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 June 30, 2024

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

For the transition period from to

Commission File Number 001-37368

ADAPTIMMUNE THERAPEUTICS PLC

(Exact name of Registrant as specified in its charter)


England and Wales	Not Applicable
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

60 Jubilee Avenue, Milton Park

Abingdon, Oxfordshire OX14 4RX

United Kingdom

(Address of principal executive offices)

(44) 1235 430000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered

American Depositary Shares, each representing 6 Ordinary Shares, par value £0.001 per share	ADAP	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ⌧ Yes ◻ No

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ⌧ Yes ◻ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ◻	Accelerated filer ◻
Non-accelerated filerx	Smaller reporting company x
	Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ⌧ No

As of August 8, 2024, the number of outstanding ordinary shares par value £0.001 per share of the Registrant is 1,534,472,670.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	June 30,		December 31,
	2024		2023
Assets
Current assets
Cash and cash equivalents	$	211,810	$	143,991
Marketable securities - available-for-sale debt securities (amortized cost of $2,979 and $2,940) net of allowance for expected credit losses of $0 and $0		2,979		2,947
Accounts receivable, net of allowance for expected credit losses of $0 and $0		2,335		821
Other current assets and prepaid expenses		36,646		59,793
Total current assets		253,770		207,552

Restricted cash		2,866		3,026
Operating lease right-of-use assets, net of accumulated amortization of $15,645 and $13,220		18,203		20,762
Property, plant and equipment, net of accumulated depreciation of $51,182 and $46,020		45,867		50,946
Intangible assets, net of accumulated amortization of $5,257 and $5,155		996		330
Total assets	$	321,702	$	282,616

Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	7,513	$	8,128
Operating lease liabilities, current		5,293		5,384
Accrued expenses and other current liabilities		30,850		30,303
Deferred revenue, current		38,417		28,973
Total current liabilities		82,073		72,788

Operating lease liabilities, non-current		17,101		19,851
Deferred revenue, non-current		99,860		149,060
Borrowings, non-current		24,954		—
Other liabilities, non-current		1,440		1,404
Total liabilities		225,428		243,103

Stockholders’ equity
Common stock - Ordinary shares par value £0.001, 2,039,252,874 authorized and 1,534,220,604 issued and outstanding (2023: 1,702,760,280 authorized and 1,363,008,102 issued and outstanding)		2,083		1,865
Additional paid in capital		1,099,758		1,064,569
Accumulated other comprehensive loss		(3,412)		(3,748)
Accumulated deficit		(1,002,155)		(1,023,173)
Total stockholders' equity		96,274		39,513

Total liabilities and stockholders’ equity	$	321,702	$	282,616

See accompanying notes to unaudited condensed consolidated financial statements.

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ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)



	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenue	$	128,231	$	5,130	$	133,909	$	52,731
Operating expenses
Research and development		(40,448)		(29,965)		(75,655)		(55,513)
General and administrative		(19,083)		(20,073)		(38,815)		(40,470)
Total operating expenses		(59,531)		(50,038)		(114,470)		(95,983)
Operating profit/(loss)		68,700		(44,908)		19,439		(43,252)
Interest income		1,376		1,543		2,721		2,219
Interest expense		(526)		—		(526)		—
Gain on bargain purchase		—		22,155		—		22,155
Other income (expense), net		497		501		436		(170)
Profit/(loss) before income tax expense		70,047		(20,709)		22,070		(19,048)
Income tax expense		(526)		(680)		(1,052)		(1,305)
Net profit/(loss) attributable to ordinary shareholders	$	69,521	$	(21,389)	$	21,018	$	(20,353)

Net profit/(loss) per ordinary share
Basic	$	0.05	$	(0.02)	$	0.01	$	(0.02)
Diluted	$	0.04	$	(0.02)	$	0.01	$	(0.02)


Weighted average shares outstanding:
Basic		1,533,531,837		1,108,166,960		1,492,386,749		1,050,071,434
Diluted		1,559,183,774		1,108,166,960		1,519,004,675		1,050,071,434

See accompanying notes to unaudited condensed consolidated financial statements.

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ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/LOSS

(In thousands)



	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023
Net profit/(loss)	$	69,521	$	(21,389)	$	21,018	$	(20,353)
Other comprehensive income/(loss), net of tax
Foreign currency translation adjustments, net of tax of $0, and $0		(2,091)		(12,281)		4,724		(29,190)
Foreign currency gains (losses) on intercompany loan of a long-term investment nature, net of tax of $0, and $0		1,400		10,590		(4,382)		26,116
Unrealized holding gains (losses) on available-for-sale debt securities, net of tax of $0, and $0		(1)		385		(6)		857
Total comprehensive profit/(loss) for the period	$	68,829	$	(22,695)	$	21,354	$	(22,570)

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				Total
	Common	Common		Additional		(loss)		Accumulated		stockholders’
	stock	stock		paid in capital		income		deficit		equity
Balance as of January 1, 2024	1,363,008,102	$	1,865	$	1,064,569	$	(3,748)	$	(1,023,173)	$	39,513

Net loss	—		—		—		—		(48,503)		(48,503)
Other comprehensive profit	—		—		—		1,028		—		1,028
Issuance of shares upon exercise of stock options	6,297,720		8		66		—		—		74
Issue of shares under At The Market sales agreement, net of commission and expenses	163,669,056		208		28,953		—		—		29,161
Share-based compensation expense	—		—		3,102		—		—		3,102
Balance as of March 31, 2024	1,532,974,878	$	2,081	$	1,096,690	$	(2,720)	$	(1,071,676)	$	24,375
Net profit	—		—		—		—		69,521		69,521
Other comprehensive loss	—		—		—		(692)		—		(692)
Issuance of shares upon exercise of stock options	1,245,726		2		—		—		—		2
Issue of shares under At The Market sales agreement, net of commission and expenses	—		—		10		—		—		10
Share-based compensation expense	—		—		3,058		—		—		3,058
Balance as of June 30, 2024	1,534,220,604	$	2,083	$	1,099,758	$	(3,412)	$	(1,002,155)	$	96,274

