Quarterly report pursuant to Section 13 or 15(d)

Business combinations

Business combinations
3 Months Ended
Mar. 31, 2024
Business combinations  
Business combinations

Note 13 – Business combinations

On March 6, 2023 the Company announced entry into a definitive agreement under which it would combine with TCR2 Therapeutics Inc. (“TCR2”) in an all-stock transaction to create a preeminent cell therapy company focused on treating solid tumors. TCR2 is a Boston, Massachusetts-based T-cell therapy company focused on treating solid tumours, with clinical franchises undergoing trials and a preclinical pipeline. The combination provides extensive benefits for clinical development and product delivery supported by complementary technology platforms.

The transaction was approved by the Company’s shareholders and TCR2 stockholders on May 30, 2023 and the merger became effective on June 1, 2023. The Company issued 357,429,306 shares to TCRstockholders in return for 100% of TCR2’s stock. As a result, TCR2 and all entities within the TCR2 group, became wholly owned by the Company. Following the completion of the transaction, the former TCR2 stockholders held approximately 25% of the Company, whereas the Company’s pre-existing shareholders held approximately 75%.

The Company was identified as the acquirer, with TCR2 as the acquiree, and June 1, 2023 was determined to be the acquisition date.

The consideration transferred for TCR2 includes the shares issued by the Company to former TCR2 shareholders, plus the fair value of replacement awards of the Company granted to TCR2 grantholders attributable to pre-combination vesting. The table below summarizes the consideration transferred and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:

Consideration transferred:

Fair value of 357,429,306 ordinary shares issued



Fair value of replacement options and RSU-style options granted attributable to pre-combination service:


Purchase consideration



Identifiable assets acquired and liabilities assumed:

Assets acquired

Cash and cash equivalents



Restricted cash


Marketable securities - available-for-sale debt securities


Other current assets and prepaid expenses


Property, plant and equipment


Operating lease right-of-use assets


Intangible assets


Total assets acquired



Liabilities assumed

Accounts payable


Accrued expenses and other current liabilities


Operating lease liabilities, current


Operating lease liabilities, non-current


Total liabilities assumed



Net assets acquired and liabilities assumed



The fair value of the 357,429,306 ordinary shares issued to TCR2 stockholders of $60,763,000 was determined on the basis of the closing market price of $1.02 ($0.17 per ordinary share) of the Company’s ADSs as of May 31, 2023.

The assets acquired and liabilities assumed were measured based on management’s estimates of the fair value as of the acquisition date, excluding leases.

The lease contracts acquired by the Company relate to the rental of office and manufacturing spaces in which TCR2 was the lessee. The Company retained TCR2’s previous classification of acquired leases as operating leases as there were no lease modifications as a result of the combination, with the exception of leases with a remaining lease term of 12 months or less at the acquisition date, for which no assets or liabilities were recognized at the acquisition date. The lease liabilities were measured at the present value of the remaining lease payments as if the leases were a new lease as of June 1, 2023, discounted using the incremental borrowing rate. The right-of-use assets were measured at the same amount as the lease liabilities, with adjustments to reflect favorable or unfavorable terms compared to market terms. No intangible assets were identified in relation to lease contracts acquired.

The table below summarises the calculation for the gain on bargain purchase, recognized in the Gain on bargain purchase line in the Consolidated Statement of Operations:

Gain on bargain purchase

Purchase consideration



Net assets acquired and liabilities assumed


Gain on bargain purchase



The transaction resulted in a gain on bargain purchase as the purchase consideration included in the agreement on March 6, 2023 comprising Company ADSs was based on a fixed ratio of 1.5117 of the Company’s ADSs to be issued for each TCR2 stock acquired. As the transaction was an all-stock transaction, the value of the consideration was highly sensitive to changes in the Company’s ADS price. The price of a Company ADS fell from a closing price of $1.32 on March 6, 2023 compared to a closing price of $1.02 on May 31, 2023.

The amount of revenue and earnings of the combined entity for the three months ended March 31, 2023, had the acquisition date been January 1, 2022, would be as follows:

Three months ended

March 31, 2023




Net loss


The supplemental pro forma earnings for the three months ended March 31, 2023 were adjusted to exclude the $3.8 million of acquisition-related costs recognized by the Company and the $3.7 million of acquisition-related costs incurred by TCR2 during that period. The supplemental pro forma earnings was adjusted to include the impact of replacement options issued, as if these had been issued as of January 1, 2022. Accordingly, the share-based compensation expense recognized by TCR2 in the three months ended March 31, 2023 of $0.6 million was excluded from the pro forma earnings.

TCR2 did not generate revenue in the period from January 1, 2023 to March 31, 2023, as it has no contracts with customers, so there was no impact on the revenue included in the Company’s Consolidated Statement of Operations or in the supplemental pro forma revenue and earnings presented above.

The Company incurred the following acquisition-related costs that were recognized as an expense in 2023:

Three months ended


March 31, 




Legal, professional and accounting fees





Bankers' fees



Total acquisition-related costs





All acquisition-related costs that were recognized as an expense were recognized in General and administrative expenses in the Consolidated Statement of Operations. No issuance costs were incurred relating to the issuance of shares to TCR2 stockholders.