Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
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 001-37368
ADAPTIMMUNE THERAPEUTICS PLC
(Exact name of Registrant as specified in its charter)
England and Wales
Not Applicable
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
60 Jubilee Avenue, Milton Park
Abingdon, Oxfordshire OX14 4RX
United Kingdom
(Address of principal executive offices)
(44) 1235 430000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
American Depositary Shares, each representing 6 Ordinary Shares, par value £0.001 per share
ADAP
The Nasdaq Global Select Market
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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer⌧
Accelerated filer ◻
Non-accelerated filer◻
Smaller 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 standard 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, 2021, the number of outstanding ordinary shares par value £0.001 per share of the Registrant is 937,224,360.
TABLE OF CONTENTS
PART I — FINANCIAL INFORMATION
4
Item 1.
Financial Statements:
Unaudited Condensed Consolidated Balance Sheets as of Setpember 30, 2021 and December 31, 2020
Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020
5
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020
6
Unaudited Condensed Consolidated Statements of Change in Equity for the three and nine months ended September 30, 2021 and 2020
7
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020
9
Notes to the Unaudited Condensed Consolidated Financial Statements
10
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
18
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
30
Item 4.
Controls and Procedures
31
PART II — OTHER INFORMATION
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
32
Signatures
33
2
General information
In this Quarterly Report on Form 10-Q (“Quarterly Report”), “Adaptimmune,” the “Group,” the “Company,” “we,” “us” and “our” refer to Adaptimmune Therapeutics plc and its consolidated subsidiaries, except where the context otherwise requires.
Information Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” or the negative of these words or other comparable terminology.
Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A. Risk Factors of this Quarterly Report and under Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
This Quarterly Report also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications, government data and similar sources.
3
Item 1. Financial Statements.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30,
December 31,
2021
2020
Assets
Current assets
Cash and cash equivalents
$
42,918
56,882
Marketable securities - available-for-sale debt securities
197,202
311,335
Accounts receivable, net of allowance for doubtful accounts of $0 and $0
1,641
139
Other current assets and prepaid expenses
58,689
29,796
Total current assets
300,450
398,152
Restricted cash
1,717
4,602
Operating lease right-of-use assets, net of accumulated amortization
21,481
18,880
Property, plant and equipment, net of accumulated depreciation of $35,087 (2020: $31,097)
28,689
27,778
Intangibles, net of accumulated amortization
1,191
1,730
Total assets
353,528
451,142
Liabilities and stockholders’ equity
Current liabilities
Accounts payable
4,784
6,389
Operating lease liabilities, current
2,267
2,773
Accrued expenses and other accrued liabilities
27,984
27,079
Deferred revenue, current
6,102
2,832
Total current liabilities
41,137
39,073
Operating lease liabilities, non-current
23,704
20,938
Deferred revenue, non-current
47,040
49,260
Other liabilities, non-current
664
644
Total liabilities
112,545
109,915
Stockholders’ equity
Common stock - Ordinary shares par value £0.001, 1,240,853,520 authorized and 937,049,820issued and outstanding (2020: 1,038,249,630 authorized and 928,754,958 issued and outstanding)
1,337
1,325
Additional paid in capital
954,732
935,706
Accumulated other comprehensive loss
(10,098)
(10,048)
Accumulated deficit
(704,988)
(585,756)
Total stockholders' equity
240,983
341,227
Total liabilities and stockholders’ equity
See accompanying notes to unaudited condensed consolidated financial statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three months ended
Nine months ended
Revenue
1,203
1,193
4,732
2,456
Operating expenses
Research and development
(28,211)
(24,067)
(81,585)
(65,791)
General and administrative
(15,173)
(13,001)
(42,529)
(32,557)
Total operating expenses
(43,384)
(37,068)
(124,114)
(98,348)
Operating loss
(42,181)
(35,875)
(119,382)
(95,892)
Interest income
225
2,147
916
4,024
Other income (expense), net
(237)
(1,689)
(184)
(1,501)
Loss before income taxes
(42,193)
(35,417)
(118,650)
(93,369)
Income taxes
(208)
(15)
(582)
(110)
Net loss attributable to ordinary shareholders
(42,401)
(35,432)
(119,232)
(93,479)
Net loss per ordinary share
Basic and diluted
(0.05)
(0.04)
(0.13)
(0.11)
Weighted average shares outstanding:
936,600,648
928,022,057
933,992,708
829,973,177
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
Net loss
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments, net of tax of $0, $0, $0 and $0
15,564
(15,522)
8,386
3,583
Foreign currency gains (losses) on intercompany loan of a long-term investment nature, net of tax of $0, $0, $0 and $0
(15,310)
15,698
(8,351)
(5,061)
Unrealized holding gains (losses) on available-for-sale debt securities, net of tax of $0, $0, $0 and $0
211
(85)
324
Reclassification adjustment for gains on available-for-sale debt securities included in net loss, net of tax of $0 and $0
—
(76)
Total comprehensive loss for the period
(42,114)
(35,121)
(119,282)
(94,709)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY
Accumulated
Additional
other
Total
Common
paid in
comprehensive
stockholders'
stock
capital
loss
deficit
equity
Balance as of 1 January 2021
928,754,958
(37,763)
Other comprehensive loss
(176)
Issuance of shares upon exercise of stock options
4,062,210
529
535
Share-based compensation expense
5,334
Balance as of March 31, 2021
932,817,168
1,331
941,569
(10,224)
(623,519)
309,157
(39,068)
(161)
350,628
1
42
43
Issue of shares under At The Market sales agreement, net of expenses
3,069,330
2,515
2,519
5,449
Balance as of June 30, 2021
936,237,126
1,336
949,575
(10,385)
(662,587)
277,939
812,694
128
129
Other comprehensive income
287
5,019
Balance as of September 30, 2021
937,049,820
stockholders’
(loss) income
