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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, 2023

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 filerx

Smaller reporting company x

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 7, 2023, the number of outstanding ordinary shares par value £0.001 per share of the Registrant is 1,362,729,582.

Table of Contents

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

4

Item 1.

Financial Statements:

4

Unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

4

Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022

5

Unaudited Condensed Consolidated Statements of Comprehensive Profit/Loss for the three and nine months ended September 30, 2023 and 2022

6

Unaudited Condensed Consolidated Statements of Change in Equity for the three and nine months ended September 30, 2023 and 2022

7

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022

9

Notes to the Unaudited Condensed Consolidated Financial Statements

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

40

Item 4.

Controls and Procedures

40

PART II — OTHER INFORMATION

41

Item 1.

Legal Proceedings

41

Item 1A.

Risk Factors

41

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

41

Item 3.

Defaults Upon Senior Securities

41

Item 4.

Mine Safety Disclosures

41

Item 5.

Other Information

41

Item 6.

Exhibits

42

Signatures

42

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 discussed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2023, those discussed in the section titled “Risk Factors” included under Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on August 9, 2023 and those discussed in the section titled “Risk Factors” included under Part II, Item 1A below. 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, 

    

2023

    

2022

Assets

Current assets

Cash and cash equivalents

$

90,059

$

108,033

Marketable securities - available-for-sale debt securities

71,669

96,572

Accounts receivable, net of allowance for expected credit losses of $0 and $0

789

7,435

Other current assets and prepaid expenses

56,851

43,330

Total current assets

219,368

255,370

Restricted cash

3,013

1,569

Operating lease right-of-use assets, net of accumulated amortization of $11,930 and $9,470

21,302

18,019

Property, plant and equipment, net of accumulated depreciation of $42,543 and $38,588

52,571

53,516

Intangible assets, net of accumulated amortization of $5,008 and $4,676

384

442

Total assets

$

296,638

$

328,916

Liabilities and stockholders’ equity

Current liabilities

Accounts payable

$

13,922

$

4,753

Operating lease liabilities, current

5,081

2,728

Accrued expenses and other current liabilities

26,831

31,215

Restructuring provision

2,285

Deferred revenue, current

29,312

23,520

Total current liabilities

75,146

64,501

Operating lease liabilities, non-current

20,520

20,349

Deferred revenue, non-current

111,487

160,892

Other liabilities, non-current

1,356

1,296

Total liabilities

208,509

247,038

Stockholders’ equity

Common stock - Ordinary shares par value £0.001, 1,702,760,280 authorized and 1,361,595,036 issued and outstanding (2022: 1,282,773,750 authorized and 987,109,890 issued and outstanding)

1,863

1,399

Additional paid in capital

1,061,420

990,656

Accumulated other comprehensive gain/(loss)

102

(875)

Accumulated deficit

(975,256)

(909,302)

Total stockholders' equity

88,129

81,878

Total liabilities and stockholders’ equity

$

296,638

$

328,916

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, 

    

2023

    

2022

    

2023

    

2022

Revenue

$

7,319

$

7,007

$

60,050

$

16,120

Operating expenses

Research and development

(37,788)

(33,182)

 

(93,301)

 

(104,674)

General and administrative

(16,164)

(16,815)

 

(56,634)

 

(48,169)

Total operating expenses

(53,952)

(49,997)

(149,935)

 

(152,843)

Operating loss

(46,633)

(42,990)

 

(89,885)

 

(136,723)

Interest income

2,149

324

 

4,368

 

1,019

Gain on bargain purchase

(106)

 

22,049

 

Other income (expense), net

(324)

1,644

 

(494)

 

1,001

Loss before income tax expense

(44,914)

(41,022)

 

(63,962)

 

(134,703)

Income tax expense

(687)

(399)

 

(1,992)

 

(1,503)

Net loss attributable to ordinary shareholders

$

(45,601)

$

(41,421)

$

(65,954)

$

(136,206)

Net loss per ordinary share

Basic and diluted

$

(0.03)

$

(0.04)

$

(0.06)

$

(0.14)

Weighted average shares outstanding:

Basic and diluted

1,357,849,656

980,791,114

 

1,153,791,567

 

961,354,122

See accompanying notes to unaudited condensed consolidated financial statements.