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				Total
	Common	Common		Additional		(loss)		Accumulated		stockholders’
	stock	stock		paid in capital		income		deficit		equity
Balance as of January 1, 2023	987,109,890	$	1,399	$	990,656	$	(875)	$	(909,302)	$	81,878

Net profit	—		—		—		—		1,036		1,036
Other comprehensive loss	—		—		—		(910)		—		(910)
Issuance of shares upon exercise of stock options	6,035,574		7		1		—		—		8
Issuance of shares upon completion of public offering, net of issuance costs	554,496		1		187		—		—		188
Share-based compensation expense	—		—		1,676		—		—		1,676
Balance as of March 31, 2023	993,699,960	$	1,407	$	992,520	$	(1,785)	$	(908,266)	$	83,876
Net loss	—		—		—		—		(21,389)		(21,389)
Other comprehensive loss	—		—		—		(1,307)		—		(1,307)
Issuance of shares upon exercise of stock options	698,778		1		13		—		—		14
Issuance of shares upon acquisition of TCR²	357,429,306		443		60,320		—		—		60,763
Share-based compensation expense	—		—		4,694		—		—		4,694
Balance as of June 30, 2023	1,351,828,044	$	1,851	$	1,057,547	$	(3,092)	$	(929,655)	$	126,651

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)


	Six months ended
	June 30,
	2024		2023
Cash flows from operating activities
Net profit/(loss)	$	21,018	$	(20,353)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		5,457		3,824
Amortization		115		253
Gain on bargain purchase		—		(22,155)
Share-based compensation expense		6,160		5,513
Unrealized foreign exchange (gains)/losses		(266)		377
Accretion on available-for-sale debt securities		(42)		(633)
Other		2		663
Changes in operating assets and liabilities:
Decrease in receivables and other operating assets		20,788		1,971
Increase/(decrease) in payables and other current liabilities		1,012		(8,801)
Increase in borrowings		454		—
Decrease in deferred revenue		(39,249)		(41,704)
Net cash provided by/(used in) operating activities		15,449		(81,045)

Cash flows from investing activities
Acquisition of property, plant and equipment		(524)		(3,565)
Acquisition of intangible assets		(588)		(199)
Cash from acquisition of TCR2 Therapeutics Inc.		—		45,264
Maturity or redemption of marketable securities		—		76,119
Investment in marketable securities		—		(67,121)
Other		11		537
Net cash (used in)/provided by investing activities		(1,101)		51,035

Cash flows from financing activities
Proceeds from issuance of borrowings, net of discount		24,500		—
Proceeds from issuance of common stock from offerings, net of commissions and issuance costs		29,171		188
Proceeds from exercise of stock options		76		22
Net cash provided by financing activities		53,747		210

Effect of currency exchange rate changes on cash, cash equivalents and restricted cash		(436)		398
Net increase/(decrease) in cash, cash equivalents and restricted cash		67,659		(29,402)
Cash, cash equivalents and restricted cash at start of period		147,017		109,602
Cash, cash equivalents and restricted cash at end of period	$	214,676	$	80,200

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 commercial-stage biopharmaceutical company primarily focused on the treatment of solid tumor cancers with cell therapies. The Company’s proprietary platform enables it to identify cancer targets, find and develop cell therapy candidates active against those targets and produce therapeutic candidates for administration to patients.

The Company is subject to a number of risks similar to other biopharmaceutical companies in the clinical development stage including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical programs or clinical programs, the need to obtain marketing approval for its cell therapies, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of its cell therapies, the need to develop a reliable commercial manufacturing process, the need to commercialize any cell therapies that may be approved for marketing, and protection of proprietary technology. If the Company does not successfully commercialize any of its cell therapies, it will be unable to generate product revenue or achieve profitability. The Company had an accumulated deficit of $1,002,155,000 as of June 30, 2024.

Note 2 — Summary of Significant Accounting Policies

(a) Basis of presentation

The condensed consolidated financial statements of Adaptimmune Therapeutics plc and its subsidiaries and other financial information included in this Quarterly Report are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars. All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated on consolidation.

The unaudited condensed consolidated financial statements presented in this Quarterly Report should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2024 (the “Annual Report”). The balance sheet as of December 31, 2023 was derived from audited consolidated financial statements included in the Company’s Annual Report but does not include all disclosures required by U.S. GAAP. The Company’s significant accounting policies are described in Note 2 to those consolidated financial statements.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim period. The interim results are not necessarily indicative of results to be expected for the full year.

(b) Use of estimates in interim financial statements

The preparation of interim financial statements, in conformity with U.S. GAAP and SEC regulations, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the interim financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are made in various areas, including in relation to valuation allowances relating to deferred tax assets, revenue recognition, the fair value of assets acquired, liabilities assumed and consideration transferred in business combinations, and estimation of the incremental borrowing rate for operating leases. If actual results differ from the Company’s estimates, or to the extent these estimates are adjusted in future periods, the Company’s results of operations could either benefit from, or be adversely affected by, any such change in estimate.

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(c) Fair value measurements

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The hierarchy defines three levels of valuation inputs:

Level 1 - Quoted prices in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 - Unobservable inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability

The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The fair value of marketable securities, which are measured at fair value on a recurring basis is detailed in Note 6, Fair value measurements.

(d) Significant concentrations of credit risk

The Company held cash and cash equivalents of $211,810,000, marketable securities of $2,979,000 and restricted cash of $2,866,000 as of June 30, 2024. The cash and cash equivalents and restricted cash are held with multiple banks and the Company monitors the credit rating of those banks. The Company maintains cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation in the United States and the U.K. Government Financial Services Compensation Scheme in the United Kingdom. The Company’s investment policy limits investments to certain types of instruments, such as money market instruments, corporate debt securities and commercial paper, places restrictions on maturities and concentration by type and issuer and specifies the minimum credit ratings for all investments and the average credit quality of the portfolio.

The Company had three customers during the three and six months ended June 30, 2024 which are Galapagos, Genentech and GSK. There were accounts receivable of $2,335,000 as of June 30, 2024 and $821,000 as of December 31, 2023. The Company has been transacting with Galapagos since 2024, Genentech since 2021 and GSK since 2014, during which time no credit losses have been recognized. As of June 30, 2024, no allowance for expected credit losses is recognized on the basis that the possibility of credit losses arising on its receivables as of June 30, 2024 is considered to be remote. As of June 30, 2024 there are no receivables, either accrued or billed, due from Genentech that are no longer recoverable following the termination of the Genentech Collaboration and License Agreement.