Balance as of 1 January 2020
631,003,568
943
585,623
(7,264)
(455,664)
123,638
(28,167)
(2,326)
4,610,772
888
894
Issuance of shares upon completion of public offering, net of issuance costs
144,900,000
190
90,360
90,550
1,448
Balance as of March 31, 2020
780,514,340
1,139
678,319
(9,590)
(483,831)
186,037
(29,880)
785
5,704,606
4,174
4,181
141,450,000
178
243,660
243,838
2,624
Balance as of June 30, 2020
927,668,946
1,324
928,777
(8,805)
(513,711)
407,585
856,464
461
462
176
3,280
Balance as of September 30, 2020
928,525,410
932,518
(8,494)
(549,143)
376,206
8
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
4,333
5,151
15,802
7,352
Unrealized foreign exchange gains
(213)
(1,102)
Amortization on available-for-sale debt securities
4,094
2,798
Other
2,239
737
Changes in operating assets and liabilities:
Increase/(decrease) in receivables and other operating assets
(31,809)
3,345
Decrease in non-current operating assets
2,291
Decrease in payables and other current liabilities
(109)
(117)
Increase in deferred revenue
1,696
48,649
Net cash used in operating activities
(123,199)
(24,375)
Cash flows from investing activities
Acquisition of property, plant and equipment
(4,558)
(1,174)
Acquisition of intangibles
(181)
(496)
Maturity or redemption of marketable securities
190,393
78,915
Investment in marketable securities
(81,363)
(363,777)
Net cash provided by (used in) investing activities
104,291
(286,532)
Cash flows from financing activities
Proceeds from issuance of common stock from offerings, net of commissions and issuance costs
2,529
334,388
Proceeds from exercise of stock options
707
5,541
Net cash provided by financing activities
3,236
339,929
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash
(1,177)
(1,023)
Net (decrease) increase in cash, cash equivalents and restricted cash
(16,849)
27,999
Cash, cash equivalents and restricted cash at start of period
61,484
54,908
Cash, cash equivalents and restricted cash at end of period
44,635
82,907
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — General
Adaptimmune Therapeutics plc is registered in England and Wales. Its registered office is 60 Jubilee Avenue, Milton Park, Abingdon, Oxfordshire, OX14 4RX, United Kingdom. Adaptimmune Therapeutics plc and its subsidiaries (collectively “Adaptimmune” or the “Company”) is a clinical-stage biopharmaceutical company primarily focused on providing novel cell therapies to people with cancer. We are a leader in the development of T-cell therapies for solid tumors. The Company’s proprietary platform enables it to identify cancer targets, find and develop cell therapy candidates active against those targets and produce therapeutic candidates for administration to patients.
The Company is subject to a number of risks similar to other biopharmaceutical companies in the early stage of clinical development including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical programs or clinical programs, the need to obtain marketing approval for its cell therapies, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of its cell therapies, the need to develop a reliable commercial manufacturing process, the need to commercialize any cell therapies that may be approved for marketing, and protection of proprietary technology. If the Company does not successfully commercialize any of its cell therapies, it will be unable to generate product revenue or achieve profitability. The Company had an accumulated deficit of $704,988,000 as of September 30, 2021.
Note 2 — Summary of Significant Accounting Policies
(a) Basis of presentation
The condensed consolidated financial statements of Adaptimmune Therapeutics plc and its subsidiaries and other financial information included in this Quarterly Report are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars. All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated on consolidation.
The unaudited condensed consolidated financial statements presented in this Quarterly Report should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on February 25, 2021 (the “Annual Report”). The balance sheet as of December 31, 2020 was derived from audited consolidated financial statements included in the Company’s Annual Report but does not include all disclosures required by U.S. GAAP. The Company’s significant accounting policies are described in Note 2 to those consolidated financial statements.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim period. The interim results are not necessarily indicative of results to be expected for the full year.
(b) Use of estimates in interim financial statements
The preparation of interim financial statements, in conformity with U.S. GAAP and SEC regulations, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the interim financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are primarily made in relation to valuation allowances relating to deferred tax assets, revenue recognition, and estimation of the incremental borrowing rate for operating leases. If actual results differ from the Company’s estimates, or to the extent these estimates are adjusted in future periods, the Company’s results of operations could either benefit from, or be adversely affected by, any such change in estimate.
(c) Fair value measurements
The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The hierarchy defines three levels of valuation inputs:
Level 1 - Quoted prices in active markets for identical assets or liabilities
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3 - Unobservable inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability
The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The fair value of marketable securities, which are measured at fair value on a recurring basis is detailed in Note 6, Fair value measurements.
(d) New accounting pronouncements
Recently adopted
Convertible instruments and contracts in an entity’s own stock
On January 1, 2021, the Company adopted ASU 2020-06 - Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for convertible instruments and contracts in an entity’s own stock. The guidance was adopted on a modified retrospective basis, whereby the guidance is applied to transactions outstanding as of the beginning of the fiscal year in which the guidance is adopted. The guidance has not had a material impact on the Company’s condensed consolidated financial statements.
To be adopted in future periods
Measurement of credit losses on financial instruments
In June 2016, the FASB issued ASU 2016-13 - Financial Instruments - Credit losses, which replaces the incurred loss impairment methodology for financial instruments in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods within that fiscal year. In November 2019, the FASB issued ASU 2019-10 which resulted in the postponement of the effective date of the new guidance for eligible smaller reporting companies (as defined by the SEC), including the Company, at that time to the fiscal year beginning January 1, 2023; however, earlier adoption is permitted, and the Company may choose to implement the guidance in an earlier fiscal year. The guidance must be adopted using a modified-retrospective approach and a prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The Company is currently evaluating the impact of the guidance on its condensed consolidated financial statements.
11
Note 3 — Revenue
The Company has two contracts with customers: a collaboration and license agreement with GlaxoSmithKline (“GSK”) and a collaboration agreement with Astellas.
Revenue comprises the following categories (in thousands):
Development revenue
The aggregate amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the agreement as of September 30, 2021 was $76,322,000. Of this amount, $15,000,000 is allocated to the rights granted for each of the two independent Astellas targets, which will be recognised at a point-in-time upon commencement of the licenses in the event of nomination of the targets. The remaining amounts relate to our co-development with Astellas and GSK, which will be recognized as development progresses.
Future development, regulatory and sales milestones under both agreements are not considered probable as of September 30, 2021 and have not been included in the transaction price. Reimbursement of the research funding over the co-development period under the Astellas agreement is variable consideration and included in the transaction price as of September 30, 2021 to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.
The Company received a milestone payment of $4.2 million in the nine months ended September 30, 2021 following achievement of a development milestone for the third target under the GSK Collaboration and License Agreement. As a result of the inclusion of this amount in the transaction price, $1,029,000 of revenue was recognized in the three and nine months ended September 30, 2021 from performance obligations partially satisfied in previous periods.
Of the revenue recognized in the nine months ended September 30, 2021, $1,056,000 was included in the deferred income balance at January 1, 2021.
On September 3, 2021, the Company entered into a Strategic Collaboration and License Agreement with Genentech, Inc. and F. Hoffman-La Roche Ltd, which became effective on October 19, 2021 upon expiry or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The agreement is further described in Note 14.
Note 4 — Loss per share
The dilutive effect of 115,924,296 and 91,263,299 stock options outstanding as of September 30, 2021 and 2020 respectively have been excluded from the diluted loss per share calculation for the three and nine months ended September 30, 2021 and 2020 because they would have an antidilutive effect on the loss per share for the period.
Note 5 — Accumulated other comprehensive loss
The Company reports foreign currency translation adjustments and the foreign exchange gain or losses arising on the revaluation of intercompany loans of a long-term investment nature within Other comprehensive (loss) income. Unrealized gains and losses on available-for-sale debt securities are also reported within Other comprehensive (loss) income until a gain or loss is realized, at which point they are reclassified to Other (expense) income, net in the Condensed Consolidated Statement of Operations.
12
The following table shows the changes in Accumulated other comprehensive (loss) income (in thousands):
foreign
unrealized
accumulated
currency
gains (losses) on
translation
available-for-sale
adjustments
debt securities
Balance at January 1, 2021
(10,158)
110
Foreign currency translation adjustments
(3,001)
Foreign currency gains on intercompany loan of a long-term investment nature, net of tax of $0
3,048
Unrealized holding losses on available-for-sale debt securities, net of tax of $0
(223)
Balance at March 31, 2021
(10,111)
(113)
(4,177)
3,911
Unrealized holding gains on available-for-sale debt securities, net of tax of $0
105
Balance at June 30, 2021
(10,377)
(8)
Foreign currency losses on intercompany loan of a long-term investment nature, net of tax of $0
Balance at September 30, 2021
(10,123)
25
Balance at January 1, 2020
(7,302)
38
17,911
(19,651)
(586)
Balance at March 31, 2020
(9,042)
(548)
1,194
(1,108)
699
Balance at June 30, 2020
(8,956)
151
Reclassification from accumulated other comprehensive income of gains on available-for-sale debt securities included in net loss, net of tax of $0
Balance at September 30, 2020
(8,780)
286
13
Note 6 — Fair value measurements
Assets and liabilities measured at fair value on a recurring basis based on Level 1, Level 2, and Level 3 fair value measurement criteria as of September 30, 2021 are as follows (in thousands):
Fair value measurements using
Level 1
Level 2
Level 3
Assets:
Corporate debt securities
The Company estimates the fair value of available-for-sale debt securities with the aid of a third party valuation service, which uses actual trade and indicative prices sourced from third-party providers on a daily basis to estimate the fair value. If observed market prices are not available (for example securities with short maturities and infrequent secondary market trades), the securities are priced using a valuation model maximizing observable inputs, including market interest rates.
Note 7 — Marketable securities – available-for-sale debt securities
As of September 30, 2021, the Company has the following investments in marketable securities (in thousands):
Gross
Aggregate
Remaining
Amortized
Unrealized
Estimated
Contractual Maturity
Cost
Gains
Losses
Fair Value
Available-for-sale debt securities:
Less than 3 months
9,228
(1)
9,232
3 months to 1 year
135,761
104
(29)
135,836
1 year to 2 years
52,189
14
(69)
52,134
197,178
123
(99)
The aggregate fair value (in thousands) and number of securities held by the Company (including those classified as cash equivalents) in an unrealized loss position as of September 30, 2021 and 31 December, 2020 are as follows:
September 30, 2021
December 31, 2020
Fair market value of investments in an unrealized loss position
Number of investments in an unrealized loss position
Unrealized losses
Marketable securities:
85,165
15
157,985
(158)
As of September 30, 2021, the securities in an unrealized loss position are not considered to be other than temporarily impaired because the impairments are not severe and have been for a short duration. No securities have been in an unrealized loss position for more than one year. The Company does not intend to sell the debt securities in an unrealized loss position and believes that it has the ability to hold the debt securities to maturity.
Note 8 — Other current assets
Other current assets consisted of the following (in thousands):
Corporate tax receivable
43,446
20,585
Prepayments
9,970
6,314
Clinical materials
1,285
2,086
Other current assets
3,988
811
Note 9 — Operating leases
The Company has operating leases in relation to property for office and research facilities.
On August 13, 2021, the Company modified the lease of 60 Jubilee Avenue, Milton Park, Abingdon, Oxfordshire, UK (the “60 Jubilee Avenue lease”) and on August 20, 2021, the Company modified the lease of 39 Innovation Drive, Milton Park, Abingdon, Oxfordshire, UK (the “39 Innovation Drive lease”). The effect of the modifications extended the first break option exercisable by the Company and has resulted in a change in the lease term for both leases. The modification to the 39 Innovation Drive lease also amended the lease payments for that lease. The modifications did not result in the identification of a separate contract.
Upon modification, the lease liability has been remeasured using the current estimate of the Company’s incremental borrowing rate and the amount of the remeasurement of the lease liability has been recognized as an adjustment to the corresponding right-of-use asset. The effect of the modification was to increase the lease liability and the corresponding right-of-use asset by $4,290,000.
The modification also removed a bank guarantee, which resulted in a reduction in restricted cash of $2,739,000. The Company paid $1,736,000 to the lessor as a rent deposit.
The following table shows the weighted-average remaining lease term and the weighted-average discount rate as at September 30, 2021 and 2020:
Weighted-average remaining lease term - operating leases
8.0 years
6.5 years
Weighted-average discount rate - operating leases
6.8%
7.2%
The maturities of operating lease liabilities as of September 30, 2021 are as follows (in thousands):
Operating leases
978
2022
3,932
2023
4,050
2024
3,986
2025
4,034
after 2025
16,968
Total lease payments
33,948
Less: Imputed interest
7,977
Present value of lease liability
25,971
The maximum lease term without activation of termination options is to 2041.
Note 10 — Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
Accrued clinical and development expenditure
13,661
13,081
Accrued employee expenses
10,219
11,825
Other accrued expenditure
3,907
2,126
197
47
Note 11 — Contingencies and commitments
On January 7, 2021, the Company entered into an agreement with a third party, whereby the third party is responsible for the development, manufacture, submission of regulatory filings and commercialization of a companion diagnostic for the detection of the MAGE-A4 biomarker. The Company shall compensate the third party for its performance of activities under the agreement based on milestone payments and reimbursement of direct expenses. The agreement is non-exclusive and the third party can sell the companion diagnostic to other parties. Once the companion diagnostic is approved and launched, the Company guarantees a minimum revenue to the third party. The agreement can be terminated by the Company and the third party upon 60 days’ notice, if certain conditions are met.
16
Note 12 — Share-based compensation
The following table shows the total share-based compensation expense included in the unaudited consolidated statements of operations (in thousands):
2,177
1,219
7,064
3,126
2,842
2,061
8,738
4,226
The following table shows information about share options and options which have a nominal exercise price (similar to restricted stock units (RSUs)) granted:
Number of options over ordinary shares granted
4,170,230
1,882,966
19,891,334
14,851,182
Weighted average fair value of ordinary shares options
0.51
1.25
0.70
0.57
Number of additional options with a nominal exercise price granted
1,348,920
571,320
16,008,168
7,410,136
Weighted average fair value of options with a nominal exercise price
1.70
0.98
0.78
Note 13 — Stockholders’ equity
On August 10, 2020 the Company entered into a sales agreement with Cowen and Company, LLC (“Cowen”) (the “Sales Agreement”) under which we may from time to time issue and sell American Depositary Shares (“ADSs”) representing our ordinary shares through Cowen in at-the-market (“ATM”) offerings for an aggregate offering price of up to $200 million. In the three months ended June 30, 2021, the Company sold 511,555 ADSs representing 3,069,330 ordinary shares resulting in net proceeds to the Company of $2,519,000 after deducting commissions payable under the Sales Agreement and issuance costs. As of September 30, 2021, $197,360,000 remained available for sale under the Sales Agreement.
Note 14 — Subsequent Events
On September 3, 2021, Adaptimmune Limited, a wholly owned subsidiary of Adaptimmune Therapeutics Plc, entered into a Strategic Collaboration and License Agreement (the “Agreement”) with Genentech, Inc. (“Genentech”) and F. Hoffman-La Roche Ltd.
Under the Agreement, Genentech and Adaptimmune (each, a “party” and together, the “parties”) will collaborate to develop two types of allogeneic T-cell therapies: (i) “off-the-shelf” αβ T-cell therapies directed to up to five collaboration targets and (ii) personalized therapies utilizing αβ T-cell receptors (TCRs) isolated from a patient, with such therapies being administered to the same patient. The parties will collaborate to perform a research program, initially during an eight year period (which may be extended for up to two additional two year terms at Genentech’s election upon payment of an extension fee for each two-year term), to develop the cell therapies, following which Genentech will determine whether to further develop and commercialize such therapies. Under the Agreement, Adaptimmune exclusively licenses Genentech certain intellectual property rights it controls to enable Genentech to research, develop, manufacture and commercialize (i) “off-the-shelf” T-cell therapies directed to the collaboration targets and (ii) personalized T-cell therapies developed within the scope of the Agreement, and Genentech is solely responsible for the clinical development and commercialization of any cell therapies arising from the collaboration. Adaptimmune will manufacture and supply cell therapies for Phase 1 trials of “off-the-shelf” T-cell therapies unless Genentech decides to assume responsibility for such manufacturing.
Under the Agreement, Adaptimmune is also subject to certain restrictions on its ability to further develop and commercialize certain cell therapies. In particular restrictions apply in relation to its ability to develop cell therapy products to nominated targets and to develop competing personalized cell therapies. This restriction does not prevent Adaptimmune from developing cell therapies to other targets or cell therapies containing different types of receptors.
17
Under the terms of the Agreement, Adaptimmune will receive $150 million as an upfront payment, which is anticipated to be received in the fourth quarter of 2021. Adaptimmune may also receive:
In addition, Adaptimmune will receive tiered royalties on net sales in the mid-single to low-double digits.
Adaptimmune also has a right to opt-in to receive a profit share and to co-promote “off-the-shelf” T-cell therapies. If Adaptimmune elects to opt in, then Adaptimmune will be eligible to share 50 percent of profits and losses from U.S. sales on such products and to receive up to $800 million in ex-U.S. regulatory and sales-based milestone payments, as well as royalties on ex-U.S. net sales.
The parties can terminate the Agreement in the event of material breach or insolvency of the other party. Genentech is entitled to terminate the Agreement in its entirety, on a product-by-product basis or collaboration target by collaboration target basis on provision of 180 days notice. Either party may terminate the Agreement on written notice in the event that the US Federal Trade Commission or US Department of Justice seeks a preliminary injunction under applicable antitrust laws against the parties or where HSR clearance has not occurred within 180 days of the effective date of the Agreement. The Agreement became effective on October 19, 2021 upon expiry of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2020, included in our Annual Report on Form 10-K that was filed with the SEC on February 25, 2021. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2020, our actual results could differ materially from the results described in, or implied by, these forward-looking statements.
Overview
We are a clinical-stage biopharmaceutical company focused on providing novel cell therapies to people with cancer. We are a leader in the development of T-cell therapies for solid tumors and have reported clinical responses (per RECIST 1.1) in seven solid tumor indications.
Our proprietary platform enables us to identify cancer targets, find and develop cell therapy candidates active against those targets and produce therapeutic candidates for administration to patients. Our cell therapy candidates include Specific Peptide Enhanced Affinity Receptor (“SPEAR”) T-cells, which use genetically engineered T-cell receptors; next generation Tumor Infiltrating Lymphocytes (“TiLs”) where a patient’s own T-cells are co-administered with our next generation technology, and HLA-independent TCRs (“HiTs”) where surface proteins are targeted independently of the peptide-HLA complex.
We have multiple clinical trials ongoing:
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We have an active preclinical pipeline of cell therapy candidates with the aim of delivering five new cell therapies to the clinic in the next five years. The pipeline includes new autologous SPEAR T-cells, SPEAR T-cells addressing alternative HLA-types, next generation SPEAR T-cells, next-generation TILs and HiTs. Preclinical data presented at the American Society of Gene & Cell Therapy (ASGCT) in May 2021 from the Company’s HiT mesothelin program validated that human T-cells expressing a TCR targeting mesothelin, independent of HLA recognition, can kill human tumor cells in vitro; and showed that the HiT works as well, or better than, an in-house developed T-cell receptor fusion construct (“TRuC”) targeting mesothelin in preclinical studies.
We are also developing allogeneic or “off-the-shelf” cell therapies utilizing a proprietary allogeneic platform.
We also have a number of development and research collaborations including our collaboration with GSK for the development, manufacture and commercialization of TCR therapeutic candidates for up to five programs, a clinical and preclinical alliance agreement with MD Anderson Cancer Center and research collaborations with Alpine, Noile-Immune, and the Center for Cancer Immune Therapy (CCIT).
Financial Operations Overview
The Company has three contracts with customers: the GSK Collaboration and License Agreement, the Astellas Collaboration Agreement and the Genentech Collaboration Agreement.
The GSK Collaboration Agreement
The GSK Collaboration and License Agreement consists of multiple performance obligations. GSK nominated its third target under the Collaboration and License Agreement in 2019, and the Company received $3.2 million following the nomination of the target. The Company received a milestone payment of $4.2 million in the nine months ended September 30, 2021 following achievement of a development milestone. These amounts are being recognized as revenue as development progresses.
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The Astellas Collaboration Agreement
In January 2020, the Company entered into a collaboration agreement with Astellas. The Company received $50.0 million as an upfront payment after entering into the agreement. Under the agreement the parties will agree on up to three targets and will co-develop T-cell therapies directed to those targets pursuant to an agreed research plan. For each target, Astellas will fund co-development up until completion of a Phase 1 trial for products directed to such target. In addition, Astellas was also granted the right to develop, independently of Adaptimmune, allogeneic T-cell therapy candidates directed to two targets selected by Astellas. Astellas will have sole rights to develop and commercialize products resulting from these two targets.
The agreement consists of the following performance obligations: (i) research services and rights granted under the co-exclusive license for each of the three co-development targets and (ii) the rights granted for each of the two independent Astellas targets. The revenue allocated to the co-development targets is recognized as the development of products directed to the targets progresses up until completion of a Phase 1 trial. The revenue allocated to each of the research licenses for the targets being independently developed by Astellas will be recognized when the associated license commences, which is upon designation of a target by Astellas.
The Genentech Collaboration Agreement
On September 3, 2021, the Company entered into the Genentech Collaboration Agreement, which became effective on October 19, 2021 upon expiry or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and is fully described in Note 14 to the financial statements.
Research and Development Expenses
Research and development expenditures are expensed as incurred. Research and development expenses consist principally of the following:
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These expenses are partially offset by:
As a company that carries out extensive research and development activities, we benefit from the U.K. research and development tax credit regime for small and medium sized companies (“SME R&D Tax Credit Scheme”), whereby our principal research subsidiary company, Adaptimmune Limited, is able to surrender the trading losses that arise from its research and development activities for a payable tax credit of up to approximately 33.4% of eligible research and development expenditures. Qualifying expenditures largely comprise employment costs for research staff, consumables and certain internal overhead costs incurred as part of research projects for which we do not receive income. Subcontracted research expenditures are eligible for a cash rebate of up to approximately 21.7%. A large proportion of costs in relation to our pipeline research, clinical trials management and manufacturing development activities, all of which are being carried out by Adaptimmune Limited, are eligible for inclusion within these tax credit cash rebate claims.
Expenditures incurred in conjunction with our collaboration agreements are not qualifying expenditures under the SME R&D Tax Credit Scheme but certain of these expenditures can be reimbursed through the U.K. research and development expenditure credit scheme (the “RDEC Scheme”). Under the RDEC Scheme tax relief is given at 13% of allowable R&D costs, which may result in a payable tax credit at an effective rate of approximately 10.5% of allowable R&D costs for the year ended December 31, 2021.
Our research and development expenses may vary substantially from period to period based on the timing of our research and development activities, which depends upon the timing of initiation of clinical trials and the rate of enrollment of patients in clinical trials. The duration, costs, and timing of clinical trials and development of our cell therapies will depend on a variety of factors, including:
A change in the outcome of any of these variables may significantly change the costs and timing associated with the development of that SPEAR T-cell. For example, if the FDA, or another regulatory authority, requires us to conduct clinical trials beyond those that we currently anticipate will be required for regulatory approval, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.
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General and Administrative Expenses
Our general and administrative expenses consist principally of:
Other (Expense) Income, Net
Other (expense) income, net primarily comprises foreign exchange (losses) gains. We are exposed to foreign exchange rate risk because we currently operate in the United Kingdom and United States. Our expenses are generally denominated in the currency in which our operations are located, which are the United Kingdom and United States. However, our U.K.-based subsidiary incurs significant research and development costs in U.S. dollars and, to a lesser extent, Euros. Our U.K. subsidiary has an intercompany loan balance in U.S. dollars payable to the ultimate parent company, Adaptimmune Therapeutics plc, which is considered of a long-term investment nature as repayment is not planned or anticipated in the foreseeable future. It is Adaptimmune Therapeutics plc’s intent not to request payment of the intercompany loan for the foreseeable future. The foreign exchange gains or losses arising on the revaluation of intercompany loans of a long-term investment nature are reported within other comprehensive (loss) income, net of tax.
Our results of operations and cash flows will be subject to fluctuations due to changes in foreign currency exchange rates, which could harm our business in the future. We seek to minimize this exposure by maintaining currency cash balances at levels appropriate to meet forthcoming expenditure in U.S. dollars and pounds sterling. To date, we have not used hedging contracts to manage exchange rate exposure, although we may do so in the future.
Taxation
We are subject to corporate taxation in the United Kingdom and the United States. We incur tax losses and tax credit carryforwards in the United Kingdom. No deferred tax assets are recognized on our U.K. losses and tax credit carryforwards because there is currently no indication that we will make sufficient taxable profits to utilize these tax losses and tax credit carryforwards. On June 10, 2021, the U.K. 2021 Finance Bill received Royal Assent. Under this bill, the rate of U.K. corporation tax will increase to 25% in 2023, with lower rates and tapered relief to be applied to companies with profits below £250,000.
We benefit from reimbursable tax credits in the United Kingdom through the SME R&D Tax Credit Scheme as well as the RDEC Scheme which are presented as a deduction to research and development expenditure.
Our subsidiary in the United States has generated taxable profits due to a Service Agreement between our U.S. and U.K. operating subsidiaries and is subject to U.S. federal corporate income tax of 21%. Due to its activity in the United States, and the sourcing of its revenue, the U.S. subsidiary is not currently subject to any state or local income taxes. The Company also benefits from the U.S Research Tax Credit and Orphan Drug Credit.
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In the future, if we generate taxable income in the United Kingdom, we may benefit from the United Kingdom’s “patent box” regime, which would allow certain profits attributable to revenues from patented products to be taxed at a rate of 10%. As we have many different patents covering our products, future upfront fees, milestone fees, product revenues, and royalties may be taxed at this favorably low tax rate.
U.K. Value Added Tax (“VAT”) is charged on all qualifying goods and services by VAT-registered businesses. An amount of 20% of the value of the goods or services is added to all relevant sales invoices and is payable to the U.K. tax authorities. Similarly, VAT paid on purchase invoices paid by Adaptimmune Limited and Adaptimmune Therapeutics plc is reclaimable from the U.K. tax authorities.
Critical Accounting Policies and Significant Judgments and Estimates
The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the revenues and expenses incurred during the reported periods. We base our estimates on historical experience and on various other factors that we believe are relevant under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting policies considered to be critical to the judgments and estimates used in the preparation of our financial statements are disclosed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2020.
Results of Operations
Comparison of Three Months Ended September 30, 2021 and 2020
The following table summarizes the results of our operations for the three months ended September 30, 2021 and 2020, together with the changes to those items (in thousands):
Increase/decrease
%
Research and development expenses
(4,144)
General and administrative expenses
(2,172)
(6,316)
(6,306)
(1,922)
(90)
Other expense, net
1,452
(86)
(6,776)
(193)
1,287
Loss for the period
(6,969)
Revenue was $1.2 million in the three months ended September 30, 2021 compared to $1.2 million for the three months ended September 30, 2020. Revenue varies depending on the progress of development activities and the amounts we expect to receive under contracts with customers.
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Research and development expenses increased by 17% to $28.2 million for the three months ended September 30, 2021 from $24.1 million for the three months ended September 30, 2020.
Our research and development expenses comprise the following (in thousands):
Salaries, materials, equipment, depreciation of property, plant and equipment and other employee-related costs(1)
20,270
15,901
4,369
27
Subcontracted expenditure
10,111
9,636
475
Manufacturing facility expenditure
2,594
2,079
515
958
79
Reimbursements receivable for research and development tax and expenditure credits
(6,941)
(4,768)
(2,173)
46
28,211
24,067
4,144
The net increase in our research and development expenses of $4.1 million for the three months ended September 30, 2021 compared to the same period in 2020 was primarily due to the following:
Our subcontracted costs for the three months ended September 30, 2021 were $10.1 million, compared to $9.6 million in the same period of 2020. This includes $7.7 million of costs directly associated with our afami-cel, ADP-A2M4CD8 and ADP-A2AFP SPEAR T-cells and $2.4 million of other development costs.
Our research and development expenses are highly dependent on the phases and progression of our research projects and will fluctuate depending on the outcome of ongoing clinical trials. We expect that our research and development expenses will increase in future periods as we continue to invest in our translational sciences and other research and development capabilities.
General and administrative expenses increased by 17% to $15.2 million for the three months ended September 30, 2021 from $13.0 million in the same period in 2020. The net increase in our general and administrative expenses of $2.2 million for the three months ended September 30, 2021 compared to the same period in 2020 was largely due to:
We expect that our general and administrative expenses will increase in the future as we expand our operations and move towards commercial launch.
Income Taxes
Income taxes increased to a charge $208,000 for the three months ended September 30, 2021 from a charge of $15,000 for the three months ended September 30, 2020. Income taxes arise in the United States due to our U.S. subsidiary generating taxable profits. We incur losses in the United Kingdom.
Comparison of Nine Months Ended September 30, 2021 and 2020
The following table summarizes the results of our operations for the nine months ended September 30, 2021 and 2020, together with the changes to those items (in thousands):
2,276
93
(15,794)
(9,972)
(25,766)
26
(23,490)
(3,108)
(77)
Other (expense) income, net
1,317
(88)
(25,281)
(472)
429
(25,753)
28
Revenue was $4.7 million in the nine months ended September 30, 2021 compared to $2.5 million for the nine months ended September 30, 2020. Revenue has increased primarily due to an increase in development activities under our collaboration agreements. Revenue varies depending on the progress of development activities and the amounts we expect to receive under contracts with customers (to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur).
Research and development expenses increased by 24% to $81.6 million for the nine months ended September 30, 2021 from $65.8 million for the nine months ended September 30, 2020.
58,694
46,192
12,502
32,353
24,234
8,119
34
7,135
5,133
2,002
39
3,938
126
In-process research and development costs
784
(633)
(81)
(23,812)
(13,678)
(10,134)
74
81,585
65,791
15,794
The net increase in our research and development expenses of $15.8 million for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to the following:
Our subcontracted costs for the nine months ended September 30, 2021 were $32.4 million, compared to $24.2 million in the same period of 2020. This includes $24.6 million of costs directly associated with our afami-cel, ADP-A2M4CD8 and ADP-A2AFP SPEAR T-cells and $7.7 million of other development costs.
General and administrative expenses increased by 31% to $42.5million for the nine months ended September 30, 2021 from $32.5 million in the same period in 2020. Our general and administrative expenses consist of the following (in thousands):
Salaries, depreciation of property, plant and equipment and other employee-related costs
21,434
17,992
3,442
Other corporate costs
13,810
11,535
2,275
4,512
107
Reimbursements
(1,453)
(1,196)
(257)
42,529
32,557
9,972
The net increase in our general and administrative expenses of $10.0 million for the nine months ended September 30, 2021 compared to the same period in 2020 was largely due to:
Income taxes increased to a charge of $582,000 for the nine months ended September 30, 2021 from a charge of $110,000 for the nine months ended September 30, 2020. Income taxes arise in the United States due to our U.S. subsidiary generating taxable profits. We incur losses in the United Kingdom.
Liquidity and Capital Resources
Sources of Funds
Since our inception, we have incurred significant net losses and negative cash flows from operations. We financed our operations primarily through sales of equity securities, cash receipts under our collaboration arrangements and research and development tax and expenditure credits. From inception through to September 30, 2021, we have raised:
We use a non-GAAP measure, Total Liquidity, which is defined as the total of cash and cash equivalents and marketable securities, to evaluate the funds available to us in the near-term. A description of Total Liquidity and reconciliation to cash and cash equivalents, the most directly comparable U.S. GAAP measure, are provided below under “Non-GAAP measures”.
As of September 30, 2021, we had cash and cash equivalents of $42.9 million and Total Liquidity of $240.1 million. In addition, under the terms of the Agreement with Genentech, Adaptimmune is entitled to receive $150 million as an upfront payment, which is anticipated to be received in the fourth quarter of 2021. We regularly assess Total Liquidity against our activities and make decisions regarding prioritization of those activities and deployment of Total Liquidity. We believe that our Total Liquidity, together with the upfront and exclusivity payments under the Strategic Collaboration and License Agreement with Genentech, will fund the Company’s current operations based upon our currently anticipated research and development activities, planned capital spending, and planned commercialization costs into early 2024. This belief is based on estimates that are subject to risks and uncertainties and may change if actual results differ from management’s estimates.
Cash Flows
The following table summarizes the results of our cash flows for the nine months ended September 30, 2021 and 2020 (in thousands).
Cash, cash equivalents and restricted cash
Operating Activities
Net cash used in operating activities was $123.2 million for the nine months ended September 30, 2021 compared to $24.3 million for the nine months ended September 30, 2020. The receipt of the $50.0 million upfront payment from Astellas in January 2020 and the receipt of the R&D tax credit of $18.7m in July 2020, resulted in lower net cash used in operating activities for the nine months ended September 30, 2020. Excluding the impact of this, the net cash used in operating activities for the nine months ended September 30, 2021 increased due to an increase in operating expenditure.
Net cash used in operating activities of $123.2 million for the nine months ended September 30, 2021 comprised a net loss of $119.2 million and a net cash outflow of $30.2 million from changes in operating assets and liabilities, offset by non-cash items of $26.2 million. The changes in operating assets and liabilities include the impact of a $16.8 million increase in reimbursements receivable for research and development tax credits. The non-cash items consisted of depreciation expense on plant and equipment of $4.3 million, share-based compensation expense of $15.8 million, amortization on available-for-sale debt securities of $4.1 million, and other items of $2.2 million, which were offset by unrealized foreign exchange gains of $0.2 million.
Investing Activities
Net cash provided by investing activities was $104.3 million for the nine months ended September 30, 2021 compared to net cash used in investing activities of $286.5 million for the nine months ended September 30, 2020. The net cash provided by (used in) investing activities for the respective periods consisted primarily of:
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The Company invests surplus cash and cash equivalents in marketable securities. In the nine months ended September 30, 2021, the investments in marketable securities were reduced to fund the Company’s ongoing operations. In the nine months ended September 30, 2020, the Company increased its investments in marketable securities with proceeds from its public offerings.
Financing Activities
Net cash provided by financing activities was $3.2 million and $339.9 million for the nine months ended September 30, 2021 and 2020, respectively. The net cash provided by financing activities in the nine months ended September 30, 2021 consisted of net proceeds of $2.5 million from shares issued in an at-the-market offering, net of commissions and issuance costs, and proceeds of $0.7 million from share option exercises. For the nine months ended September 30, 2020, the net cash provided by financing activities consisted of net proceeds from public offerings of $334.4 million and proceeds from share option exercises of $5.5 million.
Non-GAAP Measures
Total Liquidity (a non-GAAP financial measure)
Total Liquidity (a non-GAAP financial measure) is the total of cash and cash equivalents and marketable securities. Each of these components appears in the condensed consolidated balance sheet. The U.S. GAAP financial measure most directly comparable to Total Liquidity is cash and cash equivalents as reported in the condensed consolidated financial statements, which reconciles to Total Liquidity as follows (in thousands):
Total Liquidity
240,120
368,217
We believe that the presentation of Total Liquidity provides useful information to investors because management reviews Total Liquidity as part of its management of overall liquidity, financial flexibility, capital structure and leverage. The definition of Total Liquidity includes investments, which are highly-liquid and available to use in our current operations, such as marketable securities.
Safe Harbor
See the section titled “Information Regarding Forward-Looking Statements” at the beginning of this Quarterly Report.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
There have been no material changes to the Company’s market risk during the three months ended September 30, 2021. For a discussion of the Company’s exposure to market risk, please refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2020.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”) as of September 30, 2021. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2021, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
No changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
As of September 30, 2021, we were not a party to any material legal proceedings.
Item 1A. Risk Factors.
Our business has significant risks. You should carefully consider the risk factors set out in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020 and the disclosures set out in this Quarterly Report, including our condensed consolidated financial statements and the related notes, before making an investment decision regarding our securities. The risks and uncertainties described are those significant or material risk factors currently known and specific to us that we believe are relevant to our business, results of operations and financial condition. Additional risks and uncertainties not currently known to us or that we now deem immaterial may also impair our business, results of operations and financial condition.
As of and for the period ended September 30, 2021, there have been no material changes from the risk factors previously disclosed by us in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Item 6. Exhibits.
The following exhibits are either provided with this Quarterly Report on Form 10-Q or are incorporated herein by reference:
Exhibit
Number
Description of Exhibit
10.1†**
Strategic Collaboration and License Agreement among Adaptimmune Limited, on the one hand, and Genentech, Inc. and F. Hoffman-La Roche Ltd, on the other hand, made and entered into as of September 3, 2021.
31.1**
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101**
The following financial information from Adaptimmune Therapeutics plc’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets as of September, 2021 and December 31, 2020, (ii) Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020, (iii) Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2021 and 2020, (iv) Unaudited Condensed Consolidated Statements of Change in Equity for the three and nine months ended September 30, 2021 and 2020, (v) Unaudited Condensed Consolidated Statements of Cash Flows for nine months ended September 30, 2021 and 2020 and (vi) Notes to the Unaudited Condensed Consolidated Financial Statements.
104**
Cover Page Interactive data File (formatted in Inline XBRL and contained in Exhibit 101)
* Previously filed.
** Filed herewith.
†
Certain portions of this exhibit have been omitted because they are not material and they are the type of information that the Registrant treats as private or confidential.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 4, 2021
/s/ Adrian Rawcliffe
Adrian Rawcliffe
Chief Executive Officer
/s/ Gavin Wood
Gavin Wood
Chief Financial Officer