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ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/LOSS

(In thousands)

Three months ended

Nine months ended

September 30, 

September 30, 

    

2023

    

2022

2023

2022

Net loss

$

(45,601)

$

(41,421)

$

(65,954)

$

(136,206)

Other comprehensive (loss)/income, net of tax

Foreign currency translation adjustments, net of tax of $0, and $0

24,359

58,011

(4,830)

122,496

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

(21,321)

(50,489)

4,794

(103,404)

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

69

204

926

(1,267)

Reclassification adjustment for gains on available-for-sale debt securities included in net loss, net of tax of $0, and $0

87

87

Total comprehensive loss for the period

$

(42,407)

$

(33,695)

$

(64,977)

$

(118,381)

See accompanying notes to unaudited condensed consolidated financial statements.

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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) / gain

    

deficit

equity

Balance as of January 1, 2023

987,109,890

$

1,399

$

990,656

$

(875)

$

(909,302)

$

81,878

Net profit

 

 

 

 

1,036

1,036

Other comprehensive loss

(910)

(910)

Issuance of shares upon exercise of stock options

 

6,035,574

 

7

 

1

 

 

8

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

554,496

1

187

188

Share-based compensation expense

 

 

 

1,676

 

 

1,676

Balance as of March 31, 2023

 

993,699,960

$

1,407

$

992,520

$

(1,785)

$

(908,266)

$

83,876

Net loss

 

 

 

 

(21,389)

(21,389)

Other comprehensive loss

(1,307)

(1,307)

Issuance of shares upon exercise of stock options

 

698,778

 

1

 

13

 

 

14

Issuance of shares upon acquisition of TCR2

357,429,306

443

60,320

60,763

Share-based compensation expense

 

 

 

4,694

 

 

4,694

Balance as of June 30, 2023

 

1,351,828,044

$

1,851

$

1,057,547

$

(3,092)

$

(929,655)

$

126,651

Net loss

 

(45,601)

 

(45,601)

Other comprehensive gain

3,194

3,194

Issuance of shares upon exercise of stock options

 

6,466,992

9

152

161

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

3,300,000

3

432

435

Share-based compensation expense

 

3,289

3,289

Balance as of September 30, 2023

 

1,361,595,036

$

1,863

$

1,061,420

$

102

$

(975,256)

$

88,129

See accompanying notes to unaudited condensed consolidated financial statements.

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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) / gain

deficit

equity

Balance as of January 1, 2022

 

937,547,934

$

1,337

$

959,611

$

(11,142)

$

(743,846)

$

205,960

Net loss

 

(50,265)

(50,265)

Other comprehensive gain

1,829

1,829

Issuance of shares upon exercise of stock options

 

3,318,072

5

30

35

Share-based compensation expense

 

5,586

5,586

Balance as of March 31, 2022

 

940,866,006

$

1,342

$

965,227

$

(9,313)

$

(794,111)

$

163,145

Net loss

 

 

 

 

 

(44,520)

 

(44,520)

Other comprehensive gain

8,270

8,270

Issuance of shares upon exercise of stock options

 

759,336

 

1

 

 

 

 

1

Issuance of shares under At The Market sales agreement, net of commission and expenses

35,134,182

44

9,932

 

9,976

Share-based compensation expense

 

 

 

5,045

 

 

 

5,045

Balance as of June 30, 2022

 

976,759,524

$

1,387

$

980,204

$

(1,043)

$

(838,631)

$

141,917

Net loss

 

 

 

 

 

(41,421)

 

(41,421)

Issuance of shares upon exercise of stock options

 

1,005,558

 

1

 

5

 

 

 

6

Issuance of shares under At The Market sales agreement, net of commission and expenses

4,954,854

6

1,440

1,446

Other comprehensive gain

7,726

7,726

Share-based compensation expense

 

 

 

3,663

 

 

 

3,663

Balance as of September 30, 2022

 

982,719,936

$

1,394

$

985,312

$

6,683

$

(880,052)

$

113,337

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, 

    

2023

    

2022

Cash flows from operating activities

Net loss

$

(65,954)

$

(136,206)

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

Depreciation

6,647

4,009

Amortization

322

629

Gain on bargain purchase

(22,049)

Share-based compensation expense

8,692

14,294

Unrealized foreign exchange losses/(gains)

709

(2,501)

(Accretion)/amortization on available-for-sale debt securities

(1,595)

2,165

Other

253

765

Changes in operating assets and liabilities:

Increase in receivables and other operating assets

(709)

(29,778)

(Decrease)/increase in payables and other current liabilities

(7,792)

15,200

Decrease in deferred revenue

(44,728)

(12,388)

Net cash used in operating activities

(126,204)

(143,811)

Cash flows from investing activities

Acquisition of property, plant and equipment

(3,854)

(26,081)

Acquisition of intangible assets

(199)

(231)

Cash from acquisition of TCR2 Therapeutics Inc.

45,264

Maturity or redemption of marketable securities

139,243

136,694

Investment in marketable securities

(73,026)

(42,197)

Other

913

Net cash provided by investing activities

108,341

68,185

Cash flows from financing activities

Proceeds from issuance of common stock from offerings, net of commissions and issuance costs

623

11,422

Proceeds from exercise of stock options

183

42

Net cash provided by financing activities

806

11,464

Effect of currency exchange rate changes on cash, cash equivalents and restricted cash

527

(6,791)

Net decrease in cash, cash equivalents and restricted cash

(16,530)

(70,953)

Cash, cash equivalents and restricted cash at start of period

109,602

151,666

Cash, cash equivalents and restricted cash at end of period

$

93,072

$

80,713

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 $975,256,000 as of September 30, 2023.

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 March 6, 2023 (the “Annual Report”). The balance sheet as of December 31, 2022 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 made in various areas, including in relation to valuation allowances relating to deferred tax assets, revenue recognition, the fair value of assets acquired, liabilities assumed and consideration transferred in business combinations, 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)          Significant concentrations of credit risk

The Company held cash and cash equivalents of $90,059,000, marketable securities of $71,669,000 and restricted cash of $3,013,000 as of September 30, 2023. The cash and cash equivalents and restricted cash are held with multiple banks and the Company monitors the credit rating of those banks. The Company maintains cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation in the United States and the U.K. Government Financial Services Compensation Scheme in the United Kingdom. The Company’s investment policy limits investments to certain types of instruments, such as money market instruments, corporate debt securities and commercial paper, places restrictions on maturities and concentration by type and issuer and specifies the minimum credit ratings for all investments and the average credit quality of the portfolio.

The Company had two customers during the three months ended September 30, 2023 which are Genentech and GSK, and three during the nine months ended, September 30, 2023, which also includes Astellas. There were accounts receivable of $789,000 as of September 30, 2023 and $7,435,000 as of December 31, 2022. The Company has been transacting with Genentech since 2021, Astellas since 2020 and GSK since 2014, during which time no credit losses have been recognized. As of September 30, 2023, no allowance for expected credit losses is recognized on the basis that the possibility of credit losses arising on its receivables as of September 30, 2023 is considered to be remote.

Management analyses current and past due accounts and determines if an allowance for credit losses is required based on collection experience, credit worthiness of customers and other relevant information. The process of estimating the uncollectible accounts involves assumptions and judgments and the ultimate amounts of uncollectible accounts receivable could be in excess of the amounts provided.

(e) New accounting pronouncements

Adopted in the current period

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 Company adopted the guidance in the fiscal year beginning January 1, 2023. 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. There was no material impact from the adoption of the guidance on the Company’s Consolidated financial statements.

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Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued ASU 2021-08 – Business Combinations (Topic 805)- Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in and inconsistency related to the following: (1) recognition of an acquired contract liability and (2) payment terms and their effect on subsequent revenue recognized by the acquirer. The amendments in this ASU resolve this inconsistency by requiring that an entity (acquirer) recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic 606, in contrast to current GAAP which requires that assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities, are measured at fair value as of the acquisition date. The Company adopted the guidance in the fiscal year beginning January 1, 2023. The amendments in this ASU should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Adoption of the new standard had no impact on the Company’s Consolidated financial statements upon transition. There was also no impact from adopting this standard on the acquisition accounting for TCR2 Therapeutics Inc. as no contracts with customers were assumed as a result of the business combination.

(f)          Business combinations

The Company determines whether a transaction or other event is a business combination by determining whether the assets acquired and liabilities assumed constitute a business. Business combinations are accounted for by applying the acquisition method as set out by ASC 805 Business combinations. The acquisition method of accounting requires the acquirer to recognize and measure all identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree at their acquisition-date fair values, with certain exceptions for specific items.

For leases acquired in a business combination in which the acquiree is a lessee, the acquirer shall measure the lease liability at the present value of the remaining lease payments, as if the acquired lease were a new lease of the acquirer at the acquisition date. The right-of-use asset shall be measured at the same amount as the lease liability, adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms. For leases in which the acquired entity is a lessee, the Company has elected not to recognize assets or liabilities at the acquisition date for leases that, at the acquisition date, have a remaining lease term of 12 months or less.

Goodwill is measured as the excess of the consideration transferred in the business combination over the net acquisition date amounts of the identifiable assets acquired and the liabilities assumed. If instead the net acquisition date amounts of the identifiable assets acquired and the liabilities assumed exceeds the consideration transferred, a gain on bargain purchase is recognized in the Consolidated Statement of Operations. The consideration transferred in a business combination is measured as the sum of the fair values of the assets transferred by the acquiring entity, the liabilities incurred by the acquiring entity to former owners of the acquired entity, and the equity interests issued by the acquiring entity.

The results of operations of businesses acquired by the Company are included in the Company’s Consolidated Statement of Operations as of the respective acquisition date.

Where the acquiring entity exchanges its share-based payment awards for awards held by grantees of the acquiree, such exchanges are treated as a modification of share-based payment awards and are referred to as replacement awards. The replacement awards are measured as of the acquisition date and the portion of the fair-value-based measure of the replacement award that is attributable to pre-combination vesting is considered part of the consideration transferred. For awards with service-based vesting conditions only, the amount attributable to pre-combination vesting is the fair-value-based measure of the acquiree award multiplied by the ratio of the employee’s pre-combination service period to the greater of the total service period of the original service period of the acquiree award.

Acquisition-related costs, including advisory, legal and other professional fees and administrative fees are expensed as incurred except for the costs of issuing equity securities, which are recognized as a reduction to the amounts recognized in the Statement of Changes in Equity for the respective equity issuance.

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Note 3 Revenue

The Company had two revenue-generating contracts with customers in the three months ended September 30, 2023 and three in the nine months ended September 30, 2023, compared to three in the three and nine months ended September 30, 2022: a collaboration agreement with Astellas that was terminated as of March 6, 2023, a strategic collaboration and license agreement with Genentech and a termination and transfer agreement with GSK that was effective on April 6, 2023. The original collaboration and license agreement with GSK was terminated in 2022.

Revenue comprises the following categories (in thousands):

Three months ended

 

Nine months ended

 

September 30, 

September 30, 

     

2023

     

2022

2023

     

2022

Development revenue

 

$

7,319

 

$

7,007

$

60,050

 

$

16,120

 

$

7,319

 

$

7,007

$

60,050

 

$

16,120

Deferred revenue decreased by $43,613,000 from $184,412,000 at December 31, 2022 to $140,799,000 at September 30, 2023 primarily due to revenue recognized during the quarter. This was partially offset by payments of $9,613,000 and $3,727,000 from GSK in the second and third quarters of 2023, respectively, and a $1,143,000 increase caused by the change in the exchange rate between pound sterling and the U.S. dollar from £1.00 to $1.21 at December 31, 2022 to £1.00 to $1.22 at September 30, 2023.

As of December 31, 2022, there was deferred revenue of $184,412,000 of which $59,375,000 was recognized as revenue in the nine months ended September 30, 2023.

The aggregate amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the agreements as of September 30, 2023 was $305,197,000.

The Genentech Collaboration and License Agreement

The amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the Genentech agreement as of September 30, 2023 was $268,588,000. Of this amount $164,158,000 is allocated to the research services and rights granted for the initial ‘off-the-shelf’ collaboration targets, $85,435,000 is allocated to the research services and rights granted for the personalized therapies, $12,821,000 is allocated to the material rights to designate the additional ‘off-the-shelf’ collaboration targets, $4,939,000 is allocated to the material right for the first option to extend the research term and $1,235,000 is allocated to the material right for the option to extend the research term a second time.