Management analyzes current and past due accounts and determines if an allowance for credit losses is required based on collection experience, credit worthiness of customers and other relevant information. The process of estimating the uncollectible accounts involves assumptions and judgments and the ultimate amounts of uncollectible accounts receivable could be in excess of the amounts provided.

(e) New accounting pronouncements

Adopted in the current period

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07 – Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures, which improves segment disclosure requirements, primarily through enhanced disclosure requirements for significant segment expenses. The improved disclosure requirements apply to all public entities that are required to report segment information, including those with only one reportable segment. The Company adopted the guidance in the fiscal year beginning January 1, 2024. There was no impact on the Company’s reportable segments identified and additional required disclosures have been included in Note 15.

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In March 2024, the FASB issued ASU 2024-02 - Codification Improvements—Amendments to remove References to the Concepts Statements, which contains amendments to the Codification that remove references to various FASB Concepts Statements. The amendments apply to all reporting entities within the scope of the affected accounting guidance and are effective for public business entities for fiscal years beginning after December 15, 2024, with early adoption permitted for all entities. The Company adopted the guidance in the fiscal year beginning January 1, 2024. There was no impact on the Company’s financial statements.

To be adopted in future periods

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09 – Income Taxes (Topic 740) – Improvements to Income Tax Disclosures, which improves income tax disclosures primarily relating to the rate reconciliation and income taxes paid information. This includes a tabular reconciliation using both percentages and reporting currency amounts, covering various tax and reconciling items, and disaggregated summaries of income taxes paid during the period. For public business entities, the guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company intends to adopt the guidance in the fiscal year beginning January 1, 2025. The Company is currently evaluating the impact of the guidance on its Consolidated financial statements.

(f) Borrowings

The Company recognizes borrowings comprised solely of contractual payments on fixed or determinable dates that are issued solely for cash equal to their face value, at face value with the difference between the face amount and proceeds received upon issuance shown as either a discount or premium.

These notes are subsequently measured using the Interest Method, with the total interest being measured as the difference between the actual amount of cash received by the Company and the total amount agreed to be repaid. The interest charge in a given period is based on the effective interest rate, which is the rate implicit in the note based on the contractual cash flows. The discount or premium on the note is amortized as interest expense over the life of the note so as to produce a constant rate of interest.

Note 3 — Revenue

The Company generates development revenue from collaboration agreements with customers. The Company had three revenue-generating contracts with customers in the three and six months ended June 30, 2024, compared to three customers in the three months ended June 30, 2023, and two customers in the six months ended June 30, 2023: a termination and transfer agreement with GSK that was effective on April 6, 2023, a collaboration and license agreement with Galapagos signed on May 30, 2024, a strategic collaboration and license agreement with Genentech and a collaboration agreement with Astellas that was terminated as of March 6, 2023. The collaboration and licence agreement with Genentech was terminated in April 2024 and the termination is effective from October 2024.

Revenue comprises the following categories (in thousands):


	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023

Development revenue	$	128,231	$	5,130	$	133,909	$	52,731
	$	128,231	$	5,130	$	133,909	$	52,731

Deferred revenue decreased by $39,756,000 from $178,033,000 at December 31, 2023 to $138,277,000 at June 30, 2024 due to revenue recognized during the period of $133,011,000 that was included in deferred revenue at December 31, 2023 and a $1,211,000 decrease caused by the change in the exchange rate between pound sterling and the U.S. dollar from £1.00 to $1.27 at December 31, 2023 to £1.00 to $1.26 at June 30, 2024. This was partially offset by a payment of $85,000,000 from Galapagos and milestones totalling $9,583,000 from GSK that were met and paid or accrued at June 30, 2024.

The aggregate amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the agreements as of June 30, 2024 was $154,393,000.

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The Galapagos Collaboration and Exclusive License Agreement

On May 30, 2024, the Company entered into a clinical collaboration agreement with Galapagos NV. The agreement includes an option for Galapagos to exclusively license the TCR T-cell therapy candidate uza-cel, manufactured on Galapagos’ decentralized manufacturing platform, in head and neck cancer and potential future solid tumor indications. Under the agreement, we will conduct a clinical proof-of-concept trial (the “POC Trial”) to evaluate the safety and efficacy of uza-cel produced on Galapagos’ decentralized manufacturing platform in patients with head and neck cancer.

The Company will receive initial payments of $100 million, comprising $70 million upfront and $30 million of research and development funding of which $15 million is due upfront and $15 million is due once the first patient is infused in the POC Trial, option exercise fees of up to $100 million (the amount depending on the number of indications in relation to which the option is exercised), additional development and sales milestone payments of up to a maximum of $465 million, plus tiered royalties on net sales. The $70 million upfront payment and $15 million of upfront research and development funding was received in June 2024.

The Company determined that Galapagos is a customer and has accounted for the agreement under ASC 606 Revenue from Contracts with Customers. The Company has identified a performance obligation relating to the various activities required to complete the POC trial and a material right associated with the exclusive license option.

The aggregate transaction price at inception of the agreement was $100,000,000 comprising the $70,000,000 upfront payment and the $30,000,000 research and development funding. The fees for the exclusive license option exercise and development milestone payments are not considered probable as of June 30, 2024 and have not been included in the transaction price. The sales milestones and royalties for future sales of therapies have not been included within the transaction price as of June 30, 2024 because they are sales-based and would be recognized when the subsequent sales occur.

The aggregate transaction price is allocated to the performance obligations depending on the relative standalone selling price of the performance obligations. In determining the best estimate of the relative standalone selling price, the Company considered the internal pricing objectives it used in negotiating the contract, together with internal data regarding the expected costs and a standard margin on those costs, for completing the POC Trial. The residual approach was used to value the material right associated with the exclusive license option as the Company has not previously sold uza-cel on a standalone basis and has not established a price for uza-cel.

The Company expects to satisfy the POC Trial obligation over time over the period that the trial is completed, based on an estimate of the percentage of completion of the trial determined based on the costs incurred on the trial as a percentage of the total expected costs. The revenue allocated to the material right associated with the exclusive licence option will be recognized from the point that the option is either exercised and control of the license has passed to Galapagos or the option lapses.

The amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the agreement as of June 30, 2024 was $100,000,000, of which $44,400,000 is allocated to the POC Trial performance obligation and $55,600,000 is allocated to the material right for the exclusive option.

The Genentech Collaboration and License Agreement

On April 12, 2024 the Company announced the termination of the collaboration with Genentech in relation to the research, development and commercialization of cancer targeted allogeneic T-cell therapies which will be effective from October 7, 2024. The termination was accounted for as a contract modification on a cumulative catch-up basis. The termination did not change the nature the performance obligations identified but resulted in a reduction in the transaction price as the additional payments and variable consideration that would have been due in periods after October 7, 2024 will now never be received.

The Company originally expected to satisfy the performance obligations relating to the initial ‘off-the-shelf’ collaboration targets and the personalized therapies as development progressed and recognized revenue based on an estimate of the percentage of completion of the project determined based on the costs incurred on the project as a percentage of the total expected costs. The Company expected to satisfy the performance obligations relating to the material rights to designate additional ‘off-the-shelf’ collaboration targets from the point that the options would have been exercised and then as development progressed, in line with the initial ‘off-the-shelf’ collaboration targets, or at the point in time that the rights expired. The Company expected to satisfy the performance obligations relating to the material rights

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to extend the research term from the point that the options would have been exercised and then over the period of the extension, or at the point in time that the rights expired.

The aggregate remaining transaction price that had not yet been recognized as revenue as of the date of the termination was $146,301,000 which included the remaining deferred income that had not been recognized as revenue as of the date of the modification and the variable consideration to be billed under the collaboration until the effective date of the termination that is still considered probable. The termination resulted in a cumulative catch-up adjustment at the date of the termination of $101,348,000.

The amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the Genentech agreement as of June 30, 2024 was $24,515,000. Of this amount $7,926,000 is allocated to the research services and rights granted for the initial ‘off-the-shelf’ collaboration targets, $5,086,000 is allocated to the research services and rights granted for the personalized therapies, $7,764,000 is allocated to the material rights to designate the additional ‘off-the-shelf’ collaboration targets, $2,991,000 is allocated to the material right for the first option to extend the research term and $748,000 is allocated to the material right for the option to extend the research term a second time.

The GSK Termination and Transfer Agreement

On April 6, 2023, the Company and GSK entered into a Termination and Transfer Agreement (the “Termination and Transfer Agreement”) regarding the return of rights and materials comprised within the PRAME and NY-ESO cell therapy programs. The parties will work collaboratively to ensure continuity for patients in ongoing lete-cel clinical trials forming part of the NY-ESO cell therapy program.

As part of the agreement, sponsorship and responsibility for the ongoing IGNYTE and long-term follow-up (“LTFU”) trials relating to the NY-ESO cell therapy program will transfer to Adaptimmune. In return for this, Adaptimmune received an upfront payment of £7.5 million in June 2023 following the signing of the agreement and milestone payments of £3 million, £12 million and £6 million in September and December 2023 and June 2024, respectively. A further milestone payment of £1.5 million had been met and accrued, but not billed, at June 30, 2024.

The Company determined that GSK is a customer and has accounted for the agreement under ASC 606 Revenue from Contracts with Customers. The agreement is accounted for as a separate contract from the original GSK Collaboration and License Agreement. The Company has identified the following performance obligations under the agreement: (i) to take over sponsorship for the IGNYTE trial and (ii) to take over sponsorship for the LTFU trial.

The aggregate transaction price at inception of the agreement was $37,335,000 comprising the total £30,000,000 upfront and milestone payments. No value was ascribed to non-cash consideration and there was no variable consideration identified. The aggregate transaction price is allocated to the performance obligations depending on the relative standalone selling price of the performance obligations. In determining the best estimate of the relative standalone selling price, the Company considered the internal pricing objectives it used in negotiating the contract, together with internal data regarding the expected costs and a standard margin on those costs, for completing the trials. The amount of the transaction price allocated to the performance obligation is recognized as or when the Company satisfies the performance obligation.

The Company expects to satisfy the performance obligations over time from the point that sponsorship of the active trials that make up the trial transfers and then over the period that the trial is completed, based on the number of patients transferred and still actively enrolled to date on the trial at a given period-end relative to the total estimated periods of active patient enrollment over the estimated duration of the trial.

The Company considers that this depicts the progress of the completion of the trials under the Termination and Transfer Agreement, as the status of patients on the trial is not directly affected by decisions that the Company might make relating to its own development of the NY-ESO cell therapy program.

The amount of the transaction price that is allocated to performance obligations that are unsatisfied or partially satisfied under the agreement as of June 30, 2024 was $29,878,000, of which $13,958,000 is allocated to the IGNYTE performance obligation and $15,920,000 is allocated to the LTFU performance obligation.

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The Astellas Collaboration Agreement

The Company and Universal Cells mutually agreed to terminate the Astellas Collaboration Agreement as of March 6, 2023 (the “Termination Date”). In connection with the termination, all licenses and sublicenses granted to either party pursuant to the Collaboration Agreement ceased as of the Termination Date. There were no termination penalties in connection with the termination; however the Company is still entitled to receive reimbursement for research and development work performed up to and including a period of 30 days after the Termination Date.

The termination was accounted for as a contract modification on a cumulative catch-up basis. No performance obligations were identified as a result of the modification as there were no further goods or services to be provided by the Company and the modification resulted in the remaining unsatisfied and partially satisfied performance obligations under the collaboration becoming fully satisfied. The aggregate transaction price of the contract modification was $42,365,000 which included the remaining deferred income that had not been recognized as revenue as of the date of the modification and variable consideration from the remaining reimbursement income to be billed under the collaboration at the end of the 30 day period after the Effective Date. The transaction price of the modification was recognized in full in March 2023 and there is no remaining transaction price allocated to performance obligations that are unsatisfied or partially satisfied under, no remaining deferred income relating to, the agreement as of June 30, 2024 and no revenue was recognized in 2024.

Note 4 — Profit/(loss) per share

The following tables reconcile the numerator and denominator in the basic and diluted profit/(loss) per share computation (in thousands):


	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023
Numerator for basic and diluted profit/(loss) per share
Net profit/(loss) attributable to ordinary shareholders	$	69,521	$	(21,389)	$	21,018	$	(20,353)
Net profit/(loss) attributable to ordinary shareholders used for basic and diluted profit/(loss) per share	$	69,521	$	(21,389)	$	21,018	$	(20,353)


	Three months ended		Six months ended
	June 30,		June 30,
	2024	2023	2024	2023
Denominator for basic profit/(loss) per share - Weighted average shares outstanding	1,533,531,837	1,108,166,960	1,492,386,749	1,050,071,434
Effect of dilutive securities:
Employee stock options	25,651,937	—	26,617,926	—
Denominator for diluted profit/(loss) per share	1,559,183,774	1,108,166,960	1,519,004,675	1,050,071,434

The dilutive effect of 132,547,250 and 132,941,666 weighted stock options outstanding for the three and six months ended June 30, 2024 respectively, and 201,688,491 for the three and six months ended June 30, 2023 have been excluded from the diluted profit/(loss) per share calculation for the three and six months ended June 30, 2024 and 2023 because they would have an antidilutive effect on the profit/(loss) per share for the period.

Note 5 — Accumulated other comprehensive (loss)/income

The Company reports foreign currency translation adjustments and the foreign exchange gain or losses arising on the revaluation of intercompany loans of a long-term investment nature within Other comprehensive (loss) income. Unrealized gains and losses on available-for-sale debt securities are also reported within Other comprehensive (loss) income until a gain or loss is realized, at which point they are reclassified to Other (expense) income, net in the Condensed Consolidated Statement of Operations.

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


	Accumulated		Accumulated			Total
	foreign		unrealized			accumulated
	currency		(losses) gains on			other
	translation		available-for-sale			comprehensive
	adjustments		debt securities			(loss) income

Balance at January 1, 2024	$	(3,754)	$	6	$	(3,748)
Foreign currency translation adjustments		6,815		—		6,815
Foreign currency gains on intercompany loan of a long-term investment nature, net of tax of $0		(5,782)		—		(5,782)
Unrealized holding gains on available-for-sale debt securities, net of tax of $0		—		(5)		(5)
Balance at March 31, 2024	$	(2,721)	$	1	$	(2,720)
Foreign currency translation adjustments		(2,091)		—		(2,091)
Foreign currency gains on intercompany loan of a long-term investment nature, net of tax of $0		1,400		—		1,400
Unrealized holding gains on available-for-sale debt securities, net of tax of $0		—		(1)		(1)
Balance at June 30, 2024	$	(3,412)	$	—	$	(3,412)

	Accumulated		Accumulated		Total
	foreign		unrealized		accumulated
	currency		(losses) on		other
	translation		available-for-sale		comprehensive
	adjustments		debt securities		(loss) income

Balance at January 1, 2023	$	55	$	(930)		(875)
Foreign currency translation adjustments		(16,908)		—		(16,908)
Foreign currency gains on intercompany loan of a long-term investment nature, net of tax of $0		15,526		—		15,526
Unrealized holding gains on available-for-sale debt securities, net of tax of $0		—		472		472
Balance at March 31, 2023	$	(1,327)	$	(458)	$	(1,785)
Foreign currency translation adjustments		(12,281)		—		(12,281)
Foreign currency losses on intercompany loan of a long-term investment nature, net of tax of $0		10,590		—		10,590
Unrealized holding losses on available-for-sale debt securities, net of tax of $0		—		385		385
Balance at June 30, 2023	$	(3,019)	$	(73)	$	(3,092)

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 June 30, 2024 are as follows (in thousands):


			Fair value measurements using
	June 30,		Level 1		Level 2		Level 3
	2024
Assets classified as available-for-sale debt securities:
Corporate debt securities	$	2,979		2,979	$	—		—
	$	2,979	$	2,979	$	—	$	—

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

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prices are not available (for example securities with short maturities and infrequent secondary market trades), the securities are priced using a valuation model maximizing observable inputs, including market interest rates.

Note 7 — Marketable securities – available-for-sale debt securities

As of June 30, 2024, the Company has the following investments in marketable securities (in thousands):


				Gross		Gross		Aggregate
	Remaining	Amortized		unrealized		unrealized		estimated
	contractual maturity	cost		gains		losses		fair value
Available-for-sale debt securities:
Corporate debt securities	3 months to 1 year	$	2,979	$	—	$	—	$	2,979
		$	2,979	$	—	$	—	$	2,979

The aggregate fair value (in thousands) and number of securities held by the Company (including those classified as cash equivalents) in an unrealized loss position as of June 30, 2024 and December 31, 2023 are as follows:



	June 30, 2024						December 31, 2023
	Fair market value of investments in an unrealized loss position		Number of investments in an unrealized loss position		Unrealized losses		Fair market value of investments in an unrealized loss position		Number of investments in an unrealized loss position		Unrealized losses
Marketable securities in a continuous loss position for less than 12 months:
Corporate debt securities	$	1,987		1	$	—	$	1,600		1	$	(1)
	$	1,987		1	$	—	$	1,600		1	$	(1)

As of June 30, 2024, no allowance for expected credit losses has been recognized in relation to the security in an unrealized loss position. This is because the unrealized loss is not severe, does not represent a significant proportion of the total fair market value of the investment and the security has an investment-grade credit rating. Furthermore, the Company does not intend to sell the debt security in an unrealized loss position, believes that it has the ability to hold the debt security to maturity, and it is currently unlikely that the Company will be required to sell this security before the recovery of the amortized cost.

Note 8 — Other current assets

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


	June 30,		December 31,
	2024		2023
Research and development credits receivable	$	21,125	$	46,098
Prepayments		10,651		9,954
Clinical materials		1,278		1,329
VAT receivable		305		—
Other current assets		3,287		2,412
	$	36,646	$	59,793

On January 19, 2024, a receipt of £24.2 million ($30.8 million) was received from HMRC relating to the Research and development credits receivable.

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Note 9 — Operating leases

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

The following table shows the lease costs for the six months ended June 30, 2024 and 2023 and the weighted-average remaining lease term and the weighted-average discount rate as at June 30, 2024 and 2023:


	Six months ended
	June 30,
	2024		2023
Lease cost:
Operating lease cost	$	3,388	$	2,353
Short-term lease cost		88		319
	$	3,476	$	2,672

	June 30,
	2024		2023

Weighted-average remaining lease term - operating leases	5.1 years		5.8 years
Weighted-average discount rate - operating leases	7.8%		8.6%

The maturities of operating lease liabilities as of June 30, 2024 are as follows (in thousands):


	Operating leases

2024	$	3,417
2025		5,566
2026		4,366
2027		5,563
2028		2,144
after 2028		5,508
Total lease payments		26,564
Less: Imputed interest		(4,170)
Present value of lease liability	$	22,394

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

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Note 10 — Accrued expenses and other current liabilities

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


	June 30,		December 31,
	2024		2023
Accrued clinical and development expenditure	$	16,046	$	12,351
Accrued employee expenses		9,637		13,226
VAT payable		—		1,398
Other accrued expenditure		5,060		3,277
Other		107		51
	$	30,850	$	30,303

Note 11 — Share-based compensation

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


		Three months ended			Six months ended
		June 30,			June 30,
	2024		2023		2024		2023
Research and development	$	994	$	1,285	$	1,808	$	1,401
General and administrative		2,063		2,552		4,352		4,112
	$	3,057	$	3,837	$	6,160	$	5,513

The following table shows information about share options and options which have a nominal exercise price (similar to restricted stock units (RSUs)) granted:


		Three months ended			Six months ended
		June 30,			June 30,
	2024		2023		2024		2023
Number of options over ordinary shares granted		1,795,872		30,247,398		43,982,424		52,002,726
Weighted average fair value of ordinary shares options	$	0.19	$	0.05	$	0.12	$	0.08
Number of additional options with a nominal exercise price granted		2,540,640		6,148,186		30,655,824		26,015,098
Weighted average fair value of options with a nominal exercise price	$	0.24	$	0.15	$	0.15	$	0.17

Note 12 — Stockholders’ equity

On April 8, 2022 the Company entered into a sales agreement with Cowen (the “Sales Agreement”) under which we may from time to time issue and sell ADSs representing our ordinary shares through Cowen in ATM offerings for an aggregate offering price of up to $200 million. In the six months ended June 30, 2024 the Company sold 27,278,176 ADSs under the agreement representing 163,669,056 ordinary shares resulting in net proceeds to the Company of $29,155,317 after deducting commissions payable under the Sales Agreement and issuance costs. As of June 30, 2024, approximately $156,228,841 remained available for sale under the Sales Agreement.

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Note 13 – Business combinations

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

The transaction was approved by the Company’s shareholders and TCR² stockholders on May 30, 2023 and the merger became effective on June 1, 2023. The Company issued 357,429,306 shares to TCR²stockholders in return for 100% of TCR²’s stock. As a result, TCR² and all entities within the TCR² group, became wholly owned by the Company. Following the completion of the transaction, the former TCR² stockholders held approximately 25% of the Company, whereas the Company’s pre-existing shareholders held approximately 75%.

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

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


Consideration transferred:
Fair value of 357,429,306 ordinary shares issued	$	60,763
Fair value of replacement options and RSU-style options granted attributable to pre-combination service:		963
Purchase consideration	$	61,726

Identifiable assets acquired and liabilities assumed:

Assets acquired
Cash and cash equivalents	$	43,610
Restricted cash		1,654
Marketable securities - available-for-sale debt securities		39,532
Other current assets and prepaid expenses		6,029
Property, plant and equipment		2,712
Operating lease right-of-use assets		5,145
Intangible assets		58
Total assets acquired	$	98,740

Liabilities assumed
Accounts payable		(6,210)
Accrued expenses and other current liabilities		(4,537)
Operating lease liabilities, current		(1,974)
Operating lease liabilities, non-current		(2,244)
Total liabilities assumed	$	(14,965)

Net assets acquired and liabilities assumed	$	83,775

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

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

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

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


Gain on bargain purchase

Purchase consideration	$	(61,726)
Net assets acquired and liabilities assumed		83,775
Gain on bargain purchase	$	22,049

The gain on bargain purchase above includes the impact of a $106,000 reduction recognized in the third quarter of 2023 following finalization of provisional amounts relating to replacement awards.

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

The amount of revenue and earnings of the combined entity for the six months ended June 30, 2023, had the acquisition date been January 1, 2022, would be as follows:


	Six months ended
	June 30, 2023
Revenue	$	52,731
Net loss		(86,202)

The supplemental pro forma earnings for the six months ended June 30, 2023 were adjusted to exclude the $22 million Gain on bargain purchase, $7.2 million of acquisition-related costs recognized by the Company, as detailed below, and the $7.7 million of acquisition-related costs incurred by TCR² during that period. The supplemental pro forma earnings was adjusted to include the impact of replacement options issued, as if these had been issued as of January 1, 2022. Accordingly, the share-based compensation expense recognized by TCR² in the five months ended May 31, 2023 prior to the acquisition by the Company, of $1.0 million were excluded from the pro forma earnings.

TCR² did not generate revenue in the period from January 1, 2023 to June 30, 2023, as it has no contracts with customers, so there was no impact on the revenue included in the Company’s Consolidated Statement of Operations or in the supplemental pro forma revenue and earnings presented above.

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


	Six months ended		Total
	June 30,		acquisition-related
	2023		costs
Legal, professional and accounting fees	$	4,993	$	5,174
Bankers' fees		2,172		2,172
Total acquisition-related costs	$	7,165	$	7,346

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

Note 14 – Borrowings

On May 14, 2024 (the “Closing Date”), we entered into a Loan and Security Agreement (the “Loan Agreement”), with several banks and other financial institutions or entities and Hercules Capital, Inc. (“Hercules Capital”), for a term loan facility of up to $125.0 million (the “Term Loan”), consisting of a term loan advance in the aggregate principal amount equal to $25.0 million on the Closing Date (the “Tranche 1 Advance”), and three further term loan advances available to the Company subject to certain terms and conditions in aggregate principal amounts of $25.0 million, $5.0 million and $30.0 million, respectively, and a term loan advance available in the sole discretion of the lenders and subject to certain terms and conditions in the aggregate principal amount of $40.0 million. The proceeds of the Term Loan will be used solely to repay related fees and expenses in connection with the Loan Agreement and for working capital and general corporate purposes.

The Term Loan attracts interest on the outstanding principal in the form of both cash and payment-in-kind (“PIK”) interest. The cash interest rate is the greater of the Prime Rate plus 1.15% and 9.65% and is paid monthly in arrears. The PIK interest rate is 2% per annum. The outstanding principal used to determine both the cash and PIK interest is inclusive of capitalized PIK interest. The Term Loan also attracts an End of Term Charge of 5.85% payable on maturity which is based on the aggregate original principal amount (i.e. excluding capitalized PIK interest).

The Term Loan matures on June 1, 2029 and payments are interest-only until the Amortization Date after which the monthly payments include repayments of both principal and interest. The Amortization Date is June 1, 2027 but can be extended if certain criteria are met and the Company chooses to extend the date. The final Term Loan Maturity Date cannot be extended.

The Term Loan is secured by a lien on substantially all of Borrower’s existing or after-acquired assets, including intellectual property, subject to customary exceptions. In addition, the Loan Agreement contains customary closing and commitment fees, prepayment fees and provisions, events of default and representations, warranties and affirmative and negative covenants, including a financial covenant requiring the Company to maintain certain levels of cash in accounts subject to a control agreement in favor of Hercules Capital (the “Qualified Cash”) during the period commencing on January 1, 2025 (which initial commencement date is subject to adjustment if certain performance milestones are met) and at all times thereafter, provided that if the Company has achieved certain performance milestones, the amount of Qualified Cash is subject to certain reductions. The Loan Agreement also includes customary events of default, including payment defaults, breaches of covenants following any applicable cure period, the occurrence of certain events that could reasonably be expected to have a “material adverse effect” as set forth in the Loan Agreement, cross acceleration to third-party indebtedness and certain events relating to bankruptcy or insolvency.

Each loan tranche has been identified as a separate unit of account within the scope of ASC 835-30 Imputation of interest, with the Tranche 1 Advance constituting a debt instrument and the remaining tranches being loan commitments.

The Company drew down the Tranche 1 Advance of $25,000,000 on May 14, 2024 and received proceeds of $24,500,000 after charges payable to Hercules Capital. No qualifying debt issuance costs were incurred in relation to the Tranche 1 Advance. The Tranche 1 Advance was initially recognized at $24,750,000. At June 30, 2024 the face value of the outstanding principal (including capitalized PIK interest) on the Term Loan was $25,067,000, less unamortized discount and unaccreted value of the End of Term Charge of $113,000 based on the imputed interest rate of 13.5%.

The fair value of the Term Loan at June 30, 2024 is a Level 2 measurement considered to approximate its book value of $25.0 million due to the short period of time since the Term Loan was entered into and the interest rates upon which the terms of the Term Loan were based, notably the Prime Rate, have not changed since the Term Loan was drawn.

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The aggregate maturity of the term loan for the next five years from June 30, 2024 is as follows:


	Maturity
2024	$	—
2025		—
2026		—
2027		6,380
2028		11,793
2029		9,035
Total principal repayments	$	27,208

Composition of principal repayments
Original principal	$	25,000
Capitalized PIK interest		2,208
Total principal repayments	$	27,208

The payments included in the table include capitalized PIK interest, as this forms part of the principal balance to be repaid once incurred. Payments relating to cash interest and the End of Term Charge are excluded as they do not constitute repayments of the principal.

Note 15 – Segment reporting

The Company has one reportable segment relating to the research, development and planned commercialization of its novel cell therapies. The segment derives its current revenues from research and development collaborations.

The Company’s Chief Operating Decision Maker (the “CODM”), its Chief Executive Officer and the senior leadership team (comprising the Executive Team members and three senior vice presidents), manages the Company’s operations on an integrated basis for the purposes of allocating resources. When evaluating the Company’s financial performance, the CODM reviews total revenues, total expenses and expenses by function and the CODM makes decisions using this information on a global basis.

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The table below is a summary of the segment profit or loss, including significant segment expenses (in thousands):


	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenue	$	128,231	$	5,130	$	133,909	$	52,731
Less:
Research		(3,830)		(3,499)		(7,438)		(5,373)
CMC and Quality		(14,159)		(13,675)		(28,933)		(26,608)
Biomarkers		(2,495)		(1,222)		(5,286)		(2,452)
Development and Compliance		(12,611)		(8,647)		(27,486)		(19,037)
Infrastructure management and Facilities		(7,749)		(6,126)		(15,828)		(13,490)
Commercial planning		(2,561)		(778)		(6,445)		(1,426)
Support functions		(9,139)		(14,074)		(21,073)		(28,635)
Other segment expenses^(a)		(6,987)		(2,017)		(1,981)		1,038
Total operating expenses		(59,531)		(50,038)		(114,470)		(95,983)
Operating profit/(loss)		68,700		(44,908)		19,439		(43,252)

Interest income		1,376		1,543		2,721		2,219
Interest expense		(526)		—		(526)		—
Gain on bargain purchase		—		22,155		—		22,155
Other income (expense), net		497		501		436		(170)
Income tax expense		(526)		(680)		(1,052)		(1,305)
Segment and consolidated net profit/(loss)	$	69,521	$	(21,389)	$	21,018	$	(20,353)

^(a)Other segment expenses includes reimbursements receivable for research and development tax and expenditure credits, depreciation, amortization and share-based compensation expenses.

Note 16 – Subsequent events

On August 1, 2024, we announced receipt of accelerated approval for Tecelra from the FDA, the first engineered cell therapy for a solid tumor cancer approved in the U.S. Tecelra was approved for advanced MAGE-A4+ synovial sarcoma in adults with certain HLA types who have received prior chemotherapy.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2023, included in our Annual Report on Form 10-K that was filed with the SEC on March 6, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2023, our actual results could differ materially from the results described in, or implied by, these forward-looking statements.

