Allogene Therapeutics, Inc. (ALLO) Bundle
Understanding Allogene Therapeutics, Inc. (ALLO) Revenue Streams
Understanding Allogene Therapeutics, Inc.’s Revenue Streams
The primary revenue sources for the company are primarily derived from collaboration agreements and related party transactions. For the nine months ended September 30, 2024, the collaboration revenue recognized was $22,000, a decrease of 70% from $74,000 in the same period of 2023.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects significant volatility. The collaboration revenue for the three months ended September 30, 2024, was recorded at $0 compared to $22,000 in 2023, marking a 100% decline. Over the nine-month period, the total revenue decreased by 70%, indicating a troubling trend in revenue generation.
Contribution of Different Business Segments to Overall Revenue
The company's revenue is heavily reliant on collaboration revenue. In the nine months ended September 30, 2024, collaboration revenue represented the entirety of the recognized revenue, indicating that the company has not generated product sales revenue to date.
Analysis of Significant Changes in Revenue Streams
Collaboration revenue has fluctuated significantly, primarily due to changes in agreements and performance obligations. The decline from $74,000 to $22,000 indicates a shift in partnership dynamics and revenue recognition. Furthermore, the company has not generated any revenue from product sales, underscoring a reliance on external partnerships.
| Period | Collaboration Revenue | Change (%) |
|---|---|---|
| Three Months Ended September 30, 2024 | $0 | -100% |
| Three Months Ended September 30, 2023 | $22,000 | N/A |
| Nine Months Ended September 30, 2024 | $22,000 | -70% |
| Nine Months Ended September 30, 2023 | $74,000 | N/A |
Overall, the analysis of revenue streams highlights the challenges faced in maintaining consistent revenue generation, particularly as the reliance on collaboration agreements continues to dictate the financial outlook.
A Deep Dive into Allogene Therapeutics, Inc. (ALLO) Profitability
A Deep Dive into Allogene Therapeutics, Inc.'s Profitability
Gross Profit Margin: The gross profit margin for the nine months ended September 30, 2024, was 0%, reflecting a total revenue of $22,000 and total cost of goods sold (COGS) of $22,000.
Operating Profit Margin: The operating loss for the same period was ($212,709,000), resulting in an operating profit margin of -963%.
Net Profit Margin: The net loss for the nine months ended September 30, 2024, was ($197,651,000), leading to a net profit margin of -896%.
Trends in Profitability Over Time
For the nine months ended September 30, 2023, the net loss was ($241,487,000). This indicates a trend of improving net loss compared to the previous year, with a reduction of $43,836,000 or 18% year-over-year.
Comparison of Profitability Ratios with Industry Averages
As of the latest data, the industry average for gross profit margin in the biotechnology sector is approximately 70%. In contrast, the gross profit margin for this company stands at 0%, highlighting significant underperformance.
Analysis of Operational Efficiency
The total operating expenses for the nine months ended September 30, 2024, were $212,731,000, down from $242,702,000 in the prior year, representing a 12% decrease.
The breakdown of operating expenses includes:
| Expense Type | 2024 (in $000) | 2023 (in $000) | Change ($000) | Change (%) |
|---|---|---|---|---|
| Research and Development | 147,327 | 188,253 | (40,926) | (22%) |
| General and Administrative | 49,687 | 54,449 | (4,762) | (9%) |
| Impairment of Long-lived Assets | 15,717 | 0 | 15,717 | 100% |
| Total Operating Expenses | 212,731 | 242,702 | (29,971) | (12%) |
The gross margin trend indicates a significant operational challenge, as the company has not generated sufficient revenue to cover its operational costs. The decrease in research and development expenses reflects a strategic pivot towards cost management.
Debt vs. Equity: How Allogene Therapeutics, Inc. (ALLO) Finances Its Growth
Debt vs. Equity: How Allogene Therapeutics Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the total liabilities of the company amounted to $125.4 million, comprised primarily of current liabilities of $32.6 million and long-term liabilities of $92.8 million. The company does not have any outstanding long-term debt but has obligations related to operating leases and other long-term liabilities.
Debt-to-Equity Ratio
The debt-to-equity ratio is a crucial indicator of financial leverage. As of September 30, 2024, the total stockholders' equity was $463.7 million. Therefore, the debt-to-equity ratio can be calculated as follows:
| Total Liabilities | Total Stockholders' Equity | Debt-to-Equity Ratio |
|---|---|---|
| $125.4 million | $463.7 million | 0.27 |
This ratio of 0.27 indicates a conservative level of debt compared to equity, which is favorable in the biopharmaceutical industry where companies often rely on equity financing.
Recent Debt Issuances and Credit Ratings
In the nine months ended September 30, 2024, the company recognized $100,000 in interest expenses related to award proceeds from CIRM. No significant new debt issuances were reported during this period, reflecting a strategy focused more on equity financing.