The Company expects to satisfy the performance obligations relating to the initial ‘off-the-shelf’ collaboration targets and the personalized therapies as development progresses and recognizes revenue based on an estimate of the percentage of completion of the project determined based on the costs incurred on the project as a percentage of the total expected costs. The Company expects to satisfy the performance obligations relating to the material rights to designate additional ‘off-the-shelf’ collaboration targets from the point that the options are exercised and then as development progresses, in line with the initial ‘off-the-shelf’ collaboration targets, or at the point in time that the rights expire. The Company expects to satisfy the performance obligations relating to the material rights to extend the research term from the point that the options are exercised and then over the period of the extension, or at the point in time that the rights expire.

The Astellas Collaboration Agreement

The Company and Universal Cells mutually agreed to terminate the Astellas Collaboration Agreement as of March 6, 2023 (the “Termination Date”). In connection with the termination, all licenses and sublicenses granted to either party pursuant to the Collaboration Agreement ceased as of the Termination Date. There were no termination penalties in connection with the termination; however the Company is still entitled to receive reimbursement for research and development work performed up to and including a period of 30 days after the Termination Date.

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The Company originally satisfied the performance obligations relating to the three co-development targets as development progresses and recognized revenue based on an estimate of the percentage of completion of the project determined based on the costs incurred on the project as a percentage of the total expected costs. The Company originally determined that the performance obligations relating to the two independent Astellas targets would be recognized at a point-in-time, upon commencement of the licenses in the event of nomination of the target, since they were right-to-use licenses.

The termination was accounted for as a contract modification on a cumulative catch-up basis. No performance obligations were identified as a result of the modification as there were no further goods or services to be provided by the Company and the modification resulted in the remaining unsatisfied and partially satisfied performance obligations under the collaboration becoming fully satisfied. The aggregate transaction price of the contract modification was $42,365,000 which included the remaining deferred income that had not been recognized as revenue as of the date of the modification and variable consideration from the remaining reimbursement income to be billed under the collaboration at the end of the 30 day period after the Effective Date. The transaction price of the modification was recognized in full in March 2023 and there is no remaining transaction price allocated to performance obligations that are unsatisfied or partially satisfied under, no remaining deferred income relating to, the agreement as of September 30, 2023 and no revenue was recognized in the three months ended September 30, 2023.

The GSK Collaboration and License Agreement

The GSK Collaboration and License Agreement consisted of multiple performance obligations, including the development of a third target, which was the only performance obligation for which revenue was recognized in 2022.

The collaboration was terminated by GSK in October 2022 (effective December 23, 2022). A further amendment to the collaboration agreement was entered into on December 19, 2022 for the deletion of certain provisions relating to GSK’s post termination manufacturing and supply obligations and payment of £5,000,000 by GSK to Adaptimmune. The aggregate transaction price of the contract modification was $6,500,000, which was recognized as revenue on the date of the modification. No revenue was recognized in relation to the GSK Collaboration and License Agreement in 2023.

The GSK Termination and Transfer Agreement

On April 6, 2023, the Company and GSK entered into a Termination and Transfer Agreement (the “Termination and Transfer Agreement”) regarding the return of rights and materials comprised within the PRAME and NY-ESO cell therapy programs. The parties will work collaboratively to ensure continuity for patients in ongoing lete-cel clinical trials forming part of the NY-ESO cell therapy program.

As part of the agreement, sponsorship and responsibility for the ongoing IGNYTE and long-term follow-up (“LTFU”) trials relating to the NY-ESO cell therapy program will transfer to Adaptimmune. In return for this, Adaptimmune received an upfront payment of £7.5 million in June 2023 following the signing of the agreement and a milestone payment if £3 million in September 2023. Further milestone payments totalling £19.5 million will be due in relation to successive stages of transfer of the trials.

The Company determined that GSK is a customer and has accounted for the agreement under ASC 606 Revenue from Contracts with Customers. The agreement is accounted for as a separate contract from the original GSK Collaboration and License Agreement. The Company has identified the following performance obligations under the agreement: (i) to take over sponsorship for the IGNYTE trial and (ii) to take over sponsorship for the LTFU trial.

The aggregate transaction price at inception of the agreement was $37,335,000 comprising the total £30,000,000 upfront and milestone payments. No value was ascribed to non-cash consideration and there was no variable consideration identified. The aggregate transaction price is allocated to the performance obligations depending on the relative standalone selling price of the performance obligations. In determining the best estimate of the relative standalone selling price, the Company considered the internal pricing objectives it used in negotiating the contract, together with internal data regarding the expected costs and a standard margin on those costs, for completing the trials. The amount of the transaction price allocated to the performance obligation is recognized as or when the Company satisfies the performance obligation.

