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.

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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.

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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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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.

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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


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