Company Quick10K Filing
Quick10K
Adaptimmune Therapeutics
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$1.60 628 $1,005
10-Q 2019-09-30 Quarter: 2019-09-30
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
20-F 2015-12-31 Annual: 2015-12-31
8-K 2019-11-06 Earnings, Exhibits
8-K 2019-09-30 Officers, Other Events, Exhibits
8-K 2019-09-30 Regulation FD, Exhibits
8-K 2019-08-26 Enter Agreement, Other Events, Exhibits
8-K 2019-08-01 Earnings, Exhibits
8-K 2019-07-27 Officers, Other Events, Exhibits
8-K 2019-07-25 Other Events, Exhibits
8-K 2019-07-22 Other Events, Exhibits
8-K 2019-07-18 Other Events, Exhibits
8-K 2019-06-26 Officers, Other Events, Exhibits
8-K 2019-05-14 Enter Agreement, Other Events, Exhibits
8-K 2019-05-06 Earnings, Exhibits
8-K 2019-05-06 Regulation FD, Other Events, Exhibits
8-K 2019-05-06 Other Events, Exhibits
8-K 2019-05-02 Shareholder Vote
8-K 2019-05-02 Other Events, Exhibits
8-K 2019-04-02 Other Events, Exhibits
8-K 2019-02-27 Earnings, Exhibits
8-K 2019-01-07 Other Events, Exhibits
8-K 2018-12-10 Officers, Regulation FD, Exhibits
8-K 2018-11-06 Earnings, Exhibits
8-K 2018-10-20 Other Events, Exhibits
8-K 2018-09-07 Other Events, Exhibits
8-K 2018-09-05 Enter Agreement, Other Events, Exhibits
8-K 2018-08-15 Other Events, Exhibits
8-K 2018-08-02 Earnings, Exhibits
8-K 2018-07-20 Enter Agreement, Other Events, Exhibits
8-K 2018-07-18 Other Events, Exhibits
8-K 2018-07-05 Officers, Exhibits
8-K 2018-06-20 Shareholder Vote
8-K 2018-06-02 Other Events, Exhibits
8-K 2018-04-12 Officers, Regulation FD, Exhibits
8-K 2018-01-08 Regulation FD, Other Events, Exhibits
MNTA Momenta Pharmaceuticals 1,247
TWST Twist Bioscience 837
KOD Kodiak Sciences 436
GNCA Genocea Biosciences 354
LOGC LogicBio Therapeutics 215
LQDA Liquidia Technologies 103
PTE PolarityTE 93
NTGN Neon Therapeutics 71
XTNT Xtant Medical Holdings 39
APTO Aptose Biosciences 0
ADAP 2019-09-30
Part I - Financial Information
Item 1. Financial Statements.
Note 1 - General
Note 2 - Summary of Significant Accounting Policies
Note 3 - Revenue
Note 4 - Operating Leases
Note 5 - Other Income (Expense), Net
Note 6 - Loss per Share
Note 7 - Accumulated Other Comprehensive (Loss) Income
Note 8 - Fair Value Measurements
Note 9 - Available-For-Sale Debt Securities
Note 10 - Other Current Assets
Note 11 - Accrued Expenses and Other Current Liabilities
Note 12 - Share-Based Compensation
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-10.1 ex-10d1.htm
EX-10.2 ex-10d2.htm
EX-31.1 ex-31d1.htm
EX-31.2 ex-31d2.htm
EX-32.1 ex-32d1.htm
EX-32.2 ex-32d2.htm

Adaptimmune Therapeutics Earnings 2019-09-30

ADAP 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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 5, 2019, the number of outstanding ordinary shares par value £0.001 per share of the Registrant is 630,993,866.

Table of Contents

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

5

Item 1.

Financial Statements:

5

Unaudited Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018

5

Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018

6

Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2019 and 2018

7

Unaudited Condensed Consolidated Statements of Change in Equity for the three and nine months ended September 30, 2019 and 2018

8

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018

10

Notes to the Unaudited Condensed Consolidated Financial Statements

11

Item 2.

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

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34

Item 4.

Controls and Procedures

34

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

82

Item 3.

Defaults Upon Senior Securities

82

Item 4.

Mine Safety Disclosures

82

Item 5.

Other Information

82

Item 6.

