regulatory approval;

Current report

•make required milestone, royalty and revenue sharing payments to third parties under license and collaboration agreements;

Current report

•continue to scale up internal and external manufacturing capacity with the aim of securing sufficient quantities to meet our capacity requirements for commercialization of AUCATZYL and clinical trials of our other product candidates;

Current report

•continue our ongoing and planned research and development of our current programmed T cell product candidates for the treatment of hematological cancers, solid tumors and autoimmune diseases;

Current report

•seek to discover and develop additional product candidates and further expand our clinical product pipeline;

Current report

•initiate preclinical studies and clinical trials for any additional product candidates that we may pursue in the future, including our planned development of additional T cell therapies for the treatment of hematological cancers, solid tumors and autoimmune diseases;

Current report

•develop, maintain, expand and protect our intellectual property portfolio;

Current report

•hire additional clinical, quality control and manufacturing personnel;

Current report

•add clinical, operational, financial and management information systems and personnel, including personnel to support the commercial development of AUCATZYL, as well as our other product development and future commercialization efforts;

Current report

•expand our operations in the United States, Europe and other geographies; and

Current report

To become and remain profitable, we must succeed in commercializing AUCATZYL and developing and eventually commercializing other products that generate significant revenue. This will require us to be successful in a range of challenging activities, including marketing and selling AUCATZYL and any future products for which we may obtain regulatory approval, completing preclinical studies and clinical trials of our product candidates, preparing a satisfactory filing package for regulatory authorities, obtaining regulatory approval, manufacturing, marketing and selling any products for which we may obtain regulatory approval, as well as discovering and developing additional product candidates. We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability.

Current report

Because of the numerous risks and uncertainties associated with the development, manufacturing, delivery and commercialization of complex autologous cell therapies, we are unable to accurately predict the timing or amount of expenses or when, or if, we will be able to achieve profitability. If we are required by regulatory authorities to perform studies in addition to those currently expected, or if there are any delays in the initiation and completion of our clinical trials or the development of any of our product candidates, our expenses could increase and profitability could be further delayed.

Current report

Even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our ADSs and could impair our ability to raise capital, expand our business, maintain our research and development efforts or continue our operations. A decline in the value of our ADSs could also cause you to lose all or part of your investment.

Current report

We will need additional funding to successfully commercialize AUCATZYL and to complete the development of and commercialize our other product candidates, which may not be available on acceptable terms, if at all.

Current report

Unless and until we are able to successfully commercialize AUCATZYL and achieve significant revenue from sales, we will require substantial additional funding to meet our financial needs and to pursue our business objectives. If we are unable to raise capital when needed, we could be forced to delay, reduce or altogether cease our product development programs or commercialization efforts.

Current report

Since our inception, we have devoted substantially all of our resources to fund the operating expenses and capital expenditure requirements associated with the research and development of AUCATZYL and our other product candidates. Even once we begin to generate revenue from sales of AUCATZYL, we will need to raise additional capital to reach profitability as well as to complete the development and commercialization of our other programmed T cell product candidates, and in connection with our continuing operations, strategy and other planned activities. Our future capital requirements will depend on many factors, including:

Current report

•our ability to execute our commercialization strategies for and generate revenue from sales of AUCATZYL and, if approved, our other product candidates;

Current report

•the progress, results and costs of laboratory testing, manufacturing, and preclinical and clinical development of our current and future product candidates;

Current report

•the timing and amounts of any milestone, royalty payments or revenue sharing payments we may be required to make under current or future license or collaboration agreements;

Current report

•the costs of leasing, building out, equipping, and operating the facilities necessary to research, develop, manufacture and commercialize our product candidates, as well as to support our continuing operations;

Current report

•the costs of hiring additional clinical, quality control and manufacturing personnel;

Current report

•the costs and timing of commercialization activities, including product manufacturing, marketing, sales and distribution, for any future product candidates for which we receive marketing approval;

Current report

Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve product sales. In addition, AUCATZYL, or our other product candidates, if approved, may not achieve commercial success. Our product revenues in the near term will be derived primarily from sales of AUCATZYL in the US, as we that we do not expect to generate material revenues from obe-cel in other jurisdictions or from other pipeline programs, for up to several years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

Current report

To the extent that we raise additional capital through the sale of equity or convertible debt securities, our shareholders may experience substantial dilution. We may sell ordinary shares or ADSs, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell ordinary shares or ADSs, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. These sales may also result in material dilution to our existing shareholders, and new investors could gain rights superior to our existing shareholders. In February 2024, we issued an aggregate of approximately 91.7 million ADSs in an underwritten offering and a private placement, resulting in substantial dilution for existing shareholders. Debt financing and preferred equity financing, if available, could result in fixed payment obligations, and we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions.