Equity Financing Activities
Throughout 2024, the company has engaged in multiple equity financing activities. Notably, in May 2024, it completed a registered offering of 37,931,035 shares at a price of $2.90 per share, generating net proceeds of approximately $105.3 million. Additionally, the company raised $1.0 million through at-the-market offerings.
Balance Between Debt Financing and Equity Funding
The company has strategically balanced its financing methods by minimizing debt and relying heavily on equity financing. As of September 30, 2024, it held $403.4 million in cash and cash equivalents, sufficient to fund operations for at least the next 12 months. This liquidity position allows the company to pursue its growth strategies without incurring additional debt.
Summary of Financing Activities
| Type of Financing | Amount | Date |
|---|---|---|
| Registered Offering | $105.3 million | May 2024 |
| ATM Offerings | $1.0 million | September 2024 |
| Interest Expense from CIRM | $100,000 | September 2024 |
This financing strategy, characterized by minimal debt and a focus on equity, positions the company favorably for future growth while managing financial risk.
Assessing Allogene Therapeutics, Inc. (ALLO) Liquidity
Assessing Allogene Therapeutics, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio stood at 3.4, indicating a strong liquidity position compared to the industry average of approximately 2.0.
Quick Ratio: The quick ratio for the same period was 3.1, reflecting a solid capability to meet short-term obligations without relying on inventory.
Analysis of Working Capital Trends
As of September 30, 2024, the working capital was $463.7 million, showing a significant increase from $580.6 million at the end of the previous quarter. This trend indicates effective management of current assets and liabilities despite ongoing operational losses.
| Period | Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) |
|---|---|---|---|
| September 30, 2024 | $580,635 | $116,905 | $463,730 |
| June 30, 2024 | $621,411 | $40,800 | $580,611 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows from operating activities showed a net cash used of $(163.6 million), compared to $(184.0 million) for the same period in 2023, indicating improved cash flow management.
Investing activities resulted in a net cash provided of $20.8 million in 2024, whereas in 2023, it was $95.8 million.
Financing activities generated a net cash inflow of $110.9 million for the nine months ended September 30, 2024, compared to $95.5 million in 2023. This increase can be attributed to successful equity offerings.
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $(163,602) | $(184,026) |
| Investing Activities | $20,754 | $95,828 |
| Financing Activities | $110,932 | $95,540 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had $403.4 million in cash and cash equivalents, expected to fund operations into 2026. However, the cumulative net losses incurred since inception amount to $1.76 billion, which raises concerns regarding the sustainability of current operations without additional capital.
Management recognizes the need for further financing to continue product development and operational activities, indicating a potential liquidity risk if additional funds are not secured in a timely manner.
Is Allogene Therapeutics, Inc. (ALLO) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The price-to-earnings (P/E) ratio is a crucial metric for assessing valuation. As of September 30, 2024, the company reported a net loss of $197.7 million for the nine months ended, with a weighted-average number of shares outstanding of 189.5 million, resulting in a basic and diluted net loss per share of $1.04. Given that the company is operating at a loss, the P/E ratio is not applicable.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio provides insight into the market's valuation relative to the company's book value. As of September 30, 2024, total stockholders' equity was $463.7 million. With approximately 209.5 million shares outstanding, the book value per share is approximately $2.21. If the current stock price is $2.90, the P/B ratio is approximately 1.31 (calculated as $2.90 / $2.21).
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate the enterprise value-to-EBITDA (EV/EBITDA) ratio, we first determine the enterprise value. As of September 30, 2024, the company's total liabilities were $125.4 million and total assets were $589.1 million, which includes cash and cash equivalents of $51.2 million. The latest EBITDA figure for the nine months ended September 30, 2024, was not directly provided, but the loss from operations was $212.7 million. Assuming minimal depreciation and amortization, the company is also not generating positive EBITDA, rendering this ratio non-calculable at this time.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly. As of September 30, 2024, the stock was trading at $2.90, following a registered offering that raised $110 million. The stock reached a high of approximately $5.50 and a low of about $1.80 during this period, indicating high volatility in market sentiment.
Dividend Yield and Payout Ratios
The company does not currently pay dividends, as it has consistently reported net losses. Therefore, the dividend yield is 0%, and the payout ratio is also 0%.
Analyst Consensus on Stock Valuation
As of the latest reports, analyst consensus remains cautious, with a majority rating the stock as a Hold. Analysts highlight the need for significant capital to sustain operations and the ongoing losses as key concerns.
| Metric | Value |
|---|---|
| Net Loss (9M 2024) | $197.7 million |
| Net Loss per Share | $1.04 |
| Book Value per Share | $2.21 |
| P/B Ratio | 1.31 |
| Stock Price | $2.90 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Allogene Therapeutics, Inc. (ALLO)
Key Risks Facing Allogene Therapeutics, Inc.
