Quarterly Report (10-q)

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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, 2022

	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 7, 2022, the number of outstanding ordinary shares par value £0.001 per share of the Registrant is 982,974,108.

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, 2022 and December 31, 2021	4

	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021	5

	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021	6

	Unaudited Condensed Consolidated Statements of Change in Equity for the three and nine months ended September 30, 2022 and 2021	7

	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	9

	Notes to the Unaudited Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

Item 4.	Controls and Procedures	33

PART II — OTHER INFORMATION		34

Item 1.	Legal Proceedings	34

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3.	Defaults Upon Senior Securities	34

Item 4.	Mine Safety Disclosures	35

Item 5.	Other Information	35

Item 6.	Exhibits	35

Signatures		36

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, 2021. 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.

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,
	2022		2021
Assets
Current assets
Cash and cash equivalents	$	79,001	$	149,948
Marketable securities - available-for-sale debt securities		120,669		219,632
Accounts receivable, net of allowance for doubtful accounts of $0 and $0		1,774		752
Other current assets and prepaid expenses		62,695		45,126
Total current assets		264,139		415,458

Restricted cash		1,712		1,718
Operating lease right-of-use assets, net of accumulated amortization		17,607		20,875
Property, plant and equipment, net of accumulated depreciation of $35,229 and $36,253		48,176		30,494
Intangible assets, net of accumulated amortization of $4,354 and $4,051		568		1,000
Total assets	$	332,202	$	469,545

Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	6,905	$	8,113
Operating lease liabilities, current		2,474		2,320
Accrued expenses and other current liabilities		36,079		29,909
Deferred revenue, current		20,622		22,199
Total current liabilities		66,080		62,541

Operating lease liabilities, non-current		19,926		23,148
Deferred revenue, non-current		132,233		177,223
Other liabilities, non-current		626		673
Total liabilities		218,865		263,585

Stockholders’ equity
Common stock - Ordinary shares par value £0.001, 1,282,773,750 authorized and 982,719,936 issued and outstanding (2021: 1,240,853,520 authorized and 937,547,934 issued and outstanding)		1,394		1,337
Additional paid in capital		985,312		959,611
Accumulated other comprehensive income (loss)		6,683		(11,142)
Accumulated deficit		(880,052)		(743,846)
Total stockholders' equity		113,337		205,960

Total liabilities and stockholders’ equity	$	332,202	$	469,545

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,
	2022		2021		2022		2021
Revenue	$	7,007	$	1,203	$	16,120	$	4,732
Operating expenses
Research and development		(33,182)		(28,211)		(104,674)		(81,585)
General and administrative		(16,815)		(15,173)		(48,169)		(42,529)
Total operating expenses		(49,997)		(43,384)		(152,843)		(124,114)
Operating loss		(42,990)		(42,181)		(136,723)		(119,382)
Interest income		324		225		1,019		916
Other (expense) income, net		1,644		(237)		1,001		(184)
Loss before income tax expense		(41,022)		(42,193)		(134,703)		(118,650)
Income tax expense		(399)		(208)		(1,503)		(582)
Net loss attributable to ordinary shareholders	$	(41,421)	$	(42,401)	$	(136,206)	$	(119,232)

Net loss per ordinary share
Basic and diluted	$	(0.04)	$	(0.05)	$	(0.14)	$	(0.13)

Weighted average shares outstanding:
Basic and diluted		980,791,114		936,600,648		961,354,122		933,992,708

See accompanying notes to unaudited condensed consolidated financial statements.

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,
	2022		2021		2022		2021
Net loss	$	(41,421)	$	(42,401)	$	(136,206)	$	(119,232)
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments, net of tax of $0, and $0		58,011		15,564		122,496		8,386
Foreign currency gains on intercompany loan of a long-term investment nature, net of tax of $0, and $0		(50,489)		(15,310)		(103,404)		(8,351)
Unrealized holding losses on available-for-sale debt securities, net of tax of $0, and $0		204		33		(1,267)		(85)
Total comprehensive loss for the period	$	(33,695)	$	(42,114)	$	(118,381)	$	(119,282)

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
Issue 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)
Other comprehensive gain	—		—		—		7,726		—		7,726
Issuance of shares upon exercise of stock options	1,005,558		1		5		—		—		6
Issue of shares under At The Market sales agreement, net of commission and expenses	4,954,854		6		1,440		—		—		1,446
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 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 January 1, 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
Issuance of shares under At The Market sales agreement, net of commission and 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
Issuance of shares under At The Market sales agreement, net of commission and expenses	—		—		10						10
Other comprehensive gain	—		—		—		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.

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ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Nine months ended
	September 30,
	2022		2021
Cash flows from operating activities
Net loss	$	(136,206)	$	(119,232)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		4,009		4,333
Amortization		629		—
Share-based compensation expense		14,294		15,802
Unrealized foreign exchange gains		(2,501)		(213)
Amortization on available-for-sale debt securities		2,165		4,094
Other		765		2,239
Changes in operating assets and liabilities:
Increase in receivables and other operating assets		(29,778)		(31,809)
Increase/ (decrease) in payables and other current liabilities		15,200		(109)
(Decrease)/ increase in deferred revenue		(12,388)		1,696
Net cash used in operating activities		(143,811)		(123,199)

Cash flows from investing activities
Acquisition of property, plant and equipment		(26,081)		(4,558)
Acquisition of intangible assets		(231)		(181)
Maturity or redemption of marketable securities		136,694		190,393
Investment in marketable securities		(42,197)		(81,363)
Net cash provided by investing activities		68,185		104,291

Cash flows from financing activities
Proceeds from issuance of common stock from offerings, net of commissions and issuance costs		11,422		2,529
Proceeds from exercise of stock options		42		707
Net cash provided by financing activities		11,464		3,236

Effect of currency exchange rate changes on cash, cash equivalents and restricted cash		(6,791)		(1,177)
Net decrease in cash, cash equivalents and restricted cash		(70,953)		(16,849)
Cash, cash equivalents and restricted cash at start of period		151,666		61,484
Cash, cash equivalents and restricted cash at end of period	$	80,713	$	44,635

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 $880,052,000 as of September 30, 2022.

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 14, 2022 (the “Annual Report”). The balance sheet as of December 31, 2021 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, 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 $79,001,000, marketable securities of $120,669,000 and restricted cash of $1,712,000 as of September 30, 2022. 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 has three customers, which are Genentech, Astellas and GSK. There were accounts receivable of $1,774,000 as of September 30, 2022 and $752,000 as of December 31, 2021. The Company has been transacting with Genentech since 2021, Astellas since 2020 and GSK since 2014, during which time no impairment losses have been recognized. As of September 30, 2022, there were no overdue accounts receivable.

(e) New accounting pronouncements

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. The Company intends to adopt 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. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

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

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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. For public business entities, including the Company, the guidance is effective for fiscal years beginning on or after December 15, 2022, including interim periods within that fiscal year. The Company intends to adopt 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. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

Note 3 — Revenue

The Company had three revenue-generating contracts with customers in the three and nine months ended September 30, 2022 compared to two in the three and nine months ended September 30, 2021: a collaboration and license agreement with GSK, a collaboration agreement with Astellas and a strategic collaboration and license agreement with Genentech.

Revenue comprises the following categories (in thousands):


	Three months ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021

Development revenue	$	7,007	$	1,203	$	16,120	$	4,732
	$	7,007	$	1,203	$	16,120	$	4,732

Deferred revenue decreased by $46,567,000 from $199,422,000 at December 31, 2021 to $152,855,000 at September 30, 2022 primarily due to a $35,693,000 decrease caused by the change in the exchange rate between pound sterling and the U.S. dollar from £1.00 to $1.35 at December 31, 2021 to £1.00 to $1.11 at September 30, 2022.

As of December 31, 2021, there was deferred revenue of $199,422,000 of which $13,038,000 was recognized as revenue in the nine months ended September 30, 2022.

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, 2022 was $326,545,000.

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, 2022 was $276,396,000. Of this amount $170,265,000 is allocated to the research services and rights granted for the initial ‘off-the-shelf’ collaboration targets, $88,016,000 is allocated to the research services and rights granted for the personalized therapies, $12,228,000 is allocated to the material rights to designate the additional ‘off-the-shelf’ collaboration targets, $4,710,000 is allocated to the material right for the first option to extend the research term and $1,177,000 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 period of the extension, or at the point in time that the rights expire.

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The Astellas Collaboration Agreement

The amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the Astellas agreement as of September 30, 2022 was $49,818,000, of which $12,337,000 is allocated to the rights granted for each of the two independent Astellas targets, $6,670,000 is allocated to research services and rights granted under the co-exclusive license for the first co-development target, $12,518,000 is allocated to research services and rights granted under the co-exclusive license for the second co-development target and $5,956,000 is allocated to research services and rights under the co-exclusive license for the third co-development targets. The Company expects to satisfy the performance obligations relating to the three co-development targets 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 has 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 are right-to-use licenses.

The GSK Collaboration and License Agreement

The amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the GSK agreement as of September 30, 2022 was $330,000. The Company satisfies the performance obligations relating to the development of each target over time 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.

Future research, development, regulatory and sales milestones under each of the agreements are not considered probable as of September 30, 2022 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, 2022 to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. On October 24, 2022, the Company received notice of termination of the Collaboration and License Agreement, effective 60 days following the receipt of the notice of termination. As the terms of the transfer and related agreement are being negotiated, an estimate of the financial effect of this event cannot yet be made

Note 4 — Loss per share

The following table reconciles 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,
	2022		2021		2022		2021
Numerator for basic and diluted loss per share
Net loss attributable to ordinary shareholders	$	(41,421)	$	(42,401)	$	(136,206)	$	(119,232)
Net loss attributable to ordinary shareholders used for basic and diluted loss per share	$	(41,421)	$	(42,401)	$	(136,206)	$	(119,232)


	Three months ended		Nine months ended
	September 30,		September 30,
	2022	2021	2022	2021
Denominator for basic and diluted loss per share - Weighted average shares outstanding	980,791,114	936,600,648	961,354,122	933,992,708

The dilutive effect of 152,427,845 and 115,924,296 stock options outstanding as of September 30, 2022 and 2021 respectively have been excluded from the diluted loss per share calculation for the three and nine months ended September 30, 2022 and 2021 because they would have an antidilutive effect on the loss per share for the period.

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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.

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

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





	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)

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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, 2022 are as follows (in thousands):


			Fair value measurements using
	September 30,		Level 1		Level 2		Level 3
	2022
Assets:
Corporate debt securities	$	97,771	$	97,771	$	—	$	—
U.S. Treasury securities		18,066		—		18,066		—
Agency bonds		4,832		—		4,832		—
	$	120,669	$	97,771	$	22,898	$	—

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, 2022, 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	$	12,410	$	—	$	(43)	$	12,367
U.S. Treasury securities	Less than 3 months		18,117		—		(51)		18,066
Agency bonds	3 months to 1 year		5,000		—		(168)		4,832
Corporate debt securities	3 months to 1 year		84,319		—		(1,277)		83,042
Corporate debt securities	1 year to 2 years		2,447		—		(85)		2,362
		$	122,293	$	—	$	(1,624)	$	120,669

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, 2022 and December 31, 2021 are as follows:


	September 30, 2022						December 31, 2021
	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 in a continuous loss position for 12 months or longer:
Corporate debt securities	$	34,519		6	$	(393)	$	8,232		1		(35)

Marketable securities in a continuous loss position for less than 12 months:
Corporate debt securities	$	63,252		14	$	(1,012)	$	163,258		34	$	(348)
U.S. Treasury securities		18,066		3		(51)		—		—		—
Agency bond		4,832		1		(168)		4,993		1		(7)
	$	120,669		24	$	(1,624)	$	176,483		36	$	(390)

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As of September 30, 2022, 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. Six securities have been in an unrealized loss position for more than one year with a net total unrealized loss of $393,000. Furthermore, the Company does not intend to sell the debt securities in an unrealized loss position, believes that it has the ability to hold the debt securities to maturity, and it is currently unlikely that the Company will be required to sell these securities before the recovery of the amortized cost.

Note 8 — Other current assets

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


	September 30,		December 31,
	2022		2021
Corporate tax receivable	$	48,543	$	30,773
Prepayments		8,052		9,043
Clinical materials		1,171		746
VAT receivable		3,217		2,482
Other current assets		1,712		2,082
	$	62,695	$	45,126

Note 9 — Operating leases

The Company has operating leases in relation to property for office and research facilities.

On March 30, 2022, the Company entered into an agreement to modify the lease of 39 Innovation Drive, Milton Park, Abingdon, Oxfordshire, UK, and on June 15, 2022, the deeds associated with the modification were signed. However, for purposes of ASC 842 Leases, the Company determined that the effective date of the modification is March 30, 2022. The effect of the modification was a partial reduction of the scope of the lease and an increase in contractual lease payments relating to a non-lease component. The modification did not result in the identification of a separate contract but did result in the identification of a non-lease component relating to a leasehold improvement.

Upon modification, the lease liability has been remeasured using the current estimate of the Company’s incremental borrowing rate. The remeasurement of the lease liability also resulted in variable lease payments not previously included in the amount of the lease liability becoming included in the amount of the lease payments as at the date of the modification. The amount of the remeasurement of the lease liability due to the inclusion of variable lease payments that depend on an index or rate 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 $75,000.

The following table shows the weighted-average remaining lease term and the weighted-average discount rate as at September 30, 2022 and 2021:



	September 30,
	2022	2021

Weighted-average remaining lease term - operating leases	7.0 years	8.0 years
Weighted-average discount rate - operating leases	6.8%	6.8%

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The maturities of operating lease liabilities as of September 30, 2022 are as follows (in thousands):


	Operating leases

2022	$	1,010
2023		3,833
2024		3,782
2025		3,829
2026		3,883
after 2026		12,004
Total lease payments		28,341
Less: imputed interest		(5,941)
Present value of lease liability	$	22,400

The maximum lease term without activation of termination options is to 2041.

Note 10 — Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	September 30,		December 31,
	2022		2021
Accrued clinical and development expenditure	$	19,526	$	13,436
Accrued employee expenses		10,356		11,758
Other accrued expenditure		5,067		4,388
Other		1,130		327
	$	36,079	$	29,909

Note 11 — Contingencies and commitments

Alpine Collaboration Agreement

On May 14, 2019, the Company entered into a Collaboration Agreement relating to the development of next-generation SPEAR T-cell products with Alpine. The Company paid an upfront exclusive license option fee of $2,000,000 to Alpine in June 2019. Under the agreement, Adaptimmune will pay Alpine for ongoing research and development funding costs and development and commercialization milestone payments up to a maximum of $288,000,000 may be payable if all possible targets are selected and milestones achieved. The upfront payment of $2,000,000 and the payments for ongoing research was recognized within Research and development in the Consolidated Statement of Operations for the year ended December 31, 2019. A further payment of $1,000,000 was paid and recognized within Research and development in the Consolidated Statement of Operations for the nine months ended September 30, 2022. Alpine would also receive low single-digit royalties on worldwide net sales of applicable products.

Universal Cells Research, Collaboration and License Agreement and Co-development and Co-commercialization agreement

On November 25, 2015, the Company entered into a Research, Collaboration and License Agreement relating to gene editing and Human Leukocyte Antigen (“HLA”) engineering technology with Universal Cells, Inc. (“Universal Cells”). The Company paid an upfront license and start-up fee of $2,500,000 to Universal Cells in November 2015, a milestone payment of $3,000,000 in February 2016 and

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further milestone payments of $200,000 and $900,000 were made in the years ended December 31, 2018 and 2017, respectively. The agreement was amended and re-stated as of January 13, 2020, primarily to reflect changes to the development plan agreed between the parties. The agreement was further amended as of July 22, 2022, primarily to make certain changes to development milestones and to agree on the status thereof, as agreed between the parties. Following the amendment, a milestone payment of $500,000 was made in the nine months ended 30 September 2022. Further milestone payments of up to $35,300,000 are payable if certain development and product milestones are achieved of which a milestone of $1,800,000 has been accrued but not paid as of September 30, 2022, and milestones of $600,000 and $400,000 have been invoiced, but not yet paid, as of September 30, 2022. Universal Cells would also receive a profit-share payment for the first product, and royalties on sales of other products utilizing its technology. The upfront license and start-up fee and milestone payments were expensed to Research and development when incurred.

MD Anderson Strategic Alliance

On September 26, 2016, the Company announced that it had entered into a multi-year strategic alliance with The University of Texas MD Anderson Cancer Center (“MD Anderson”) designed to expedite the development of T-cell therapies for multiple types of cancer. The Company and MD Anderson are collaborating on a number of studies including clinical and preclinical development of the Company’s SPEAR T-cell therapies and will collaborate on future clinical stage first and second generation SPEAR T-cell therapies across a number of cancers.

Under the terms of the agreement, the Company committed at least $19,644,000 to fund studies. Payment of this funding is contingent on mutual agreement to study orders in order for any study to be included under the alliance and the performance of set milestones by MD Anderson. The Company made an upfront payment of $3,412,000 to MD Anderson in the year ended December 31, 2017 and milestone payments of $2,326,000, $3,549,000 and $454,000 in the years ended December 31, 2018, 2020, and 2021, respectively. A further milestone of $2,326,000 was met and paid in the nine months ended September 30, 2022. The Company is obligated to make further payments to MD Anderson as certain milestones are achieved. These costs are expensed to research and development as MD Anderson renders the services under the strategic alliance.

The agreement may be terminated by either party for material breach by the other party. Individual studies may be terminated for, amongst other things, material breach, health and safety concerns or where the institutional review board, the review board at the clinical site with oversight of the clinical study, requests termination of any study. Where any legal or regulatory authorization is finally withdrawn or terminated, the relevant study will also terminate automatically.

Note 12 — Share-based compensation

The following table shows the total share-based compensation expense included in the unaudited consolidated statements of operations (in thousands):

Three months ended

Nine months ended