Exhibits

83

Signatures

84

2

Table of Contents

General information

In this Quarterly Report on Form 10-Q (“Quarterly Report”), “Adaptimmune,” the “Group,” the “Company,” “we,” “us” and “our” refer to Adaptimmune Therapeutics plc and its consolidated subsidiaries, except where the context otherwise requires.

Information Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. All statements other than statements of historical fact in this Quarterly Report are forward-looking statements.

These forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results of operations, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. These forward-looking statements are based on assumptions regarding our present and future business strategies and the environment in which we expect to operate in the future. Important factors that could cause those differences include, but are not limited to:

our ability to successfully advance our ADP-A2M4 (MAGE-A4) and ADP-A2AFP (AFP) products through clinical development and the timing within which we can recruit patients and treat patients in all of our clinical trials;
our ability to fund our operations and continue as a going concern;
our ability to successfully and reproducibly manufacture SPEAR T-cells in order to meet patient demand;
our ability to further develop our commercial manufacturing process for our SPEAR T-cells, transfer such commercial process to third party contract manufacturers, if required, and for such third party contract manufacturers or ourselves to manufacture SPEAR T-cells to the quality and on the timescales we require;
our ability to successfully advance our SPEAR T-cell technology platform to improve the safety and effectiveness of our existing SPEAR T-cell candidates and to submit Investigational New Drug Applications, or INDs, for new SPEAR T-cell candidates;
the rate and degree of market acceptance of T-cell therapy generally, and of SPEAR T-cells;
government regulation and approval, including, but not limited to, the expected regulatory approval timelines for SPEAR T-cells and the level of pricing and reimbursement for SPEAR T-cells, if approved for marketing;
our ability to successfully commercialize any products;
the existence of any third party patents preventing further development of any SPEAR T-cells, including, any inability to obtain appropriate third party licenses, or enforcement of patents against us or our collaborators;
our ability to obtain granted patents covering any SPEAR T-cells and to enforce such patents against third parties;
volatility in equity markets in general and in the biopharmaceutical sector in particular and our ability to maintain compliance with the Nasdaq Global Select Market closing bid price requirement;
fluctuations in the price of materials and bought-in components;
the scope and timing of performance of our ongoing collaboration with GlaxoSmithKline (“GSK”);

3

Table of Contents

our relationships with suppliers, contract manufacturing organizations or CROs and other third-party providers including fluctuations in the price of materials and services, ability to obtain reagents particularly where such reagents are only available from a single source, and performance of third party providers;
increased competition from other companies in the biotechnology and pharmaceutical industries including where such competition impacts ability to recruit patients in to clinical trials;
claims for personal injury or death arising from the use of SPEAR T-cell candidates;
our ability to attract and retain qualified personnel; and
additional factors that are not known to us at this time.

Additional factors that could cause actual results, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results to differ materially include, but are not limited to, those discussed under “Risk Factors” in Part II, Item 1A in this Quarterly Report and in our other filings with the Securities and Exchange Commission (the “SEC”). Additional risks that we may currently deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this Quarterly Report not to occur. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements speak only at the date they were made, and we undertake no obligation to update or to review any estimate and/or forward-looking statement because of new information, future events or other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. Our future results may differ materially from those expressed in these estimates and forward-looking statements. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this Quarterly Report might not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive of, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

4

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, 

    

2019

    

2018

Assets

Current assets

Cash and cash equivalents

$

39,409

$

68,379

Marketable securities - available-for-sale debt securities

63,451

136,755

Accounts receivable, net of allowance for doubtful accounts of $0 and $0

192

Other current assets and prepaid expenses (including current portion of clinical materials)

44,110

25,769

Total current assets

146,970

231,095

Restricted cash

4,318

4,097

Clinical materials

2,485

3,953

Operating lease right-of-use assets, net of accumulated amortization

20,563

Property, plant and equipment, net of accumulated depreciation of $20,818 (2018: $15,924)

31,641

36,118

Intangibles, net of accumulated amortization

2,274

1,473

Total assets

$

208,251

$

276,736

Liabilities and stockholders’ equity

Current liabilities

Accounts payable

5,535

4,083

Operating lease liabilities, current

2,337

Accrued expenses and other accrued liabilities

26,846

20,354

Deferred revenue

2,683

Total current liabilities

37,401

24,437

Operating lease liabilities, non-current

22,599

Other liabilities, non-current

568

5,414

Total liabilities

60,568

29,851

Stockholders’ equity

Common stock - Ordinary shares par value £0.001, 785,857,300 authorized and 630,952,736 issued and outstanding (2018: 701,103,126 authorized and 627,454,270 issued and outstanding)

943

939

Additional paid in capital

583,065

574,208

Accumulated other comprehensive loss

(10,025)

(9,763)

Accumulated deficit

(426,300)

(318,499)

Total stockholders' equity

147,683

246,885

Total liabilities and stockholders’ equity

$

208,251

$

276,736

See accompanying notes to unaudited condensed consolidated financial statements.

5

Table of Contents

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

Three months ended

    

Nine months ended

September 30, 

September 30, 

    

2019

    

2018

    

2019

    

2018

Development revenue

237

1,678

394

18,912

License revenue

39,114

39,114

Total revenue

$

237

$

40,792

$

394

$

58,026

Operating expenses

Research and development (including losses accrued on firm purchase commitments of $5,000, $-, $5,000 and $-)

(29,617)

(23,484)

 

(77,147)

 

(75,500)

General and administrative

(10,741)

(10,290)

 

(32,662)

 

(32,785)

Total operating expenses

(40,358)

(33,774)

(109,809)

 

(108,285)

Operating (loss) income

(40,121)

7,018

 

(109,415)

 

(50,259)

Interest income

615

606

 

2,324

 

1,805

Other income (expense), net

291

(2,249)

 

(556)

 

(10,525)

(Loss) income before income taxes

(39,215)

5,375

 

(107,647)

 

(58,979)

Income taxes

(87)

(133)

 

(154)

 

(362)

Net (loss) income attributable to ordinary shareholders

$

(39,302)

$

5,242

$

(107,801)

$

(59,341)

Net (loss) income per ordinary share - Basic and diluted

Basic

$

(0.06)

$

0.01

$

(0.17)

$

(0.10)

Diluted

(0.06)

0.01

(0.17)

(0.10)

Weighted average shares outstanding:

Basic

630,866,800

582,004,954

 

629,403,293

 

573,796,275

Diluted

630,866,800

621,764,201

629,403,293

573,796,275

See accompanying notes to unaudited condensed consolidated financial statements.

6

Table of Contents

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

Three months ended

Nine months ended

September 30, 

September 30, 

    

2019

    

2018

2019

    

2018

Net (loss) income

$

(39,302)

$

5,242

$

(107,801)

$

(59,341)

Other comprehensive (loss) income, net of tax

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

6,617

1,521

7,916

5,103

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

(8,388)

(8,388)

Unrealized (gains) losses on available-for-sale debt securities

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

(55)

85

223

1,252

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

(13)

2,473

Total comprehensive (loss) income for the period

$

(41,128)

$

6,848

$

(108,063)

$

(50,513)

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 other

comprehensive loss

Accumulated

unrealized

Accumulated

(losses)

foreign

gains on

Additional

currency

available-for-

Total

Common

Common

paid in

translation

sale debt

Accumulated

stockholders'

    

stock

    

stock

    

capital

    

adjustments

    

securities

    

deficit

    

equity

Balance as of 1 January 2019

627,454,270

$

939

$

574,208

$

(9,607)

$

(156)

$

(318,499)

$

246,885

Net loss

 

 

 

 

 

 

(27,412)

 

(27,412)

Issuance of shares upon exercise of stock options

 

840,432

 

1

 

35

 

 

 

 

36

Foreign currency translation adjustments

 

 

 

 

(3,543)

 

 

 

(3,543)

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

 

 

 

 

 

210

 

 

210

Share-based compensation expense

 

 

 

3,479

 

 

 

 

3,479

Balance as of March 31, 2019

 

628,294,702

$

940

$

577,722

$

(13,150)

$

54

$

(345,911)

$

219,655

Net loss

 

 

 

 

 

 

(41,087)

 

(41,087)

Issuance of shares upon exercise of stock options

 

2,377,876

 

3

 

327

 

 

 

 

330

Foreign currency translation adjustments

 

 

 

 

4,842

 

 

 

4,842

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

 

 

 

 

 

68

 

 

68

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

(13)

(13)

Share-based compensation expense

 

 

 

3,196

 

 

 

 

3,196

Balance as of June 30, 2019

 

630,672,578

$

943

$

581,245

$

(8,308)

$

109

$

(386,998)

$

186,991

Net loss

 

 

 

 

 

 

(39,302)

 

(39,302)

Issuance of shares upon exercise of stock options

 

280,158

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

 

 

6,617

 

 

 

6,617

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

(8,388)

(8,388)

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

 

 

 

 

 

(55)

 

 

(55)

Share-based compensation expense

 

 

 

1,820

 

 

 

 

1,820

Balance as of September 30, 2019

 

630,952,736

$

943

$

583,065

$

(10,079)

$

54

$

(426,300)

$

147,683

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ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY

(In thousands, except share data)

Accumulated other

comprehensive loss

Accumulated

Accumulated

unrealized

foreign

losses on

Additional

currency

available-for-

Total

Common

Common

paid in

translation

sale debt

Accumulated

stockholders’

stock

stock

capital

adjustments

securities

deficit

equity

Balance as of 1 January 2018 (under previous guidance)

562,119,334

$

854

$

455,401

$

(17,867)

$

(3,774)

$

(231,630)

$

202,984

Cumulative effect of applying new accounting standards

 

 

 

 

 

 

8,645

 

8,645

Balance as of 1 January 2018 (adjusted)

 

562,119,334

 

854

 

455,401

 

(17,867)

 

(3,774)

 

(222,985)

 

211,629

Net loss

 

  

 

  

 

  

 

  

 

  

 

(20,738)

 

(20,738)

Issuance of shares upon exercise of stock options

 

2,740,626

 

4

 

1,530

 

 

 

 

1,534

Other comprehensive loss before reclassifications

 

  

 

  

 

  

 

  

 

  

 

  

 

Foreign currency translation adjustments

 

 

 

 

(2,525)

 

 

 

(2,525)

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

 

 

 

 

 

(4,056)

 

 

(4,056)

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

 

 

 

 

 

1,163

 

 

1,163

Share-based compensation expense

 

 

 

4,672

 

 

 

 

4,672

Balance as of March 31, 2018

 

564,859,960

$

858

$

461,603

$

(20,392)

$

(6,667)

$

(243,723)

$

191,679

Net loss

 

  

 

  

 

  

 

  

 

  

 

(43,845)

 

(43,845)

Issuance of shares upon exercise of stock options

 

1,636,440

 

2

 

887

 

 

 

 

889

Other comprehensive loss before reclassifications

 

  

 

  

 

  

 

  

 

  

 

  

 

Foreign currency translation adjustments

 

 

 

 

6,107

 

 

 

6,107

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

 

 

 

 

 

5,223

 

 

5,223

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

 

 

 

 

 

1,310

 

 

1,310

Share-based compensation expense

 

 

 

3,739

 

 

 

 

3,739

Balance as of June 30, 2018

 

566,496,400

$

860

$

466,229

$

(14,285)

$

(134)

$

(287,568)

$

165,102

Net income

 

  

 

  

 

  

 

  

 

  

 

5,242

 

5,242

Issuance of shares upon exercise of stock options

 

725,676

 

1

 

509

 

 

 

 

510

Issuance of shares upon completion of registered direct offering

60,000,000

78

99,575

99,653

Other comprehensive income before reclassifications

 

  

 

  

 

  

 

  

 

  

 

  

 

Foreign currency translation adjustments

 

 

 

 

1,521

 

 

 

1,521

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

 

 

 

 

 

85

 

 

85

Share-based compensation expense

 

 

 

4,042

 

 

 

 

4,042

Balance as of September 30, 2018

 

627,222,076

$

939

$

570,355

$

(12,764)

$

(49)

$

(282,326)

$

276,155

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, 

    

2019

    

2018

    

Cash flows from operating activities

Net loss

$

(107,801)

$

(59,341)

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

Depreciation

5,406

5,248

Amortization

511

464

Share-based compensation expense

8,495

12,453

Realized (gain) loss on available-for-sale debt securities

(13)

2,473

Unrealized foreign exchange losses

522

4,921

Other

(195)

262

Changes in operating assets and liabilities:

Increase in receivables and other operating assets

(20,075)

(4,140)

Decrease in non-current operating assets

1,468

490

Increase (decrease) in payables and deferred revenue

11,703

(35,533)

Net cash used in operating activities

(99,979)

(72,703)

Cash flows from investing activities

Acquisition of property, plant and equipment

(1,425)

(3,823)

Acquisition of intangibles

(1,036)

(666)

Maturity or redemption of marketable securities

92,803

114,988

Investment in marketable securities

(19,080)

(75,545)

Net cash provided by investing activities

71,262

34,954

Cash flows from financing activities

Proceeds from issuance of common stock, net of issuance costs of $0 and $347

99,653

Proceeds from exercise of stock options

366

2,933

Net cash provided by financing activities

366

102,586

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

(398)

4,111

Net (decrease) increase in cash and cash equivalents

(28,749)

68,948

Cash, cash equivalents and restricted cash at start of period

72,476

88,296

Cash, cash equivalents and restricted cash at end of period

$

43,727

$

157,244

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 patients, particularly for the treatment of solid tumors. The Company’s proprietary SPEAR (Specific Peptide Enhanced Affinity Receptor) T-cell platform enables it to identify cancer targets, find and genetically engineer T-cell receptors (“TCRs”), and produce therapeutic candidates (“SPEAR T-cells”) for administration to patients. Using its affinity engineered TCRs, the Company aims to become the first company to have a TCR T-cell approved for the treatment of a solid tumor indication.

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 SPEAR T-cells, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s SPEAR T-cells, the need to develop a reliable commercial manufacturing process, the need to commercialize any T-cell therapies that may be approved for marketing, and protection of proprietary technology. If the Company does not successfully commercialize any of its SPEAR T-cells, it will be unable to generate product revenue or achieve profitability. The Company had an accumulated deficit of $426.3 million as of September 30, 2019.

Note 2 Summary of Significant Accounting Policies

(a)          Basis of presentation

The condensed consolidated interim 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 interim financial statements presented in this Quarterly Report should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2019 (the “Annual Report”). The balance sheet as of December 31, 2018 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.

On January 1, 2019, the Company adopted new guidance on the accounting for leases, which has been codified within Accounting Standard Codification Topic 842, Leases (“ASC 842”). The Company has adopted the guidance using the modified retrospective approach, with the cumulative effect of initially applying the guidance recognized as an adjustment to the opening balance of equity at January 1, 2019. Therefore, the comparative financial information for the three and nine months ended September 30, 2018 and as of December 31, 2018 has not been restated and continues to be reported under previous guidance. The effect of adopting ASC 842 on the accumulated deficit, total stockholders’ equity and net assets as at January 1, 2019 was $0.

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(b)          Going concern analysis

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. As of September 30, 2019, the Company had cash and cash equivalents of $39.4 million, marketable securities of $63.5 million, and stockholders’ equity of $147.7 million. During the nine months ended September 30, 2019, the Company incurred a net loss of $107.8 million, used cash of $100.0 million in its operating activities, and generated revenues of $0.4 million. The Company has incurred net losses in most periods since inception, and it expects to incur operating losses in future periods. When considered with the Company’s projected expenditure for the next 12 months, these factors raise substantial doubt about its ability to continue as a going concern for at least one year from the issuance of these condensed consolidated financial statements. If the Company does not have sufficient funding for the next 12 months, it might result in a significant reduction in its research and development activities or other operations.

The Company is considering obtaining additional capital (whether non-dilutive or dilutive). In addition, the Company continues to review and prioritize clinical development projects and costs with the aim of focusing operations on the ADP-A2M4 SPEARHEAD-1, ADP-A2M4CD8 SURPASS and ADP-A2AFP trials. Management believes that with additional funds and cost reductions, it will have sufficient capital to meet the Company’s operating expenses and obligations. While management believes the Company has the ability to raise additional funds, there is no assurance that such plans will be successful and therefore there is substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued.

(c)          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 consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are primarily made in relation to the valuation of share options, valuation allowances relating to deferred tax assets, revenue recognition, estimating clinical trial expenses and estimating reimbursements from R&D tax and expenditure credits. 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.

(d)          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 8, Fair value measurements.

(e)          Leases

On January 1, 2019, the Company adopted a new standard, Accounting Standard Update 2016-02 – Leases, which is codified in ASC 842. The comparative financial information for the three and nine months ended September 30, 2018 and as of December 31, 2018 has not been restated and is prepared in accordance with the accounting policies that are described in Note 2 to the consolidated financial statements included in the Annual Report.

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The Company determines whether an arrangement is a lease at contract inception by establishing if the contract conveys the right to use, or control the use of, identified property, plant, or equipment for a period of time in exchange for consideration. Leases may be classified as finance leases or operating leases. All the Company’s leases are classified as operating leases as they were previously classed as these and the lease classification is not reassessed on adoption of ASC 842. Operating lease right-of-use (ROU) assets and operating lease liabilities recognized in the Condensed Consolidated Balance Sheet represent the right to use an underlying asset for the lease term and an obligation to make lease payments arising from the lease respectively.

Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of minimum lease payments over the lease term. Since the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rates (the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment) based on the information available at commencement date in determining the discount rate used to calculate the present value of lease payments. As the Company has no external borrowings, the incremental borrowing rates are determined using information on indicative borrowing rates that would be available to the Company based on the value, currency and borrowing term provided by financial institutions, adjusted for company and market specific factors. The lease term is based on the non-cancellable period in the lease contract, and options to extend the lease are included when it is reasonably certain that the Company will exercise that option. Any termination fees are included in the calculation of the ROU asset and lease liability when it is assumed that the lease will be terminated.

The Company accounts for lease components (e.g. fixed payments including rent and termination costs) separately from non-lease components (e.g. common-area maintenance costs and service charges based on utilization) which are recognized over the period in which the obligation occurs.

At each reporting date, the operating lease liabilities are increased by interest and reduced by repayments made under the lease agreements. The right-of-use asset is subsequently measured for an operating lease at the amount of the remeasured lease liability (i.e. the present value of the remaining lease payments), adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, and any unamortized initial direct costs.

The Company has operating leases in relation to property for office and research facilities. All of the leases have termination options, and it is assumed that the initial termination options for the buildings will be activated for most of these. The maximum lease term without activation of termination options is to 2041.

The Company has elected not to recognize a right-of-use asset and lease liability for short-term leases. A short-term lease is a lease with a lease term of 12 months or less and which does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Operating lease costs are recognized on a straight line basis over the lease term, and they are categorized within Research and development and General and administrative expenses in the Condensed Consolidated Statement of Operations. The operating lease cash flows are categorized under Net cash used in operating activities in the Condensed Consolidated Statement of Cash Flows.

(f)          Foreign currency

The reporting currency of the Company is the U.S. dollar. The Company has determined the functional currency of the ultimate parent company, Adaptimmune Therapeutics plc, is U.S. dollars because it predominately raises finance and expends cash in U.S. dollars. The functional currency of subsidiary operations is the applicable local currency. Transactions in foreign currencies are translated into the functional currency of the subsidiary in which they occur at the foreign exchange rate in effect on at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the functional currency of the relevant subsidiary at the foreign exchange rate in effect on the balance sheet date. Foreign exchange differences arising on translation are recognized within other income (expense) in the consolidated statement of operations.

The results of operations for subsidiaries, whose functional currency is not the U.S. dollar, are translated at an average rate for the period where this rate approximates to the foreign exchange rates ruling at the dates of the transactions and the balance sheet are translated at foreign exchange rates ruling at the balance sheet date. Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income (loss). The Company’s subsidiary in the United Kingdom has an intercompany loan

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balance in U.S dollars payable to the ultimate parent company, Adaptimmune Therapeutics plc. Beginning on July 1, 2019, the intercompany loan will be considered of a long-term investment nature as repayment is not planned or anticipated in the foreseeable future. It is Adaptimmune Therapeutics plc’s intent not to request payment of the intercompany loan for the foreseeable future. The foreign exchange gains or losses arising on the revaluation of intercompany loans of a long-term investment nature are reported within other comprehensive income (loss).

(g)          New accounting pronouncements

Adopted in the period

Leases

On January 1, 2019, the Company adopted Accounting Standard Update 2016-02 – Leases, which is codified in ASC 842. The Company has adopted the guidance using the modified retrospective approach, with the cumulative effect of initially applying the guidance recognized as an adjustment to the opening balance of equity at January 1, 2019. Therefore, the comparative information has not been adjusted and continues to be reported under previous guidance. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed it to carry forward the historical lease classification of the Company’s leases as operating leases. The effect on the accumulated deficit, total stockholders’ equity and net assets as at January 1, 2019 was $0.

The adoption of ASC 842 has had a material impact on the Company’s financial statements. At January 1, 2019 the Company recognized right-of-use assets and liabilities for operating leases following the adoption date of $22.2 million and $26.9 million respectively and derecognized $4.7 million of other liabilities and prepayments that had been recognized under previous guidance.

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. Early application is permitted for the fiscal year beginning January 1, 2019, including interim periods within that fiscal year. The FASB has issued a proposed Accounting Standards Update which could result in postponement of the effective date of the new guidance to 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.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued ASU 2018-15 – Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods within that fiscal year. Early application is permitted for the fiscal year beginning January 1, 2019, including interim periods within that fiscal year. The guidance may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13 – Fair Value Measurement (Topic 820) - Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods

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within that fiscal year. Early application is permitted. Certain amendments apply prospectively with the all other amendments applied retrospectively to all periods presented upon their effective date. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

Note 3 Revenue

Revenue from contracts with customers arises from one customer, which is GlaxoSmithKline (“GSK”), in one geographic location, which is the United Kingdom. Revenue comprises the following categories (in thousands):

Three months ended

Three months ended

 

Nine months ended

Nine months ended

 

September 30, 

September 30, 

September 30, 

September 30, 

     

2019

    

2018

2019

    

2018

Development

 

$

237

 

$

1,678

$

394

 

$

18,912

Licenses

 

 

39,114

 

 

39,114

 

$

237

 

$

40,792

$

394

 

$

58,026

The Company has one contract with a customer, which is the GSK Collaboration and License Agreement. The GSK Collaboration and License Agreement consists of multiple performance obligations. In 2019, GSK nominated a third target under the Collaboration and License Agreement. Development of products to this target commenced during the nine months ended September 30, 2019.

The amount of the transaction price probable of being received that is allocated to performance obligations that are unsatisfied or partially satisfied at September 30, 2019 was $2.7 million. The revenue allocated to the third target program will be recognized over an estimated period up to the end of 2020 as the development of products to the target progresses.

The Company received $3.2 million from GSK following the nomination of the third target. Under the terms of the GSK Collaboration and License Agreement, the Company may also be entitled to development and regulatory milestones. The development and regulatory milestones are per product milestones and are dependent on achievement of certain obligations, the nature of the product being developed, stage of development of product, territory in which an obligation is achieved and type of indication or indications in relation to which the product is being developed. In addition, for any program multiple products may be developed to address different HLA-types. These amounts have not been included within the transaction price as of September 30, 2019 because they are not considered probable.

The Company may also receive commercialization milestones upon the first commercial sale of a product based on the indication and the territory and mid-single to low double-digit royalties on worldwide net sales. These amounts have not been included within the transaction price as of September 30, 2019 because they are sales or usage-based royalties promised in exchange for a license of intellectual property, which will be recognized when the subsequent sale or usage occurs.

Development and license revenue recognized in the three and nine months ended September 30, 2018 related to development of the second target program, PRAME, which ended in 2018, and the NY-ESO program, which was transferred to GSK on July 23, 2018.

The following table shows movements in deferred revenue for the nine months ended September 30, 2019 (in thousands):

Deferred revenue

Deferred revenue at January 1, 2019

 

$

Amounts invoiced in the period

 

3,217

Revenue in the period

(394)

Foreign exchange arising on consolidation

(140)

Deferred revenue at September 30, 2019

$

2,683

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Note 4 – Operating leases

The following table shows the lease costs for the three and nine months ended September 30, 2019 (in thousands):

Three months ended

Nine months ended

September 30, 

September 30, 

2019

     

2019

Lease cost:

Operating lease cost

$

989

 

$

3,003

Short-term lease cost

 

62

 

230

$

1,051

 

$

3,233

Nine months ended

September 30, 

2019

Other information:

Operating cash flows from operating leases (in thousands)

$

3,176

September 30, 

2019