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Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________________________
FORM 10-Q
________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-38693
________________________________________________________
Allogene Therapeutics, Inc.
(Exact Name of Registrant as Specified in its Charter)
________________________________________________________
Delaware82-3562771
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
210 East Grand Avenue, South San Francisco, California 94080
(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code: (650) 457-2700
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareALLOThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of November 2, 2020, the registrant had 140,280,152 shares of common stock, $0.001 par value per share, outstanding.



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Table of Contents
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
ALLOGENE THERAPEUTICS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share amounts)
September 30,
2020
December 31,
2019
Assets(1)
Current assets:
Cash and cash equivalents$158,136 $175,126 
Short-term investments682,886 355,407 
Prepaid expenses and other current assets13,036 14,043 
Total current assets854,058 544,576 
Long-term investments207,993 58,322 
Operating lease right-of-use asset41,557 44,495 
Property and equipment, net102,653 56,449 
Intangible assets, net 151 
Restricted cash9,449 4,299 
Other long-term assets2,274 4,618 
Equity method investment4,516 4,892 
Total assets$1,222,500 $717,802 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$10,151 $9,250 
Accrued and other current liabilities39,979 23,829 
Total current liabilities50,130 33,079 
Lease liability, noncurrent50,846 51,349 
Other long-term liabilities2,793 4,351 
Total liabilities103,769 88,779 
Commitments and Contingencies (Notes 6 and 7)
Stockholders’ equity:
Preferred stock, $0.001 par value: 10,000,000 shares authorized as of September 30, 2020 and December 31, 2019; no shares were issued and outstanding as of September 30, 2020 and December 31, 2019
  
Common stock, $0.001 par value: 200,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 139,755,839 and 124,267,358 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively
140 124 
Additional paid-in capital1,695,411 1,023,876 
Accumulated deficit(577,773)(396,122)
Accumulated other comprehensive income953 1,145 
Total stockholders’ equity1,118,731 629,023 
Total liabilities and stockholders’ equity$1,222,500 $717,802 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
(1)The balance sheet as of December 31, 2019 is derived from the audited financial statements as of that date.
1

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ALLOGENE THERAPEUTICS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except share and per share amounts)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Operating expenses:
Research and development$51,421 $39,995 $140,759 $95,172 
General and administrative16,619 15,016 48,122 42,261 
Total operating expenses68,040 55,011 188,881 137,433 
Loss from operations(68,040)(55,011)(188,881)(137,433)
Other income (expense), net:
    Interest and other income, net2,005 4,309 7,606 13,693 
    Other expenses(162) (376) 
Total other income (expense), net1,843 4,309 7,230 13,693 
Loss before income taxes(66,197)(50,702)(181,651)(123,740)
Benefit (expense) from income taxes (33) 176 
Net loss(66,197)(50,735)(181,651)(123,564)
Other comprehensive income:
Net unrealized gain (loss) on available-for-sale investments(877)(295)(192)1,560 
Net comprehensive loss$(67,074)$(51,030)$(181,843)$(122,004)
Net loss per share, basic and diluted$(0.52)$(0.50)$(1.55)$(1.24)
Weighted-average number of shares used in computing net loss per share, basic and diluted127,140,755 102,186,644 117,227,079 99,801,001 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ALLOGENE THERAPEUTICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share amounts)



Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive IncomeTotal Stockholders’ Equity
SharesAmount
Balance - June 30, 2020139,233,450 $139 $1,673,026 $(511,576)$1,830 $1,163,419 
Issuance of common stock upon exercise of stock options and vesting of RSUs
431,812 1 2,446 — — 2,447 
Vesting of early exercised common stock
— — 710 — — 710 
Stock-based compensation— — 17,823 — — 17,823 
Employee stock purchase plan
90,577 — 1,406 — — 1,406 
Net loss— — — (66,197)— (66,197)
Net unrealized loss on available-for-sale investments
— — — — (877)(877)
Balance - September 30, 2020139,755,839 $140 $1,695,411 $(577,773)$953 $1,118,731 


Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income
Total
Stockholders’
Equity
SharesAmount
Balance - December 31, 2019124,267,358 $124 $1,023,876 $(396,122)$1,145 $629,023 
Issuance of common stock upon exercise of stock options and vesting of RSUs
1,285,053 2 7,225 — — 7,227 
Vesting of early exercised common stock
— — 2,130 — — 2,130 
Stock-based compensation
— — 48,808 — — 48,808 
Employee stock purchase plan175,142 — 2,843 — — 2,843 
Issuance of common stock from public ATM offering, net of commissions and offering costs of $0.3 million
570,839 1 14,844 — — 14,845 
Issuance of common stock from public offering, net of commissions and offering costs of $36.8 million
13,457,447 13 595,685 — — 595,698 
Net loss— — — (181,651)— (181,651)
Net unrealized loss on available-for-sale investments
— — — — (192)(192)
Balance - September 30, 2020139,755,839 $140 $1,695,411 $(577,773)$953 $1,118,731 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.





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ALLOGENE THERAPEUTICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share amounts)
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income
Total
Stockholders’
Equity
SharesAmount
Balance - June 30, 2019121,631,278 $122 $937,709 $(284,357)$2,161 $655,635 
Issuance of common stock upon exercise of stock
200,868 — 467 — — 467 
Vesting of early exercised common stock
— — 710 — — 710 
Stock-based compensation— — 12,835 — — 12,835 
Employee stock purchase plan63,333 1,099 — 1,099 
Net loss— — — (50,735)— (50,735)
Net unrealized loss on available-for-sale investments
— — — — (295)(295)
Balance - September 30, 2019121,895,479 $122 $952,820 $(335,092)$1,866 $619,716 


Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income
Total
Stockholders’
Equity
SharesAmount
Balance - December 31, 2018121,482,671 $121 $914,265 $(211,528)$306 $703,164 
Issuance of common stock upon exercise of stock
304,826 1 703 — — 704 
Vesting of early exercised common stock
— — 3,880 — — 3,880 
Stock-based compensation
— — 32,189 — — 32,189 
Employee stock purchase plan
107,982 — 1,783 — — 1,783 
Net loss
— — — (123,564)— (123,564)
Net unrealized gain on available-for-sale investments
— — — — 1,560 1,560 
Balance - September 30, 2019121,895,479 $122 $952,820 $(335,092)$1,866 $619,716 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ALLOGENE THERAPEUTICS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended September 30,
20202019
Cash flows from operating activities:
Net loss$(181,651)$(123,564)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation48,808 32,189 
Amortization of other intangible assets acquired151 452 
Depreciation and amortization5,591 2,720 
Net amortization/accretion on investment securities1,437 (3,136)
Non-cash rent expense1,240 4,827 
Benefit from income taxes (176)
Share of losses from equity method investments376  
Changes in operating assets and liabilities:
Prepaid expenses and other current assets657 86 
Other long-term assets1,975 (2,863)
Accounts payable1,681 (3,137)
Accrued and other current liabilities16,175 7,510 
Other long-term liabilities(1,558)(1,991)
Net cash used in operating activities(105,118)(87,083)
Cash flows from investing activities:
Purchases of property and equipment(48,554)(36,679)
Proceeds from sales of investments4,877  
Proceeds from maturities of investments371,777 355,765 
Purchase of investments(855,433)(162,931)
Net cash (used in) provided by investing activities(527,333)156,155 
Cash flows from financing activities:
Proceeds from issuance of common stock from ATM offering, net of commissions and issuance costs14,845  
Proceeds from issuance of common stock from public offering, net of commissions and issuance costs595,730  
Proceeds from issuance of common stock upon exercise of stock options7,194 703 
Proceeds from issuance of common stock under the employee stock purchase plan2,844 1,783 
Net cash provided by financing activities620,613 2,486 
Net change in cash, cash equivalents and restricted cash(11,838)71,558 
Cash, cash equivalents and restricted cash — beginning of period179,425 93,731 
Cash, cash equivalents and restricted cash — end of period$167,587 $165,289 
Non-cash investing activities:
Property and equipment purchases in accounts payable and accrued and other current liabilities$7,909 $6,571 
Supplemental disclosure:
Cash paid for amounts included in the measurement of lease liabilities$4,236 $2,182 
Cash received for amounts related to tenant improvement allowances$2,321 $2,934 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ALLOGENE THERAPEUTICS, INC.
Notes to Condensed Consolidated Financial Statements
1.          Description of Business
Allogene Therapeutics, Inc. (the Company or Allogene) was incorporated on November 30, 2017, in the State of Delaware and is headquartered in South San Francisco, California. Allogene is a clinical-stage immuno-oncology company pioneering the development and commercialization of genetically engineered allogeneic T cell therapies for the treatment of cancer. The Company is developing a pipeline of off-the-shelf T cell product candidates that are designed to target and kill cancer cells.
Public Offerings
In November 2019, the Company entered into a sales agreement with Cowen and Company, LLC (Cowen), under which the Company may from time to time issue and sell shares of its common stock through Cowen in at-the-market (ATM) offerings for an aggregate offering price of up to $250.0 million. The aggregate compensation payable to Cowen as the Company's sales agent equals up to 3.0% of the gross sales price of the shares sold through it pursuant to the sales agreement. In January 2020, the Company sold an aggregate of 570,839 shares of common stock in ATM offerings resulting in net proceeds of $14.8 million.
In June 2020, the Company sold 13,457,447 shares of its common stock, which included 1,755,319 shares sold pursuant to the full exercise of the underwriters' option to purchase additional shares, in an underwritten public offering at a price of $47.00 per share, which resulted in gross proceeds of approximately $632.5 million. Net proceeds to the Company after deducting the underwriting discounts and commissions and other expenses were approximately $595.7 million.
Need for Additional Capital
The Company has sustained operating losses and expects to continue to generate operating losses for the foreseeable future. The Company’s ultimate success depends on the outcome of its research and development activities. The Company had cash and cash equivalents and investments of $1.0 billion as of September 30, 2020. Since inception through September 30, 2020, the Company has incurred cumulative net losses of $577.8 million. Management expects to incur additional losses in the future to fund its operations and conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan.
The Company intends to raise additional capital through the issuance of equity securities, debt financings or other sources in order to further implement its business plan. However, if such financing is not available when needed and at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of its product candidates. The Company expects that its cash and cash equivalents and investments will be sufficient to fund its operations for a period of at least one year from the date the accompanying unaudited condensed consolidated financial statements are filed with the Securities and Exchange Commission (SEC).
In March 2020, the World Health Organization declared the global novel coronavirus disease (COVID-19) outbreak a pandemic. The Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 pandemic will have on its financial condition and operations, including ongoing and planned clinical trials. The impact of the COVID-19 pandemic on the financial performance of the Company will depend on future developments, including the duration and spread of the pandemic and related governmental advisories and restrictions. These developments and the impact of the COVID-19 pandemic on the financial markets and the overall economy are highly uncertain. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results may be adversely affected.
2.         Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the Company’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included. In June 2020, the Company formed a wholly-owned Netherlands-based subsidiary, Allogene Therapeutics, B.V., to help prepare for and assist with the Company's activities in Europe. The condensed
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consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All material intercompany balances and transactions have been eliminated during consolidation.
The condensed consolidated balance sheet as of September 30, 2020, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2020 and 2019, the condensed consolidated statements of stockholders’ equity as of September 30, 2020 and 2019, the condensed consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019, and the financial data and other financial information disclosed in the notes to the condensed consolidated financial statements are unaudited. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020, or for any other future annual or interim period. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related notes for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2020.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include but are not limited to the fair value of stock options, income tax uncertainties, and certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.
Significant Accounting Policies
There have been no significant changes to the accounting policies during the three and nine months ended September 30, 2020, as compared to the significant accounting policies described in Note 1 of the “Notes to Financial Statements” in the Company’s audited financial statements included in its Annual Report, with the exception of the recently adopted accounting pronouncements in the section below.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11. The standard requires measurement and recognition of expected credit losses for financial assets by requiring an allowance to be recorded as an offset to the amortized cost of such assets. For available-for-sale debt securities, expected credit losses should be estimated when the fair value of the debt securities is below their associated amortized costs. This standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted beginning the first quarter of 2019. The Company’s financial instruments that are in the scope of ASU 2016-13 include, but are not limited to, other receivables and available-for-sale debt securities. The Company adopted this standard on January 1, 2020 and applied the modified retrospective approach. Adoption of the new guidance had no significant impact on the Company’s consolidated financial statements.
In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles – Goodwill and other – Internal-Use Software (Subtopic 350-40), which amended its guidance for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This new standard also requires customers to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted this standard on January 1, 2020, on a prospective basis for applicable implementation costs. Adoption of the new guidance had no significant impact on the Company’s consolidated financial statements.
In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer. In addition, Topic 808 precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. The Company adopted this standard on January 1, 2020. Adoption of the new guidance had no significant impact on the Company’s consolidated financial statements.
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In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. This guidance will be effective for the Company in the first quarter of 2021 on a prospective basis, and early adoption is permitted. The Company early adopted this standard as of January 1, 2020 on a prospective basis in accordance with ASC 250, Accounting Changes and Error Corrections. The adoption resulted in the Company no longer needing to determine the tax effect from unrealized gains on available for sale securities, which previously had been disclosed in the condensed consolidated statement of operations as a benefit from income taxes. The impact of the adoption in the three and nine months ended September 30, 2020 is that the benefit from income taxes in the condensed consolidated statement of operations and comprehensive loss is zero for both periods compared to recognition of a zero and $0.2 million tax benefit for the three and nine months ended September 30, 2019, respectively.
Recent Accounting Pronouncements Not Yet Adopted
In January 2020, the FASB issued Accounting Standard Update No. 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), which clarifies the interactions between topics 321 and 323 in applying or discontinuing the equity method of accounting for investments. This guidance will be effective for the Company in the first quarter of 2021, and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements.
3.         Fair Value Measurements
The Company measures and reports its cash equivalents, restricted cash, and investments at fair value.
Money market funds are measured at fair value on a recurring basis using quoted prices and are classified as Level 1. Investments are measured at fair value based on inputs other than quoted prices that are derived from observable market data and are classified as Level 2 inputs except for investments in U.S treasury securities which are classified as Level 1.
There were no Level 3 assets or liabilities as of September 30, 2020 and as of December 31, 2019.
Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of September 30, 2020 and as of December 31, 2019 are presented in the following tables: 

September 30, 2020
Level 1Level 2Level 3Fair Value
(in thousands)
Financial Assets:
Money market funds (1)$101,013 $ $ $101,013 
Commercial paper 73,967  73,967 
Corporate bonds 285,657  285,657 
U.S. treasury securities468,726   468,726 
U.S. agency securities 62,581  62,581 
Total financial assets$569,739 $422,205 $ $991,944 

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December 31, 2019
Level 1Level 2Level 3Fair Value
(in thousands)
Financial Assets:
Money market funds (1)$122,900 $ $ $122,900 
Corporate bonds 205,011  205,011 
U.S. treasury securities181,894   181,894 
U.S. agency securities 25,824  25,824 
Certificates of deposit 1,000  1,000 
Total financial assets$304,794 $231,835 $ $536,629 
(1)Included within cash and cash equivalents on the Company’s condensed consolidated balance sheets

4.         Financial Instruments
The fair value and amortized cost of cash equivalents and available-for-sale securities by major security type as of September 30, 2020 and as of December 31, 2019 are presented in the following tables:
September 30, 2020
Amortized CostUnrealized GainsUnrealized LossesFair Value
(in thousands)
Money market funds$101,013 $ $ $101,013 
Commercial paper73,938 30  73,968 
Corporate bonds284,902 784 (29)285,657 
U.S. treasury securities468,178 561 (14)468,725 
U.S. agency securities62,517 69 (5)62,581 
Total cash equivalents and investments$990,548 $1,444 $(48)$991,944 
Classified as:
Cash equivalents$101,065 
Short-term investments682,886 
Long-term investments207,993 
Total cash equivalents and investments$991,944 

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December 31, 2019
Amortized CostUnrealized GainsUnrealized LossesFair Value
(in thousands)
Money market funds$122,900 $ $ $122,900 
Corporate bonds204,144 871 (4)205,011 
U.S. treasury securities181,340 557 (3)181,894 
U.S. agency securities25,658 167 (1)25,824 
Certificates of deposit1,000   1,000 
Total cash equivalents and investments$535,042 $1,595 $(8)$536,629 
Classified as:
Cash equivalents$122,900 
Short-term investments355,407 
Long-term investments58,322 
Total cash equivalents and investments$536,629 
As of September 30, 2020, the remaining contractual maturities of available-for-sale securities were less than 3 years. There have been no significant realized losses on available-for-sale securities for the periods presented. As of September 30, 2020, unrealized losses on available-for-sale investments are not attributed to credit risk. The Company believes that it is more-likely-than-not that investments in an unrealized loss position will be held until maturity and all interest and principal will be received. The Company believes that an allowance for credit losses is unnecessary because the unrealized losses on certain of the Company’s marketable securities are due to market factors. To date, the Company has not recorded any impairment charges on marketable securities.
5.         Balance Sheets Components
Property and Equipment
Property and Equipment consist of the following:
September 30,
2020
December 31,
2019
(In thousands)
Construction in progress$54,080 $12,390 
Leasehold improvements31,518 29,924 
Laboratory equipment21,346 13,117 
Computers equipment and purchased software3,992 3,726 
Furniture and fixtures2,780 2,764 
Total113,716 61,921 
Less: accumulated depreciation(11,063)(5,472)
Total property and equipment, net$102,653 $56,449 

6.         License Agreements
Asset Contribution Agreement with Pfizer
In April 2018, the Company entered into an Asset Contribution Agreement (the Pfizer Agreement) with Pfizer pursuant to which the Company acquired certain assets, including certain contracts and intellectual property for the development and administration of chimeric antigen receptor (CAR) T cells for the treatment of cancer. The Company is required to make milestone payments upon successful completion of regulatory and sales milestones on a target-by-target basis for the targets including CD19 and B-cell maturation antigen (BCMA), covered by the Pfizer Agreement. The aggregate potential milestone payments upon successful completion of various regulatory milestones in the United States and the European Union are $30.0
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million or $60.0 million, depending on the target, with aggregate potential regulatory and development milestones of up to $840.0 million, provided that the Company is not obligated to pay a milestone for regulatory approval in the European Union for an anti-CD19 allogeneic CAR T cell product, to the extent Servier has commercial rights to such territory. The aggregate potential milestone payments upon reaching certain annual net sales thresholds in North America, Europe, Asia, Australia and Oceania (the Territory) for a certain number of targets covered by the Pfizer Agreement are $325.0 million per target. The sales milestones in the foregoing sentence are payable on a country-by-country basis until the last to expire of any Pfizer Royalty Term, as described below, for any product in such country in the Territory. In October 2019, the Territory was expanded to all countries in the world. No milestone or royalty payments were made in the three months ended September 30, 2020 and 2019 respectively.
Pfizer is also eligible to receive, on a product-by-product and country-by-country basis, royalties in single-digit percentages on annual net sales for products covered by the Pfizer Agreement or that use certain Pfizer intellectual property and for which an investigational new drug application (IND) is first filed on or before April 6, 2023. The Company’s royalty obligation with respect to a given product in a given country begins upon the first sale of such product in such country and ends on the later of (i) expiration of the last claim of any applicable patent or (ii) 12 years from the first sale of such product in such country.
Research Collaboration and License Agreement with Cellectis
As part of the Pfizer Agreement, Pfizer assigned to the Company a Research Collaboration and License Agreement (the Original Cellectis Agreement) with Cellectis S.A. (Cellectis). On March 8, 2019, the Company entered into a License Agreement (the Cellectis Agreement) with Cellectis.  In connection with the execution of the Cellectis Agreement, on March 8, 2019, the Company and Cellectis also entered into a letter agreement (the Letter Agreement), pursuant to which the Company and Cellectis agreed to terminate the Original Cellectis Agreement. The Original Cellectis Agreement included a research collaboration to conduct discovery and pre-clinical development activities to generate CAR T cells directed at targets selected by each party, which was completed in June 2018.
Pursuant to the Cellectis Agreement, Cellectis granted to the Company an exclusive, worldwide, royalty-bearing license, on a target-by-target basis, with sublicensing rights under certain conditions, under certain of Cellectis’s intellectual property, including its TALEN and electroporation technology, to make, use, sell, import, and otherwise exploit and commercialize CAR T products directed at certain targets, including BCMA, FLT3, DLL3 and CD70 (the Allogene Targets), for human oncologic therapeutic, diagnostic, prophylactic and prognostic purposes. In addition, certain Cellectis intellectual property rights granted by Cellectis to the Company and to Servier pursuant to the Exclusive License and Collaboration Agreement by and between Servier and Pfizer, dated October 30, 2016, which Pfizer assigned to the Company in April 2018, will survive the termination of the Original Cellectis Agreement.
Pursuant to the Cellectis Agreement, the Company granted Cellectis a non-exclusive, worldwide, royalty-free, perpetual and irrevocable license, with sublicensing rights under certain conditions, under certain of the Company's intellectual property, to make, use, sell, import and otherwise commercialize CAR T products directed at certain targets (the Cellectis Targets).
The Cellectis Agreement provides for development and sales milestone payments by the Company of up to $185.0 million per product that is directed against an Allogene Target, with aggregate potential development and sales milestone payments totaling up to $2.8 billion. Cellectis is also eligible to receive tiered royalties on annual worldwide net sales of any products that are commercialized by the Company that contain or incorporate, are made using or are claimed or covered by, Cellectis intellectual property licensed to the Company under the Cellectis Agreement (the Allogene Products), at rates in the high single-digit percentages. Such royalties may be reduced, on a licensed product-by-licensed product and country-by-country basis, for generic entry and for payments due under licenses of third party patents. Pursuant to the Cellectis Agreement, and subject to certain exceptions, the Company is required to indemnify Cellectis against all third party claims related to the development, manufacturing, commercialization or use of any Allogene Product or arising out of the Company’s material breach of the representations, warranties or covenants set forth in the Cellectis Agreement, and Cellectis is required, subject to certain exceptions, to indemnify the Company against all third party claims related to the development, manufacturing, commercialization or use of CAR T products directed at Cellectis Targets or arising out of Cellectis’s material breach of the representations, warranties or covenants set forth in the Cellectis Agreement.
The royalties are payable, on a licensed product-by-licensed product and country-by-country basis, until the later of (i) the expiration of the last to expire of the licensed patents covering such product; (ii) the loss of regulatory exclusivity afforded such product in such country, and (iii) the tenth anniversary of the date of the first commercial sale of such product in such country; however, in no event shall such royalties be payable, with respect to a particular licensed product, past the twentieth anniversary of the first commercial sale for such product.
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Depending on the Cellectis Target, the Company has a right of first refusal or right of first negotiation to purchase or license from Cellectis rights to develop and commercialize products against such Cellectis Targets.
Under the Cellectis Agreement, the Company has certain diligence obligations to progress the development of CAR T product candidates and to commercialize one CAR T product per Allogene Target in one major market country where the Company has received regulatory approval. If the Company materially breaches any of its diligence obligations and fails to cure within 90 days, then with respect to certain targets, such target will cease to be an Allogene Target and instead will become a Cellectis Target.
Unless earlier terminated in accordance with its terms, the Cellectis Agreement will expire on a product-by-product and country-by-country basis, upon expiration of all royalty payment obligations with respect to such licensed product in such country. The Company has the right to terminate the Cellectis Agreement at will upon 60 days’ prior written notice, either in its entirety or on a target-by-target basis. Either party may terminate the Cellectis Agreement, in its entirety or on a target-by-target basis, upon 90 days’ prior written notice in the event of the other party’s uncured material breach. The Cellectis Agreement may also be terminated by the Company upon written notice at any time in the event that Cellectis becomes bankrupt or insolvent or upon written notice within 60 days of a consummation of a change of control of Cellectis.
All costs the Company incurred in connection with this agreement were recognized as research and development expenses. For the three and nine months ended September 30, 2020, zero costs were incurred related to the achievement of a clinical development milestone under this agreement. For the three and nine months ended September 30, 2019, $5.0 million of costs were incurred related to the achievement of a clinical development milestone under this agreement.
License and Collaboration Agreement with Servier
As part of the Pfizer Agreement, Pfizer assigned to the Company an Exclusive License and Collaboration Agreement (the Servier Agreement), with Les Laboratoires Servier SAS and Institut de Recherches Internationales Servier SAS (collectively, Servier) to develop, manufacture and commercialize certain allogeneic anti-CD19 CAR T cell product candidates, including UCART19, in the United States with the option to obtain the rights over additional anti-CD19 product candidates and for allogeneic CAR T cell product candidates directed against one additional target. In October 2019, the Company agreed to waive its rights to the one additional target.
Under the Servier Agreement, the Company has an exclusive license to develop, manufacture and commercialize UCART19, ALLO-501 and ALLO-501A in the field of anti-tumor adoptive immunotherapy in the United States, with an exclusive option to obtain the same rights for additional product candidates in the United States and, if Servier does not elect to pursue development or commercialization of those product candidates in certain markets outside of the United States pursuant to its license, outside of the United States as well. The Company is not required to make any additional payments to Servier to exercise an option. If the Company opts-in to another product candidate, Servier has the right to obtain rights to such product candidate outside the United States and to share development costs for such product candidate.
Under the Servier Agreement, the Company is required to use commercially reasonable efforts to develop and obtain marketing approval in the United States in the field of anti-tumor adoptive immunotherapy for at least one product directed against CD19, and Servier is required to use commercially reasonable efforts to develop and obtain marketing approval in the European Union, and one other country in a group of specified countries outside of the European Union and the United States, in the field of anti-tumor adoptive immunotherapy for at least one allogeneic adaptive T cell product directed against a certain Company-selected target.
For product candidates that the Company is co-developing with Servier, including UCART19, ALLO-501 and ALLO-501A, the Company is responsible for 60% of the specified development costs and Servier is responsible for the remaining 40% of the specified development costs under the applicable global research and development plan. Subject to certain restrictions, each party has the right to conduct activities that are specific to its territory outside the global research and development plan at such party’s sole expense. In addition, each party is solely responsible for commercialization activities in its territory at such party’s sole expense.
The Company is required to make milestone payments to Servier upon successful completion of regulatory and sales milestones. The Servier Agreement provides for aggregate potential payments by the Company to Servier of up to $137.5 million upon successful completion of various regulatory milestones, and aggregate potential payments by the Company to Servier of up to $78.0 million upon successful completion of various sales milestones. Similarly, Servier is required to make milestone payments upon successful completion of regulatory and sales milestones for products directed at the Allogene-target
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covered by the Servier Agreement that achieves such milestones. The total potential payments that Servier is obligated to make to the Company under the Servier Agreement upon successful completion of regulatory and sales milestones are $42.0 million and €70.5 million ($82.5 million), respectively. The foregoing milestones are subject to certain adjustments if the Company obtains rights for certain products outside of the United States upon Servier’s election not to pursue such rights.
Each party is also eligible to receive tiered royalties on annual net sales in countries within the paying party’s respective territory of any licensed products that are commercialized by such party that are directed at the targets licensed by such party under the Servier Agreement. The royalty rates are in a range from the low tens to the high teen percentages. Such royalties may be reduced for interchangeable drug entry, expiration of patent rights and amounts paid pursuant to licenses of third-party patents. The royalty obligation for each party with respect to a given licensed product in a given country in each party’s respective territory (the Servier Royalty Term) begins upon the first commercial sale of such product in such country and ends after a defined number of years.
Unless earlier terminated in accordance with the Servier Agreement, the Servier Agreement will continue, on a licensed product-by-licensed product and country-by-country basis, until the Servier Royalty Term with respect to the sale of such licensed product in such country expires.
For the three and nine months ended September 30, 2020, the Company recorded $4.1 million and $5.9 million, respectively, of net cost recoveries under the cost-sharing terms of the Servier Agreement as a reduction to research and development expenses. For the three and nine months ended September 30, 2019, the Company recorded $1.5 million and $4.5 million, respectively, of costs as research and development expenses. As of September 30, 2020, amounts due from Servier of $3.1 million were recorded in other current assets in the accompanying condensed consolidated balance sheets. As of December 31, 2019, amounts due to Servier of $2.2 million were recorded in accrued and other current liabilities in the accompanying condensed consolidated balance sheets.
Research Collaboration and License Agreement with Notch
On November 1, 2019, the Company entered into a Collaboration and License Agreement (the Notch Agreement) with Notch Therapeutics Inc. (Notch), pursuant to which Notch granted to Allogene an exclusive, worldwide, royalty-bearing, sublicensable license under certain of Notch’s intellectual property to develop, make, use, sell, import, and otherwise commercialize therapeutic gene-edited T cell and/or natural killer (NK) cell products from induced pluripotent stem cells directed at certain CAR targets for initial application in non-Hodgkin lymphoma, acute lymphoblastic leukemia and multiple myeloma. In addition, Notch has granted Allogene an option to add certain specified targets to its exclusive license in exchange for an agreed per-target option fee.
The Notch Agreement includes a research collaboration to conduct research and pre-clinical development activities to generate engineered cells directed to Allogene’s exclusive targets, which will be conducted in accordance with an agreed research plan and budget under the oversight of a joint development committee. Allogene will reimburse Notch’s costs incurred in accordance with such plan and budget. The term of the research collaboration will expire upon the earlier of (i) the fifth anniversary of the date of the Notch Agreement, (ii) at Allogene’s election, following the joint development committee’s determination that for each exclusive target, Notch has met certain success criteria, or (iii) the joint development committee’s determination that the research collaboration cannot be reasonably pursued against any exclusive target due to technical infeasibility or safety issues.
In connection with the execution of the Notch Agreement, Allogene made an upfront payment to Notch of $10.0 million in return for a license to access Notch's technology in order to conduct research pursuant to the Notch Agreement. The Company recognized a research and development expense of $10 million during the year ended December 31, 2019 as the license had no foreseeable alternative future use. In addition, Allogene made a $5.0 million investment in Notch’s series seed convertible preferred stock, resulting in Allogene having a 25% ownership interest in Notch’s outstanding capital stock on a fully diluted basis immediately following the investment. In connection with this investment, David Chang, M.D., Ph.D., the Company's President, Chief Executive Officer and Board member, was appointed to Notch’s Board of Directors.
Under the Notch Agreement, Notch will be eligible to receive up to $7.25 million upon achieving certain agreed research milestones, up to $4.0 million per exclusive target upon achieving certain pre-clinical development milestones, and up to $283.0 million per exclusive target and cell type (i.e., T cell or NK cell) upon achieving certain clinical, regulatory and commercial milestones. Notch is also entitled to receive tiered royalties in the mid to high single digit range on Allogene’s sales of licensed products, subject to certain reductions, for a term, on a country-by-country and product-by-product basis, commencing on first commercial sale of such product in such country and continuing until the latest of (i) the date upon which there is no valid claim of the licensed patents in such country of sale that covers such product, (ii) the expiration of applicable
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data or other regulatory exclusivity in such country of sale or (iii) a defined period from the first commercial sale of such product in such country.
The terms of the Notch Agreement will continue on a product-by-product and country-by-country basis until Allogene’s payment obligations with respect to such product in such country have expired. Following such expiration, Allogene’s license with respect to such product and country shall be perpetual, irrevocable, fully paid up and royalty-free. Allogene may terminate the Collaboration Agreement in whole or on a product-by-product basis upon ninety days’ prior written notice to Notch. Either party may also terminate the Collaboration Agreement with written notice upon material breach by the other party, if such breach has not been cured within a defined period of receiving such notice, or in the event of the other party’s insolvency.