Allogene Therapeutics faces a variety of risk factors that could significantly impact its financial health and operational viability. These risks can be categorized into internal and external factors, including industry competition, regulatory changes, and market conditions.
Industry Competition
The biopharmaceutical industry is highly competitive, with numerous companies developing similar therapies. As of September 30, 2024, Allogene has no products approved for commercial sale and has not generated any revenue from product sales to date. This lack of market presence increases the pressure to innovate and secure regulatory approvals to compete effectively.
Regulatory Changes
Regulatory approvals are critical for the company's product candidates. The failure to obtain or delays in obtaining regulatory approvals can adversely affect Allogene's ability to commercialize its products. For instance, the company relies on various licenses and collaboration agreements, which could be terminated or changed, impacting its operational strategy.
Market Conditions
Market conditions can affect the company’s ability to raise capital. As of September 30, 2024, Allogene had cash and cash equivalents of $403.4 million, which is projected to fund operations into 2026. However, the need for additional capital remains, as management anticipates incurring substantial net losses in the future, with a reported net loss of $197.7 million for the nine months ended September 30, 2024.
Operational Risks
Operationally, Allogene has faced significant losses since its inception, with an accumulated deficit of $1.8 billion as of September 30, 2024. The company’s operational expenses for the nine months ended September 30, 2024, amounted to $212.7 million, which includes $147.3 million in research and development expenses.
Financial Risks
Financially, the company has not achieved profitability and is expected to continue incurring losses. For the year ended December 31, 2023, the reported net loss was $327.3 million. The ongoing need for capital raises further concerns regarding financial stability, especially if market conditions deteriorate or investor interest wanes.
Strategic Risks
Strategically, the company’s reliance on collaboration agreements, such as the one with Pfizer, presents risks if these partnerships do not yield expected results. Additionally, the company's approach to developing an allogeneic CAR T platform involves significant research and development costs, which could strain financial resources if product candidates do not progress as planned.
Mitigation Strategies
To mitigate these risks, Allogene has outlined plans to raise additional capital through equity securities or debt financing. Furthermore, the company continues to focus on its core research and development activities, aiming to bring innovative therapies to market while managing operational costs.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | High competition in the biopharmaceutical market | Pressure to innovate and secure approvals |
| Regulatory Changes | Dependent on regulatory approvals for commercialization | Delays can hinder market entry |
| Market Conditions | Need for additional capital to sustain operations | Potential for financial instability |
| Operational Risks | Significant operational losses and high expenses | Strain on financial resources |
| Strategic Risks | Reliance on collaboration agreements | Partnerships may not yield expected results |
Future Growth Prospects for Allogene Therapeutics, Inc. (ALLO)
Future Growth Prospects for Allogene Therapeutics, Inc.
Analysis of Key Growth Drivers
Key growth drivers for the company include product innovations, market expansions, and strategic partnerships. The total addressable market for certain cancer therapies is projected to grow from $6.0 billion in the U.S. to $9.5 billion across the U.S., European Union, and United Kingdom, increasing potential revenue opportunities by more than 50% for its lead product candidate, cema-cel.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, the company reported a net loss of $197.7 million, compared to $241.5 million for the same period in 2023, indicating a 18% reduction in losses. The company anticipates that cash and cash equivalents of $403.4 million as of September 30, 2024, will be sufficient to fund operations into 2026.
Strategic Initiatives or Partnerships
The strategic alliance with the University of Texas MD Anderson Cancer Center involves a collaboration agreement worth up to $15.0 million over five years. Additionally, the company entered into a License Agreement with Overland Therapeutics for developing allogeneic CAR T cell therapies, which includes potential milestone payments up to $40.0 million.
Competitive Advantages
The company has established a robust pipeline of “off-the-shelf” T cell product candidates, which are designed for faster, more reliable treatment delivery. This positions the company to capture market share effectively, leveraging its unique allogeneic approach.
| Metric | 2023 (9 months) | 2024 (9 months) | Change |
|---|---|---|---|
| Net Loss | $241.5 million | $197.7 million | 18% reduction |
| Cash and Cash Equivalents | $79.5 million | $403.4 million | +408% |
| Research and Development Expenses | $188.3 million | $147.3 million | 22% reduction |
| General and Administrative Expenses | $54.4 million | $49.7 million | 9% reduction |
| Potential Milestone Payments | N/A | $40.0 million | N/A |
Overall, the company is positioned for growth through strategic partnerships, market expansion, and a focus on innovative product development.
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Updated on 16 Nov 2024
Resources:
- Allogene Therapeutics, Inc. (ALLO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Allogene Therapeutics, Inc. (ALLO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Allogene Therapeutics, Inc. (ALLO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.