Is Atara Biotherapeutics Stock a Buy?

Over the past 5 years, ATRA stock has plummeted 95.6%, from $45.05 in 2018 to around $2 today. The stock appeared to be on a comeback in 2021 but it was short-lived, and it’s been nothing but down ever since. ATRA shares have declined around 40% year-to-date.

The stock has been sold due to the extended amount of time it has taken for Atara to get its therapies to market. Add in sluggish revenues and operating losses, and it’s easy to see why investors have gone looking for better opportunities.

But the company has the cash to stay afloat into 2024, and its first drug has been approved for use in Europe. If Atara’s products can pass clinical phases they could be poised to deliver massive revenues from the treatments of diseases that affect millions of patients.

So is Atara Biotherapeutics stock a buy?

Atara Biotherapeutics: A Brief Overview

Atara Biotherapeutics was founded in 2012 and went public in 2014. The company is based in Thousand Oaks, CA, and has grown to include over 300 employees. With a market capitalization of $193.99 million, Atara is at the forefront of biotechnology.

The company has entered into multiple partnerships with major players in the pharmaceutical industry. In April 2022, FUJIFILM Diosynth Biotechnologies completed the purchase of Atara’s cell therapy manufacturing facility for $100 million, the start of a partnership between the companies that will help fund Atara’s operations going forward.

One of the company’s most important collaborations was with Pierre Fabre in 2021. The Paris-based pharmaceutical company agreed to distribute tabelecleucel, also known as tab-cel, in Europe, the Middle East, and Africa. Atara Biotherapeutics still retains the rights for tab-cel in North America, Latin America, and Asia.

The company received $45 million upfront from Pierre Fabre, with up to $320 million in additional payouts if Atara meets certain milestones.

Atara Biotherapeutics Products and Services

Tab-cel, also known as EBVALLO, is designed to combat Post-Transplant Lymphoproliferative Disease (PTLD), a life-threatening condition that can develop in patients who’ve had bone marrow or organ transplants. The drug is at the end stages of clinical phase 3, making it the furthest along in Atara’s pipeline.

Atara expects to discuss tab-cel with the FDA in the second quarter of this year. But the European Commission gave marketing authorization for the drug in December 2022. In initial treatments of European patients, the drug showed a 91% one-year survival rate for patients that responded to tab-cel. The overall survival rate was only 34% in non-responders.

ATA188, a drug that’s targeted at MS, is still in clinical phase 2. The fact that a data readout from the trials won’t happen until October 2023 has been a sticking point for many investors who hoped the drug would be further along at this stage.

Atara’s other drugs are in even earlier phases, with ATA3219 still in the pre-clinical stages. That drug is designed to combat malignant tumors. Two more drugs, ATA2271 and ATA3271 are targeted at cancer as well. These drugs are in Phase 1 and in preclinical trials, respectively.

Atara Biotherapeutics Financial Performance

The company’s total revenue of $1.23 million was down from $7.3 million in the same quarter of 2022. R&D expenses were down from $75 million last year to $62.2 million this year. General and Administrative expenses also dropped from $20.6 million to $13.9 million.

But the net loss was still $74.8 million in the first quarter or $0.72 per share. That’s down from $88.1 million, or $0.87 per share, in 2022. Despite the losses, Atara’s leadership assured investors that the company’s cash will keep Atara afloat through the 2nd quarter of 2024. That cash on hand is currently $205.4 million, down from $242.8 million just last quarter.

Due to the selloff, the company has a current P/S ratio of 3.4, which makes Atara seem undervalued. Still, it’s a concern that the cash runway could run out before revenues from Atara’s therapies can kick in.

Analysts’ Ratings for Atara Biotherapeutics

Because of the very low stock price and the high potential for growth, most analysts still believe that ATRA is a buy.

Among a survey of 8 Wall Street analysts, 4 said the stock was a buy, 2 said it was a hold, and 2 said the stock was a sell. Even the lowest 12-month forecast had the stock trading about the same, at around $2 over the next year.

The highest rating had the stock reaching $31 over the next 12 months. That’s a 1,450% increase from where the stock currently trades. The median forecast, however, has the stock reaching $12.45 over the next year, which is still over a 500% increase.

Is Atara Biotherapeutics Stock a Buy?

Atara Biotherapeutics is a biotech company with groundbreaking drugs in various stages of development. It’s a great sign that the company has initially succeeded with tab-cel in Europe. Atara’s drugs could provide revolutionary treatments for millions of patients.

But the company isn’t profitable, and the current cash will only last until the second quarter of 2024. Revenues and earnings per share have taken a big hit, and the time it has taken for ATA188 to progress has been a sore spot for investors who are hungry for positive news.

But ATRA has dropped so low and the company’s products have too much promise for investors to ignore the stock completely. If tab-cel can continue to be effective in the European market and FDA talks progress quickly, the company could start bringing in revenue by early 2024.

As a highly discounted stock with an enormous upside, Atara Biotherapeutics represents substantial risk. But it also could be a substantial opportunity.

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