The Company has determined that Notch continues to be a variable interest entity as of September 30, 2020. The Company does not have the power to direct the activities which most significantly affect Notch's economic performance. Accordingly, for the three and nine months ended September 30, 2020, the Company did not consolidate Notch because the Company determined that it was not the primary beneficiary.
For the three and nine months ended September 30, 2020, the Company recorded $1.2 million and $2.0 million, respectively, in collaboration costs as research and development expenses.
7.         Commitments and Contingencies
Leases
In August 2018, the Company entered into an operating lease agreement for new office and laboratory space which consists of approximately 68,000 square feet located in South San Francisco, California. The lease term is 127 months beginning August 2018 through February 2029 with an option to extend the term for another seven years which is not reasonably assured of exercise. The Company has made certain tenant improvements, including the addition of laboratory space, and has received $5.0 million of tenant improvement allowances up to September 30, 2020. The rent payments began on March 1, 2019 after an abatement period.
In October 2018, the Company entered into an operating lease agreement for new office and laboratory space which consists of 14,943 square feet located in South San Francisco, California. The lease term is 124 months beginning November 2018 through February 2029, with an option to extend the term for another seven years which is not reasonably assured of exercise. The Company has made certain tenant improvements, including the upgrading of current office and laboratory space with a lease incentive allowance of $0.8 million. Rent payments began in November 2018.
In February 2019, the Company entered into a lease agreement for approximately 118,000 square feet of space to develop a cell therapy manufacturing facility in Newark, California. The lease has a term of 188 months and is expected to commence in November 2020. Upon certain conditions, the Company has two ten-year options to extend the lease which are not reasonably assured of exercise. The Company is entitled to a tenant improvement allowance of $2.9 million for costs related to the design and construction of certain Company improvements.
The Company maintained letters of credit for the benefit of landlords which is disclosed as restricted cash in the condensed consolidated balance sheet. Restricted cash related to letters of credit due to landlords was $5.2 million and $4.3 million as of September 30, 2020 and December 31, 2019, respectively.
The balance sheet classification of our lease liabilities were as follows (in thousands):
September 30, 2020December 31, 2019
Operating lease liabilities
      Current portion included in accrued and other current liabilities$2,873 $1,679 
      Long-term portion of lease liabilities50,846 51,349 
          Total operating lease liabilities$53,719 $53,028 
The components of lease costs for operating leases, which were recognized in operating expenses, were as follows (in thousands):
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Three Months Ended
September 30,
Nine Months Ended
September 30,
2020201920202019
Operating lease cost$1,845 $1,374 $5,543 $4,076 
Variable lease cost353 277 961 702 
         Total lease costs$2,198 $1,651 $6,504 $4,778 
Cash paid for amounts included in the measurement of lease liabilities for the nine months ended September 30, 2020 was $4.2 million and was included in net cash used in operating activities in our condensed consolidated statements of cash flows.
The undiscounted future lease payments under the lease agreements as of September 30, 2020 were as follows (in thousands):
Year ending December 31:
    2020 (remaining 3 months)$1,426 
20216,649 
20227,922 
20238,173 
20248,435 
2025 and thereafter 56,722 
Total undiscounted lease payments89,327 
Less: Present value adjustment(33,496)
Less: Tenant improvement allowance(2,112)
Total$53,719 
Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, we use our estimated incremental borrowing rate. The weighted average discount rate used to determine the operating lease liability was 8.36%. As of September 30, 2020, the weighted average remaining lease term for our operating leases is 10.41 years.
Other Commitments
In July 2020, the Company entered into a Solar Power Purchase and Energy Services Agreement with Onyx Development Group LLC (Onyx) for the installation and operation of a solar photovoltaic generating system and battery energy storage system at the Company's cell therapy manufacturing facility in Newark, California. The agreement has a term of 20 years and is expected to commence in the first quarter of 2021. The Company is obligated to pay for electricity generated from the system at an agreed rate for the duration of the agreement term. Termination of the agreement by the Company will result in a termination payment due of approximately $4.3 million. In connection with the agreement, the Company maintains a letter of credit for the benefit of Onyx in the amount of $4.3 million which is disclosed as restricted cash in the condensed consolidated balance sheet as of September 30, 2020.
The Company has entered into certain license agreements for intellectual property which is used as part of our development and manufacturing processes. Each of these respective agreements are generally cancellable by the Company. These agreements require payment of annual license fees and may include conditional milestone payments for achievement of specific research, clinical and commercial events, and royalty payments. The timing and likelihood of any significant conditional milestone payments or royalty payments becoming due was not probable as of September 30, 2020.
The Company enters into contracts in the normal course of business that includes arrangements with clinical research organizations, vendors for preclinical research and vendors for manufacturing. These agreements generally allow for cancellation with notice. As of September 30, 2020, the Company had non-cancellable purchase commitments of $3.9 million.
8.         Equity Method Investment
In conjunction with the execution of the Notch Agreement (see Note 6), the Company also entered into a Share Purchase Agreement with the Company acquiring shares of Notch’s Series Seed convertible preferred stock for a total investment cost of $5.1 million which includes transaction costs of $0.1 million, resulting in a 25% ownership interest in Notch.
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The Company’s total equity investment in Notch as of September 30, 2020 and December 31, 2019 was $4.5 million and $4.9 million, respectively, and the Company accounted for the investment using the equity method of accounting.
9.         Stock-Based Compensation
In June 2018, the Company adopted the 2018 Equity Incentive Plan (2018 Plan). The 2018 Plan provided for the Company to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the Company’s Board of Directors and consultants of the Company under terms and provisions established by the Company’s Board of Directors. In October 2018, the Board of Directors approved an amendment and restatement of the 2018 Plan, increasing the shares of common stock issuable under the 2018 Plan as well as allowing for an automatic annual increase to the shares issuance under the 2018 Plan to the amount equal to 5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year. The term of any stock option granted under the 2018 Plan cannot exceed 10 years. The Company generally grants stock-based awards with service conditions only. Options shall not have an exercise price less than 100% of the fair market value of the Company’s common stock on the grant date. Options granted typically vest over a four-year period but may be granted with different vesting terms. Restricted Stock Units granted typically vest annually over a four-year period but may be granted with different vesting terms.
As of September 30, 2020, there were 12,321,515 shares reserved by the Company under the 2018 Plan for the future issuance of equity awards.
Stock Option Activity
The following summarizes option activity under the 2018 Plan:
Outstanding Options
Number
of
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contract
Term
Aggregate intrinsic value
(in years)(in thousands)
Balance, December 31, 20199,190,522 $14.51 8.82$110,490 
Granted3,126,587 21.35 
Exercised(897,860)8.64 
Forfeited(635,616)12.13 
Balance, September 30, 202010,783,633 $17.12 8.50$223,554 
Exercisable, September 30, 20206,476,316 $14.98 8.41$147,320 
Vested and expected to vest, September 30, 202010,783,633 $17.12 8.50$223,554 
The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the closing price of the Company’s common stock on the Nasdaq Global Select Market on September 30, 2020. For the nine months ended September 30, 2020, the estimated weighted-average grant-date fair value of employee options granted was $21.35 per share. As of September 30, 2020, there was $87.7 million of unrecognized stock-based compensation related to unvested stock options, which is expected to be recognized over a weighted-average period of 2 years, 273 days.
The fair value of employee, consultant and director stock option awards was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:
Nine Months Ended September 30,
20202019
Expected term in years
5.31 - 6.09
5.99 - 6.25
Expected volatility
71.42% - 72.14%
74.84%
Expected risk-free interest rate
0.36% - 1.65%
2.45% - 2.62%
Expected dividend
0%
0%
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Expected term— The expected term represents the period that stock-based awards are expected to be outstanding. The expected term for option grants is determined using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the stock-based awards.
Expected volatility The Company uses an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company does not have sufficient trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.
Risk-free interest rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.
Expected dividend—The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.
Restricted Stock Unit Activity
The following summarizes restricted stock unit activity under the 2018 Plan:
Outstanding Restricted Stock Units
Restricted
Stock Units
Weighted-
Average Fair
Value at Date
of Grant per
Share
Weighted Average Remaining Vesting LifeAggregate Intrinsic Value
(in years)(in thousands)
Unvested December 31, 20191,941,155 $27.45 1.98$50,431
Granted1,186,899 23.70 1.92
Vested(467,245)27.42 
Forfeited(143,515)24.48 
Unvested September 30, 20202,517,294 $25.86 1.87$94,927
Vested and expected to vest, September 30, 20202,517,294 $25.86 1.87$94,927
As of September 30, 2020, there was $55.1 million of unrecognized stock-based compensation related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 3 years, 4 days.
Total stock-based compensation related to stock options, restricted stock units, employee stock purchase plan and vesting of the founders’ common stock was as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Research and development$8,829 $5,533 $23,465 $13,012 
General and administrative8,994 7,301 25,343 19,177 
Total stock-based compensation$17,823 $12,834 $48,808 $32,189 
Early Exercised Options
The Company allows certain of its employees and its directors to exercise options granted under the 2018 Plan prior to vesting. The shares related to early exercised stock options are subject to the Company’s lapsing repurchase right upon termination of employment or service on the Company’s board of directors at the lesser of the original purchase price or fair market value at the time of repurchase. In order to vest, the holders are required to provide continued service to the Company. The proceeds are initially recorded in accrued and other liabilities for the current portion, and other long-term liabilities for the non-current portion. The proceeds are reclassified to paid-in capital as the repurchase right lapses. As of September 30, 2020 and December 31, 2019 there was $2.8 million and $2.8 million recorded in accrued and other liabilities and $1.8 million and $3.9 million recorded in other long-term liabilities related to shares held by employees and directors that were subject to repurchase. The
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underlying shares are shown as outstanding in the condensed consolidated financial statements since the exercise date but the shares which are subject to future vesting conditions are not included in the calculation of earnings per share.
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10.         Related Party Transactions
As of September 30, 2020, Pfizer held 22,032,040 shares of Common Stock and had appointed one member to the Company’s board of directors.
In April 2018, the Company and Pfizer entered into a transition services agreement (the Pfizer TSA) for Pfizer to provide professional services to the Company related to research and development, project management, and other administrative functions. In September 2019, the Company and Pfizer terminated the Pfizer TSA. For the three and nine months ended September 30, 2020, the costs incurred under the Pfizer TSA were zero. For the three and nine months ended September 30, 2019, the costs incurred under the Pfizer TSA were $0.7 million and $4.9 million, respectively.
The Company also purchased certain lab supplies from Pfizer in connection with its research and development activities. For the three and nine months ended September 30, 2020, the total lab supplies and services purchased from Pfizer were zero. For the three and nine months ended September 30, 2019, the total lab supplies and services pu