Current report

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. In addition, we could also be required to seek funds through arrangements with collaborators or others at an earlier stage than otherwise would be desirable. If we raise funds through research grants, we may be subject to certain requirements, which may limit our ability to use the funds or require us to share information from our research and development. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to a third party to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Raising additional capital through any of these or other means could adversely affect our business and the holdings or rights of our shareholders and may cause the market price of our ADSs to decline.

Current report

We have incurred substantial obligations under license and collaboration agreements, which could impair our flexibility and access to other capital and adversely affect our financial position, and our business would be adversely affected if we were unable to meet our obligations under these and similar future agreements.

Current report

In November 2021, we entered into a collaboration agreement with Blackstone (the “Blackstone Collaboration Agreement”) pursuant to which Blackstone agreed to pay us up to $150 million to support the continued development and commercialization of AUCATZYL/obe-cel and next-generation product candidates (collectively, the “Collaboration Products”) in exchange for our agreement to make substantial payments to Blackstone following approval of such Collaboration Products. These payments include a single-digit percentage payment on worldwide net sales of (i) the Collaboration Products in any indication and (ii) AUTO3 for the treatment of B-cell leukemias and lymphomas, by us and any of our licensees, as well as sales milestone payments relating to such net sales. Such payments to Blackstone could increase our cash requirements and could impair our liquidity. Through December 31, 2023, Blackstone paid $120 million to us under the terms of the Blackstone Collaboration Agreement. Following the approval of AUCATZYL, we expect to receive the remaining $30 million in the fourth quarter of 2024.

Current report

In connection with the Collaboration Agreement, Blackstone was granted a security interest in substantially all of our assets. The Collaboration Agreement also contains negative covenants that restrict us from (a) granting liens on certain of our assets, including liens on the intellectual property relating to the Collaboration Products, except for certain permitted liens, (b) making distributions or dividends, except for certain permitted distributions, (c) entering into development or commercialization license transactions with respect to the Collaboration Products, except that we are permitted to enter into any such development or commercialization license transactions with certain pharmaceutical companies, including those companies that have annual sales in excess of an agreed threshold, (d) consummating certain change in control transactions, (e) selling royalties or entering into similar financials transactions involving the sale of revenues or royalties, or (f) acquiring subsidiaries without joining such subsidiary as a party to the Blackstone Collaboration Agreement. These restrictions could inhibit our ability to pursue our business strategies and may limit our ability to, among other things, incur secured indebtedness, encumber assets, pay dividends or make other distributions to holders of our capital stock, license-out the Collaboration Products, complete mergers or acquisitions, or sell royalties. However, the security interest and negative covenants will expire upon the first commercial sale of AUCATZYL.

Current report

If we default under our obligations under the Blackstone Collaboration Agreement, we will be obligated to pay Blackstone liquidated damage payments in excess of the development payment paid by Blackstone. If we fail to make such payments, Blackstone could elect to exercise its remedies in respect of the security interest, which would seriously harm our business and ability to continue as a going concern.

Current report

Under the BioNTech License Agreement with BioNTech entered into in February 2024, we also agreed to pay BioNTech a low single-digit percentage of annual net revenue of AUCATZYL/obe-cel, which may be increased up to a mid-single digit percentage, in exchange for milestone payments of up to $100 million in the aggregate on achievement of certain regulatory events for specific new indications upon BioNTech's election. Such payments to BioNTech could increase our cash requirements and could impair our liquidity.

Current report

Risks Related to the Commercialization of AUCATZYL and Our Other Product Candidates

Current report

AUCATZYL and any other product candidates, if approved, may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success, thereby limiting our potential to generate revenue.

Current report

AUCATZYL and any other product candidates, if approved, may not achieve market acceptance among physicians, patients, hospitals, including pharmacy directors, and third-party payors and, ultimately, may not be commercially successful. If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable. FDA’s investigation into secondary malignancies associated with CAR T cell therapies and other similar actions could result in increased government regulation, unfavorable public perception and publicity, stricter labeling requirements for AUCATZYL and those product candidates that are approved, and a decrease in demand for AUCATZYL or any such product candidates. The degree of market acceptance of AUCATZYL, and any other product candidates, if approved for commercial sale, will depend on a number of factors, including:

Current report

•the timing of market introduction of those products compared to competitive products;

Current report

•the continued safety and efficacy of those products;

Previous report

Information regarding risks and uncertainties related to our business appears in Part I, Item 1A. “Risk Factors” of our Annual Report. As of the date of this Quarterly Report, there have been no material changes from the risk factors previously disclosed in the Annual Report, except as follows: