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United States securities and exchange commission logo
November 21, 2023
David Chang
President and Chief Executive Officer
Allogene Therapeutics, Inc.
210 East Grand Avenue
South San Francisco, California 94080
Re: Allogene
Therapeutics, Inc.
Form 10-K for
Fiscal Year Ended December 31, 2022
Filed February 28,
2023
File No. 001-38693
Dear David Chang:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments.
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to this letter, we may have additional comments.
Form 10-K for Fiscal Year Ended December 31, 2022
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Research and Development, page 85
1. We note you reported
significant research and development expenses and that you have
multiple
programs/product candidates in varying stages of development and clinical
testing, and note that
you expect your research and development expenses to increase.
Please confirm that you
will revise future filings to provide more details about
your research and
development expenses for each period presented, including but not
limited to by
product/program, internal versus external, as well as by the nature of the
expenses. For example,
in discussing the specific reasons for significant changes
in research and
development expenses, quantify the change by each product candidate for
which significant
investments were made during the periods. Refer to Item 303(b) of
Regulation S-K. To the
extent that you do not track expenses by product candidate, please
disclose as such.
David Chang
Allogene Therapeutics, Inc.
November 21, 2023
Page 2
Notes to Consolidated Financial Statements
6. Joint Venture and License Agreement with Allogene Overland Biopharm (CY)
Limited, page
111
2. Please address the following as it relates to your Joint Venture and
License Agreement
with Allogene Overland Biopharm (CY) Limited (Allogene Overland):
Provide your analysis under ASC 606 supporting your determination
that the
transaction price should not include the fair value of the Seed
Preferred Shares
received from Allogene Overland, representing a 49% ownership
interest. As part of
your response, address your consideration of Article 8.1 of the
License Agreement,
which specifically states that upfront consideration for the license
included both the
$40 million non-refundable payment and the Seed Preferred Shares
representing 49%
of Allogene Overland.
Tell us and revise your future filings to disclose the amount of the
transaction price
allocated to each performance obligation.
Provide your analysis under ASC 323 supporting the initial
measurement of your
investment in Allogene Overland at zero. Address the following as
part of your
response:
o Explain your consideration of ASC 323-10-30-2 in determining
the applicability
of ASC 610-20 and whether the license transferred should be
measured based
on its fair value.
o Explain whether you identified a basis difference between your
initial
investment in Allogene Overland and your proportionate share of
the underlying
net assets in Allogene Overland and your accounting treatment
for any such
basis difference.
Provide your analysis under ASC 810 supporting your determination
that you are not
the primary beneficiary of Allogene Overland. As part of your
response, identify the
activities of Allogene Overland that most significantly impact its
economic
performance and explain how you determined that you do not have the
power to
direct such activities and therefore do not hold a controlling
financial interest.To the
extent that the power is shared among the variable interest holders,
clarify whether
there is a tie-breaking mechanism in place with respect to key
decision making.
Please confirm with us that in future filings you will expand to
provide all the
required disclosures under ASC 810-10-50 Disclosure Variable
Interest
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but not limited to those required for
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In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Please contact Li Xiao at 202-551-4391 or Angela Connell at 202-551-3426
with any
questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences