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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

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

4

Item 1.

Financial Statements:

4

Unaudited Condensed Consolidated Balance Sheets as of Setpember 30, 2021 and December 31, 2020

4

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

31

Item 1.

Legal Proceedings

31

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3.

Defaults Upon Senior Securities

31

Item 4.

Mine Safety Disclosures

31

Item 5.

Other Information

31

Item 6.

Exhibits

32

Signatures

33

2

Table of Contents

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

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

ADAPTIMMUNE THERAPEUTICS PLC

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 937,049,820
issued 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

$

353,528

$

451,142

See accompanying notes to unaudited condensed consolidated financial statements.

4

Table of Contents

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

Three months ended

    

Nine months ended

September 30, 

September 30, 

    

2021

    

2020

    

2021

    

2020

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:

Basic and diluted

936,600,648

928,022,057

 

933,992,708

 

829,973,177

See accompanying notes to unaudited condensed consolidated financial statements.

5

Table of Contents

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

Three months ended

Nine months ended

September 30, 

September 30, 

    

2021

    

2020

2021

    

2020

Net loss

$

(42,401)

$

(35,432)

$

(119,232)

$

(93,479)

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

33

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)

(76)

Total comprehensive loss for the period

$

(42,114)

$

(35,121)

$

(119,282)

$

(94,709)

See accompanying notes to unaudited condensed consolidated financial statements.

6

Table of Contents

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY

(In thousands, except share data)

Accumulated

Additional

other

Total

Common

Common

paid in

comprehensive

Accumulated

stockholders'

    

stock

    

stock

    

capital

    

loss

    

deficit

    

equity

Balance as of 1 January 2021

928,754,958

$

1,325

$

935,706

$

(10,048)

$

(585,756)

$

341,227

Net loss

 

 

 

 

 

(37,763)

 

(37,763)

Other comprehensive loss

(176)

(176)

Issuance of shares upon exercise of stock options

 

4,062,210

 

6

 

529

 

 

 

535

Share-based compensation expense

 

 

 

5,334

 

 

 

5,334

Balance as of March 31, 2021

 

932,817,168

1,331

941,569

(10,224)

(623,519)

309,157

Net loss

 

(39,068)

 

(39,068)

Other comprehensive loss

(161)

(161)

Issuance of shares upon exercise of stock options

 

350,628

1

42

 

43

Issue of shares under At The Market sales agreement, net of expenses

3,069,330

4

2,515

2,519

Share-based compensation expense

 

5,449

 

5,449

Balance as of June 30, 2021

 

936,237,126

1,336

949,575

(10,385)

(662,587)

277,939

Net loss

 

(42,401)

 

(42,401)

Issuance of shares upon exercise of stock options

 

812,694

1

128

129

Issue of shares under At The Market sales agreement, net of expenses

10

10

Other comprehensive income

287

287

Share-based compensation expense

 

5,019

5,019

Balance as of September 30, 2021

 

937,049,820

$

1,337

$

954,732

$

(10,098)

$

(704,988)

$

240,983

See accompanying notes to unaudited condensed consolidated financial statements.

7

Table of Contents

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY

(In thousands, except share data)

Accumulated

Additional

other

Total

Common

Common

paid in

comprehensive

Accumulated

stockholders’

stock

stock

capital

(loss) income

deficit

equity

Balance as of 1 January 2020

 

631,003,568

 

$

943

 

$

585,623

 

$

(7,264)

 

$

(455,664)

 

$

123,638

Net loss

 

 

 

 

 

(28,167)

 

(28,167)

Other comprehensive loss

(2,326)

(2,326)

Issuance of shares upon exercise of stock options

 

4,610,772

 

6

 

888

 

 

 

894

Issuance of shares upon completion of public offering, net of issuance costs

144,900,000

190

90,360

90,550

Share-based compensation expense

 

 

 

1,448

 

 

 

1,448

Balance as of March 31, 2020

 

780,514,340

1,139

678,319

(9,590)

(483,831)

186,037

Net loss

 

 

 

 

 

(29,880)

 

(29,880)

Other comprehensive income

785

785

Issuance of shares upon exercise of stock options

 

5,704,606

 

7

 

4,174

 

 

 

4,181

Issuance of shares upon completion of public offering, net of issuance costs

141,450,000

178

243,660

 

243,838

Share-based compensation expense

 

 

 

2,624

 

 

 

2,624

Balance as of June 30, 2020

 

927,668,946

1,324

928,777

(8,805)

(513,711)

407,585

Net loss

 

 

 

 

 

(35,432)

 

(35,432)

Issuance of shares upon exercise of stock options

 

856,464

 

1

 

461

 

 

 

462

Other comprehensive loss

176

176

Share-based compensation expense

 

 

 

3,280

 

 

 

3,280

Balance as of September 30, 2020

 

928,525,410

$

1,325

$

932,518

$

(8,494)

$

(549,143)

$

376,206

See accompanying notes to unaudited condensed consolidated financial statements.

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ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine months ended

    

September 30, 

    

2021

    

2020

    

Cash flows from operating activities

Net loss

$

(119,232)

$

(93,479)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

4,333

5,151

Share-based compensation expense

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

See accompanying notes to unaudited condensed consolidated financial statements.

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ADAPTIMMUNE THERAPEUTICS PLC

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.

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(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.

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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):

Three months ended

 

Nine months ended

 

September 30, 

September 30, 

     

2021

     

2020

2021

     

2020

Development revenue

 

$

1,203

 

$

1,193

$

4,732

 

$

2,456

 

$

1,203

 

$

1,193

$

4,732

 

$

2,456

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.

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The following table shows the changes in Accumulated other comprehensive (loss) income (in thousands):

Accumulated

Accumulated

Total

foreign

unrealized

accumulated

currency

gains (losses) on

other

    

translation

    

available-for-sale

comprehensive

adjustments

debt securities

(loss) income

Balance at January 1, 2021

 

$

(10,158)

$

110

$

(10,048)

Foreign currency translation adjustments

(3,001)

(3,001)

Foreign currency gains on intercompany loan of a long-term investment nature, net of tax of $0

3,048

3,048

Unrealized holding losses on available-for-sale debt securities, net of tax of $0

(223)

(223)

Balance at March 31, 2021

(10,111)

(113)

(10,224)

Foreign currency translation adjustments

(4,177)

(4,177)

Foreign currency gains on intercompany loan of a long-term investment nature, net of tax of $0

3,911

3,911

Unrealized holding gains on available-for-sale debt securities, net of tax of $0

105

105

Balance at June 30, 2021

(10,377)

(8)

(10,385)

Foreign currency translation adjustments

15,564

15,564

Foreign currency losses on intercompany loan of a long-term investment nature, net of tax of $0

(15,310)

(15,310)

Unrealized holding gains on available-for-sale debt securities, net of tax of $0

33

33

Balance at September 30, 2021

$

(10,123)

$

25

$

(10,098)

Accumulated

Accumulated

Total

foreign

unrealized

accumulated

currency

gains (losses) on

other

    

translation

    

available-for-sale

comprehensive

adjustments

debt securities

(loss) income

Balance at January 1, 2020

 

$

(7,302)

$

38

$

(7,264)

Foreign currency translation adjustments

17,911

17,911

Foreign currency losses on intercompany loan of a long-term investment nature, net of tax of $0

(19,651)

(19,651)

Unrealized holding losses on available-for-sale debt securities, net of tax of $0

(586)

(586)

Balance at March 31, 2020

(9,042)

(548)

(9,590)

Foreign currency translation adjustments

1,194

1,194

Foreign currency losses on intercompany loan of a long-term investment nature, net of tax of $0

(1,108)

(1,108)

Unrealized holding gains on available-for-sale debt securities, net of tax of $0

699

699

Balance at June 30, 2020

(8,956)

151

(8,805)

Foreign currency translation adjustments

(15,522)

(15,522)

Foreign currency losses on intercompany loan of a long-term investment nature, net of tax of $0

15,698

15,698

Reclassification from accumulated other comprehensive income of gains on available-for-sale debt securities included in net loss, net of tax of $0

211

211

Unrealized holding gains on available-for-sale debt securities, net of tax of $0

(76)

(76)

Balance at September 30, 2020

$

(8,780)

$

286

$

(8,494)

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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

September 30, 

Level 1

Level 2

Level 3

     

2021

    

    

    

Assets:

Corporate debt securities

 

$

197,202

 

$

197,202

 

 

 

$

197,202

 

$

197,202

 

$

 

$

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

Gross

Aggregate

Remaining

Amortized

Unrealized

Unrealized

Estimated

    

Contractual Maturity

    

Cost

    

Gains

    

Losses

    

Fair Value

Available-for-sale debt securities:

 

  

 

  

 

  

 

  

 

  

Corporate debt securities

 

Less than 3 months

$

9,228

$

5

$

(1)

$

9,232

Corporate debt securities

3 months to 1 year

135,761

104

(29)

135,836

Corporate debt securities

1 year to 2 years

52,189

14

(69)

52,134

 

  

$

197,178

$

123

$

(99)

$

197,202

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

Fair market value of investments in an unrealized loss position

Number of investments in an unrealized loss position

Unrealized losses

Marketable securities:

Corporate debt securities

 

$

85,165

 

15

$

(99)

 

$

157,985

 

30

 

$

(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.

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Note 8 — Other current assets

Other current assets consisted of the following (in thousands):

September 30, 

December 31, 

    

2021

    

2020

Corporate tax receivable

 

$

43,446

 

$

20,585

Prepayments

 

9,970

 

6,314

Clinical materials

 

1,285

 

2,086

Other current assets

 

3,988

 

811

$

58,689

$

29,796

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:

September 30, 

2021

2020

Weighted-average remaining lease term - operating leases

8.0 years

6.5 years