The Company expects to satisfy the IGNYTE performance obligation as sponsorship of the active trials that make up the IGNYTE trial transfers, based on the number of patients transferring to the Company in each trial. The Company considers that this

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depicts the progress of the transfer of sponsorship of the IGNYTE trial to the Company, as each individual trial comprising IGNYTE transferred represents the transfer of a portion of the sponsorship for IGNYTE.

The Company expects to satisfy the LTFU performance obligation as sponsorship of the trials that make up the LTFU trial transfers, including trials for potential future patients transferring to the LTFU trial from the IGNYTE trial, based on the number of active and potential patients transferring in each trial. The Company considers that this depicts the progress of the transfer of sponsorship of the LTFU trial to the Company, as each individual trial comprising LTFU transferred represents the transfer of a portion of sponsorship for the LTFU trial and the sponsorship of patients transferring from IGNYTE in future is part of the promise to take on the overall LTFU trial.

No revenue was recognized for the agreement in the three and nine months ended September 30, 2023. The amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the agreement as of September 30, 2023 was $36,609,000, of which $20,501,000 is allocated to the IGNYTE performance obligation and $16,108,000 is allocated to the LTFU performance obligation.

Note 4 Loss per share

The following tables reconcile the numerator and denominator in the basic and diluted loss per share computation (in thousands):

Three months ended

Nine months ended

September 30, 

September 30, 

     

2023

     

2022

     

2023

     

2022

Numerator for basic and diluted loss per share

Net loss attributable to ordinary shareholders

 

$

(45,601)

 

$

(41,421)

 

$

(65,954)

 

$

(136,206)

Net loss attributable to ordinary shareholders used for basic and diluted loss per share

$

(45,601)

$

(41,421)

$

(65,954)

$

(136,206)

Three months ended

Nine months ended

September 30, 

September 30, 

 

2023

    

2022

     

2023

     

2022

Denominator for basic loss per share - Weighted average shares outstanding

 

1,357,849,656

 

980,791,114

 

1,153,791,567

 

961,354,122

The dilutive effect of 200,370,627 and 152,427,845 stock options outstanding as of September 30, 2023 and 2022 respectively have been excluded from the diluted loss per share calculation for the three and nine months ended September 30, 2023 and 2022 because they would have an antidilutive effect on the loss per share for the period.

Note 5 Accumulated other comprehensive (loss)/income

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.

15

Table of Contents

The following tables show the changes in Accumulated other comprehensive (loss) income (in thousands):

Accumulated

Accumulated

Total

foreign

unrealized

accumulated

currency

(losses) gains on

other

    

translation

    

available-for-sale

comprehensive

adjustments

debt securities

(loss) income

Balance at January 1, 2023

 

$

55

$

(930)

$

(875)

Foreign currency translation adjustments

(16,908)

(16,908)

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

15,526

15,526

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

472

472

Balance at March 31, 2023

$

(1,327)

$

(458)

$

(1,785)

Foreign currency translation adjustments

(12,281)

(12,281)

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

10,589

10,589

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

385

385

Balance at June 30, 2023

$

(3,019)

$

(73)

$

(3,092)

Foreign currency translation adjustments

24,359

24,359

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

(21,321)

(21,321)

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

69

69

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

87

87

Balance at September 30, 2023

$

19

$

83

$

102

Accumulated

Accumulated

Total

foreign

unrealized

accumulated

currency

(losses) on

other

    

translation

    

available-for-sale

comprehensive

adjustments

debt securities

(loss) income

Balance at January 1, 2022

 

$

(10,785)

$

(357)

(11,142)

Foreign currency translation adjustments

16,792

16,792

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

(13,808)

(13,808)

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

(1,155)

(1,155)

Balance at March 31, 2022

$

(7,801)

$

(1,512)

$

(9,313)

Foreign currency translation adjustments

47,694

47,694

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

(39,108)

(39,108)

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

(316)

(316)

Balance at June 30, 2022

$

785

$

(1,828)

$

(1,043)

Foreign currency translation adjustments

58,011

58,011

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

(50,489)

(50,489)

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

204

204

Balance at September 30, 2022

$

8,307

$

(1,624)

$

6,683

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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, 2023 are as follows (in thousands):