Company Quick10K Filing
Quick10K
Adaptimmune Therapeutics
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$4.30 105 $450
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 2019-05-14 Enter Agreement, Other Events, Exhibits
8-K 2019-05-06 Other Events, Exhibits
8-K 2019-05-06 Regulation FD, Other Events, Exhibits
8-K 2019-05-06 Earnings, 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
GWW Grainger W W 15,160
TMK Torchmark 9,580
HP Helmerich & Payne 6,390
BJ BJ's 3,730
ATRI Atrion 1,630
FNLC First Bancorp 288
EQ Equillium 105
UG United Guardian 87
REPR Repro Med Systems 0
PEER Peerstream 0
ADAP 2019-03-31
Part I — Financial Information
Item 1. Financial Statements.
Note 1 — General
Note 2 — Summary of Significant Accounting Policies
Note 3 — Revenue
Note 4 — Other Income, Net
Note 5 — Loss per Share
Note 6 — Fair Value Measurements
Note 7 — Available-For-Sale Debt Securities
Note 8 — Other Current Assets
Note 9 — Accrued Expenses and Other Current Liabilities
Note 10 — 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-31.1 adap-20190331ex311d5adfc.htm
EX-31.2 adap-20190331ex312da56f1.htm
EX-32.1 adap-20190331ex321e2c52a.htm
EX-32.2 adap-20190331ex32298c362.htm

Adaptimmune Therapeutics Earnings 2019-03-31

ADAP 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 adap-20190331x10q.htm 10-Q Temp_adap_Current_Folio_10Q

 

 

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 March 31, 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

(44) 1235 430000

(Address of principal executive offices)


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

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

 

As of May 2, 2019, the number of outstanding ordinary shares par value £0.001 per share of the Registrant is 628,357,300.

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

PART I — FINANCIAL INFORMATION 

5

 

 

Item 1. 

Financial Statements

5

 

 

 

 

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

5

 

 

 

 

Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018

6

 

 

 

 

Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 30, 2019 and 2018

7

 

 

 

 

Unaudited Condensed Consolidated Statements of Change in Equity for the three months ended March 31, 2019 and 2018

8

 

 

 

 

Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018

9

 

 

 

 

Notes to the Condensed Consolidated Financial Statements

10

 

 

 

Item 2. 

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

19

 

 

 

Item 3. 

Quantitative and Qualitative Disclosures About Market Risk

29

 

 

 

Item 4. 

Controls and Procedures

29

 

 

 

PART II — OTHER INFORMATION 

29

 

 

Item 1. 

Legal Proceedings

29

 

 

 

Item 1A. 

Risk Factors

29

 

 

 

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

76

 

 

 

Item 3. 

Defaults Upon Senior Securities

76

 

 

 

Item 4. 

Mine Safety Disclosures

76

 

 

 

Item 5. 

Other Information

76

 

 

 

Item 6. 

Exhibits

77

 

 

 

Signatures 

78

 

2


 

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-A2M10 (MAGE-A10), 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 our clinical trials;

·

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;

·

the scope and timing of performance of our ongoing collaboration with GlaxoSmithKline (“GSK”);

·

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;

·

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;

·

fluctuations in the price of materials and bought-in components;

·

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;

3


 

·

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


 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

 

    

2019

    

2018

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

49,917

 

$

68,379

Marketable securities - available-for-sale debt securities

 

 

118,241

 

 

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)

 

 

32,143

 

 

25,769

Total current assets

 

 

200,301

 

 

231,095

 

 

 

 

 

 

 

Restricted cash

 

 

4,473

 

 

4,097

Clinical materials

 

 

3,972

 

 

3,953

Operating lease right-of-use assets, net of accumulated amortization of $656 (2018: $0)

 

 

24,462

 

 

 —

Property, plant and equipment, net of accumulated depreciation of $18,083 (2018: $15,924)

 

 

35,703

 

 

36,118

Intangibles, net of accumulated amortization of $1,411 (2018: $1,218)

 

 

1,529

 

 

1,473

Total assets

 

$

270,440

 

$

276,736

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

 

5,391

 

 

4,083

Operating lease liabilities, current

 

 

2,217

 

 

 —

Accrued expenses and other accrued liabilities

 

 

15,827

 

 

20,354

Total current liabilities

 

 

23,435

 

 

24,437

 

 

 

 

 

 

 

Operating lease liabilities, non-current

 

 

26,779

 

 

 —

Other liabilities, non-current

 

 

571

 

 

5,414

 

 

 

 

 

 

 

Total liabilities

 

 

50,785

 

 

29,851

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock - Ordinary shares par value £0.001,  701,103,126 authorized and 628,294,702 issued and outstanding (2018: 701,103,126 authorized and 627,454,270 issued and outstanding)

 

 

940

 

 

939

Additional paid in capital

 

 

577,722

 

 

574,208

Accumulated other comprehensive loss

 

 

(13,096)

 

 

(9,763)

Accumulated deficit

 

 

(345,911)

 

 

(318,499)

Total stockholders' equity

 

 

219,655

 

 

246,885

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

270,440

 

$

276,736

 

See accompanying notes to unaudited condensed consolidated financial statements.

5


 

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

    

Three months ended

 

 

 

March 31, 

 

 

    

2019

    

2018

 

Revenue

 

$

 —

 

$

8,196

 

Operating expenses

 

 

 

 

 

 

 

Research and development

 

 

(22,019)

 

 

(25,732)

 

General and administrative

 

 

(11,773)

 

 

(11,204)

 

Total operating expenses

 

 

(33,792)

 

 

(36,936)

 

Operating loss

 

 

(33,792)

 

 

(28,740)

 

Interest income

 

 

952

 

 

659

 

Other income, net

 

 

5,430

 

 

7,130

 

Loss before income taxes

 

 

(27,410)

 

 

(20,951)

 

Income taxes

 

 

(2)

 

 

(127)

 

Net loss attributable to ordinary shareholders

 

$

(27,412)

 

$

(21,078)

 

 

 

 

 

 

 

 

 

Net loss per ordinary share - Basic and diluted

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.04)

 

$

(0.04)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic and diluted

 

 

627,945,243

 

 

562,381,995

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

6


 

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31, 

 

 

 

2019

    

2018

 

Net loss

 

$

(27,412)

 

$

(21,078)

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

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

 

 

(3,543)

 

 

(2,602)

 

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

 

 

 

 

 

 

 

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

 

 

210

 

 

(4,056)

 

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

 

 

 —

 

 

1,163

 

 

 

 

 

 

 

 

 

Total comprehensive loss for the period

 

$

(30,745)

 

$

(26,573)

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

7


 

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

unrealized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

gains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 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 $0

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

comprehensive loss

 

 

 

 

 

 

 

    

 

    

 

 

    

 

 

    

 

 

    

Accumulated

    

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

unrealized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

gains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

(21,078)

 

 

(21,078)

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

 

 —

 

 

 —

 

 

 —

 

 

(2,602)

 

 

 —

 

 

 —

 

 

(2,602)

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

 

$

(20,469)

 

$

(6,667)

 

$

(244,063)

 

$

191,262

 

See accompanying notes to unaudited condensed consolidated financial statements.

8


 

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

 

 

 

 

 

 

 

Three months ended

    

 

 

March 31, 

 

 

    

2019

    

2018

    

Cash flows from operating activities

 

 

 

 

 

 

 

Net loss

 

$

(27,412)

 

$

(21,078)

 

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

 

 

 

 

 

 

 

Depreciation

 

 

1,828

 

 

1,740

 

Amortization

 

 

167

 

 

143

 

Share-based compensation expense

 

 

3,479

 

 

4,672

 

Realized loss on available-for-sale debt securities

 

 

 —

 

 

1,163

 

Unrealized foreign exchange gains

 

 

(5,095)

 

 

(7,862)

 

Other

 

 

(39)

 

 

124

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Increase in receivables and other operating assets

 

 

(6,659)

 

 

(10,179)

 

Increase in non-current operating assets

 

 

(19)

 

 

(123)

 

Decrease in payables and deferred revenue

 

 

(2,453)

 

 

(15,879)

 

Net cash used in operating activities

 

 

(36,203)

 

 

(47,279)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

 

(904)

 

 

(1,904)

 

Acquisition of intangibles

 

 

(205)

 

 

(10)

 

Maturity or redemption of marketable securities

 

 

22,669

 

 

28,043

 

Investment in marketable securities

 

 

(3,904)

 

 

(12,490)

 

Net cash provided by investing activities

 

 

17,656

 

 

13,639

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

36

 

 

1,534

 

Net cash provided by financing activities

 

 

36

 

 

1,534

 

 

 

 

 

 

 

 

 

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

 

 

425

 

 

1,545

 

Net decrease in cash and cash equivalents

 

 

(18,086)

 

 

(30,561)

 

Cash, cash equivalents and restricted cash at start of period

 

 

72,476

 

 

88,296

 

Cash, cash equivalents and restricted cash at end of period

 

$

54,390

 

$

57,735

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

9


 

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 suitable commercial manufacturing process 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 $345.9 million as of March 31, 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 lease recognition, which has been codified within Accounting Standard Codification Topic 842, Leases (“ASC 842”).  The comparative financial information for the three months ended March 31, 2018 and as of December 31, 2018 has not been restated. 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 effect on the accumulated deficit, total stockholders’ equity and net assets as at January 1, 2019 was $0.

10


 

Note 2 — Summary of Significant Accounting Policies (continued)

(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 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.

(c)          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).

(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 6, Fair value measurements.

11


 

Note 2 — Summary of Significant Accounting Policies (continued)

(e)          Going concern

Management considers that there are no conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern for a period of at least one year from the date of the condensed consolidated interim financial statements. This evaluation is based on relevant conditions and events that are known and reasonably knowable at the date that:

a. The Company’s current financial condition, including its liquidity sources;

 

b. The Company’s conditional and unconditional obligations due or anticipated within one year;

 

c. The funds necessary to maintain the Company’s operations considering its current financial condition,

obligations, and other expected cash flows; and

 

d. Other conditions and events, when considered in conjunction with the above that may adversely affect the

Company’s ability to meet its obligations.

 

(f)          New accounting pronouncements

Adopted in the period

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued a new standard, ASC 842, related to leases to increase transparency and comparability among organizations by requiring the recognition of “Right of Use” (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

 

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. The Company also elected the practical expedient related to land easements, allowing it to carry forward our accounting treatment for land easements on existing agreements. Therefore, 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 due to the following:

·

As a lessee, the Company has recognized liabilities for operating leases following the adoption date. These liabilities have been measured at the present value of the remaining minimum rental payments using an incremental borrowing rate (the rate of interest that a lessee 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).

·

The Company’s operating lease agreements under the new standards also required the measurement of ROU assets at the initial measurement of the lease liabilities, with adjustments for prepaid or accrued lease payments and the remaining balance of any incentives received (the amount of the gross lease incentives received net of amounts recognized previously as part of the single lease cost).

12


 

Note 2 — Summary of Significant Accounting Policies (continued)

(f)          New accounting pronouncements (continued)

Adopted in the period (continued)

Leases (continued)

·

Following initial measurement of the operating lease liabilities and ROU assets, the lease liabilities experience further changes with the accrual of interest and the repayments made under the lease agreements. In addition, the ROU assets are amortized at amounts equal to the difference between the straight-line lease expense and the change in interest on the lease liability in the period.

The Company has operating leases in relation to property and laboratory facilities.  Leases with an expected term of 12 months or less at inception are not recorded on the balance sheet and are instead recognized as a lease expense on a straight-line basis over the lease. term.  The Company accounts for lease components (e.g. fixed payments including rent and termination costs) separately from the 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.

The lease term and minimum lease payments have been determined by taking the non-cancellable period and then assessing the reasonable certainty of whether to exercise an option to extend or terminate. Economic factors such as termination costs have been considered in this assessment. All of the leases have termination options and, with the exception of one of the two buildings in Milton Park, UK, the assumption has been made that the initial termination option will be activated. For Milton Park, the two buildings are assumed to have a coterminous termination point. The maximum lease term without activation of termination options is to 2041. Where termination options have been assumed to be utilized, the associated termination fees have been included in the calculation of the lease liability and ROU asset.

All leases are classified as operating leases, and the related cash flows are categorized under Net cash used in operating activities.  For the three months ended March 31, 2019 the operating lease cash outflows totaled $1.2 million, and the operating lease cost, recognized in General and administrative expenses, totaled $1.0 million. In addition, there were costs in relation to short term leases of $951,000.  

Amounts reported in the unaudited condensed consolidated balance sheet as of 31 March, 2019 were (in thousands):

 

 

 

 

 

 

    

 

March 31, 

     

 

 

 

2019

 

Operating lease right of use assets

 

$

24,462

 

Operating lease liabilities, current

 

 

(2,217)

 

Operating lease liabilities, non-current

 

 

(26,779)

 

Total operating lease liabilities

 

$

(4,534)

 

 

The maturities of operating lease liabilities are as follows (in thousands):

 

 

 

 

 

 

     

Operating leases

     

 

 

 

 

2019

 

$

2,465

 

2020

 

 

4,136

 

2021

 

 

4,172

 

2022

 

 

4,216

 

2023

 

 

3,936

 

after 2023

 

 

16,520

 

Total lease payments

 

 

35,445

 

Less: Imputed interest

 

 

6,449

 

Present value of lease liability

 

$

 28,996

 

13


 

Note 2 — Summary of Significant Accounting Policies (continued)

(f)          New accounting pronouncements (continued)

Adopted in the period (continued)

Leases (continued)

The company has no external borrowings, therefore the discount rates have been determined as an average rate for each lease, as provided by independent financial institutions. The rates provided were based upon the Company’s incremental borrowing rate for each lease based upon the value, currency and term. The weighted average discount rate for the operating leases as at March 31, 2019 is 4.65% and the weighted average remaining lease term is 8.1 years.

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 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 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.

14


 

Note 2 — Summary of Significant Accounting Policies (continued)

(g)Restricted cash

The Company’s restricted cash consists primarily of cash providing security for letters of credit in respect of lease agreements.

(h)          Accumulated other comprehensive income (loss)

The following amounts were reclassified out of other comprehensive income during the three months ended March 31, 2019 and 2018 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

Amount reclassified

 

 

 

Three months ended

 

Three months ended

 

 

 

 

March 31, 

 

March 31, 

 

 

Component of Accumulated Other Comprehensive Income

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Reclassification adjustment for losses on available-for-sale debt securities

 

$

 —

 

$

1,163

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 3 Revenue

There has been no revenue in the quarter, and there is no deferred revenue balance at March 31, 2019 or at December 31, 2018. There has been no movement in deferred revenue in the current period.

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. Following the completion of the NY-ESO SPEAR T-cell transition program and the termination of the PRAME pre-clinical development program in 2018, GSK has nominated its third target under the Collaboration and License Agreement. However, work has not commenced on this target and as such, no revenue has been recognized for the three months ended March 31, 2019. Future revenues will depend on the progress of the development programs within the Collaboration and License Agreement, and GSK’s progress with the NY-ESO program, which are difficult to predict.

 

Note 4  Other income, net

Other income, net consisted of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31, 

 

 

     

2019

     

2018

     

 

 

 

 

 

 

 

 

Realized foreign exchange gains

 

$

295

 

$

 —

 

Unrealized foreign exchange gains

 

 

5,095

 

 

7,862

 

Losses on redemption or maturity of available-for-sale debt securities

 

 

 —

 

 

(1,163)

 

Other

 

 

40

 

 

431

 

 

 

$

5,430

 

$

7,130

 

 

 

15


 

Note 5 — Loss per share

The numerator for the basic and diluted income (loss) per share is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31, 

 

 

     

2019

     

2018

     

Net income (loss) attributable to ordinary shareholders

 

$

(27,412)

 

$

(21,078)

 

Numerator for basic income (loss) per share

 

 

(27,412)

 

 

(21,078)

 

Numerator for diluted income (loss) per share

 

 

(27,412)

 

 

(21,078)

 

 

The denominator for the basic and diluted income (loss) per share is as follows:

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31, 

 

 

 

2019

    

2018

     

Denominator for basic income (loss) per share - Weighted average shares outstanding

 

627,945,243

 

562,381,995

 

Effect of dilutive securities:

 

 

 

 

 

Employee stock options

 

103,848,778

 

89,203,915

 

Denominator for diluted income (loss) per share 

 

731,794,021

 

651,585,910

 

 

The dilutive effect of 103,848,778 and 89,203,915 stock options have been excluded from the diluted loss per share calculation for the three months ended March 31, 2019 and 2018, respectively, because they would have an antidilutive effect on the loss per share for the period.

 

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 March 31, 2019 are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value measurements using

 

 

March 31, 

 

Level 1

 

Level 2

 

Level 3

 

     

2019

    

 

 

    

 

 

    

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

$

109,252

 

$

109,252

 

$

 

$

Agency bond

 

 

3,995

 

 

 —

 

 

3,995

 

 

 —

Treasury bills

 

 

1,992

 

 

 —

 

 

1,992

 

 

 —

Certificate of deposit

 

 

3,002

 

 

 

 

3,002

 

 

 

 

$

118,241

 

$

109,252

 

$

8,989

 

$

 —

 

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.

16


 

Note 7 — Available-for-sale debt securities

As of March 31, 2019, the Company has the following investments in available-for-sale debt securities (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

Gross

 

Aggregate

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Estimated

 

    

Maturity

    

cost

    

Gains

    

Losses

    

Fair Value

Cash equivalents:

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Corporate debt securities

 

Less than 3 months

 

$

7,990

 

$

 —

 

$

 —

 

$

7,990

 

 

  

 

$

7,990

 

$

 —

 

$

 —

 

$

7,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities:

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Corporate debt securities

 

3 months to 1 year

 

$

109,203

 

$

64

 

$

(15)

 

$

109,252

Agency bond

 

3 months to 1 year

 

 

3,990

 

 

 5

 

 

 —

 

 

3,995

Treasury bills

 

3 months to 1 year

 

 

1,992

 

 

 —

 

 

 —

 

 

1,992

Certificate of deposit

 

3 months to 1 year

 

 

3,002

 

 

 —

 

 

 —

 

 

3,002

 

 

  

 

$

118,187

 

$

69