Overview

We are a commercial-stage biopharmaceutical company working to redefine the treatment of solid tumor cancers with cell therapies. With the approval by the U.S. Food and Drug Administration (“FDA”) of our first biologics license application (“BLA”) for Tecelra® (afamitresgene autoleucel) (“Tecelra”), which is the first engineered cell therapy for a solid tumor cancer approved in the U.S., we are now focused on its launch and commercialization. Tecelra is a genetically modified autologous T-cell immunotherapy indicated for the treatment of adults with unresectable or metastatic synovial sarcoma who have received prior chemotherapy, are HLA-A*02:01P, -A*02:02P, -A*02:03P, or -A*02:06P positive and whose tumor expresses the MAGE-A4 antigen as determined by FDA-approved or cleared companion diagnostic devices. This indication is approved under the FDA’s accelerated approval based on overall response rate (“ORR”) and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefits from a confirmatory trial.

Tecelra is the first product in our sarcoma franchise. The second product, lete-cel (letetresgene autoleucel), is planned for regulatory submission starting in 2025. Behind lete-cel we have an active pipeline of T-cell therapies, including our uza-cel (uzatresgene autoleucel) product which is in phase 2 trials in ovarian cancer.

Tecelra

We are focussed on the launch and commercialization of Tecelra for the treatment of advanced synovial sarcoma and for which we received FDA approval on August 1, 2024. The approval of TECELRA was based on results of the SPEARHEAD-1 (Cohort 1) trial, which included 44 patients. The major efficacy outcome was overall response rate (ORR) determined by independent review and supported by duration of response. TECELRA treatment resulted in an ORR of 43% with a complete response rate of 4.5%. The median duration of response was 6 months (95% CI: 4.6, not reached). Among patients who were responsive to the treatment, 39% had a duration of response of 12 months or longer. We plan to have at least six to ten authorized treatment centers (ATCs) up and running this year and to onboard approximately 30 treatment centers within the first two years.

Lete-cel

Lete-cel targets the NY-ESO antigen and has been in clinical trials (the IGNYTE-ESO trial) for people with synovial sarcoma and myxoid round cell liposarcoma (MRCLS). Data for the IGNYTE-ESO trial was reported at the American Society of Clinical Oncology (ASCO) in June 2024. Interim Analysis data was presented and provided an ORR of 40% consistent across both synovial sarcoma and myxoid round cell liposarcoma (MRCLS), a median duration of response of approximately 11 months and with patients still in response at the time of data analysis. Full results from the IGNYTE-ESO trial are expected through the end of 2024 and we plan to file a rolling BLA submission during 2025.

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myeloid leukemia and lymphoma) and solid tumors (renal cell carcinoma). We are using TRuC technology to develop a T-cell therapy (ADP-520) against CD70, with membrane bound IL-15 to enhance persistence. ADP-520 is currently in pre-clinical testing.

●

Our allogeneic platform utilizes cells derived from induced Pluripotent Stem Cells (“iPSCs”), which can be gene-edited to express our engineered TCRs or other constructs and then differentiated into the required end cell type, for example T-cells. The platform is applicable to all of our cell therapies. We have a collaboration with Genentech Inc (“Genentech”). Termination of the agreement for the collaboration was announced on April 12, 2024 with termination becoming effective 180 days after receipt of notice of termination. The collaboration covered the development of two types of allogeneic T-cell therapies: (i) off-the-shelf αβ T-cell therapies directed to up to five collaboration targets and (ii) personalized therapies utilizing αβ T-cell receptors (TCRs) isolated from a patient, with these therapies being administered to the same patient. As of the effective date of termination, Adaptimmune will not be entitled to receive any additional milestones due after the date of termination and will also cease to have any further development obligations under the agreement.

Corporate News

On May 14, 2024, we entered into a Loan and Security Agreement (the “Loan Agreement”), with several banks and other financial institutions or entities and Hercules Capital, Inc. (“Hercules Capital”), for a term loan facility of up to $125.0 million (the “Term Loan”), consisting of a term loan advance in the aggregate principal amount equal to $25.0 million on the Closing Date (the “Tranche 1 Advance”), a term loan advance available to the Company subject to certain terms and conditions in the aggregate principal amount of $25.0 million (the “Tranche 2 Advance’), a term loan advance available subject to certain terms and conditions in the aggregate amount of $5.0 million (the “Tranche 3 Advance”), a term loan advance available subject to certain terms and conditions in the aggregate principal amount of $30.0 million (the “Tranche 4 Advance”) and a term loan advance available in the sole discretion of the lenders and subject to certain terms and conditions in the aggregate principal amount of $40.0 million (the “Tranche 5 Advance” and together with each Tranche Advance, the “Term Loan Advances”). The proceeds of the Term Loan will be used solely to repay related fees and expenses in connection with the Loan Agreement and for working capital and general corporate purposes. Following the receipt of FDA approval for Tecelra, the Company is eligible to draw down the Tranche 2 Advance of $25.0 million and is in the process of requesting the Tranche 2 Advance.

On May 30, 2024, we announced the entry into a clinical collaboration agreement with Galapagos NV. The agreement includes an option for Galapagos to exclusively license the TCR T-cell therapy candidate uza-cel, manufactured on Galapagos’ decentralized manufacturing platform, in head and neck cancer and potential future solid tumor indications. Under the agreement, we will conduct a clinical proof-of-concept trial to evaluate the safety and efficacy of uza-cel produced on Galapagos’ decentralized manufacturing platform in patients with head and neck cancer. The construct has shown encouraging results in head & neck cancer in our SURPASS-1 trial with partial responses in four out of five patients and using our manufacturing platform. We will receive initial payments of $100 million, comprising $70 million upfront and $30 million of research and development funding (of which $85 million has been received), option exercise fees of up to $100 million (the amount depending on the number of indications in relation to which the option is exercised), additional development and sales milestone payments of up to a maximum of $465 million, plus tiered royalties on net sales. We retain the right to develop, manufacture, commercialize and otherwise exploit uza-cel for platinum-resistant ovarian cancer.

Financial Operations Overview

Revenue

The Company had three customers in the three and six months ended June 30, 2024, three customers in the three months ended June 30, 2023, and two customers in the six months ended June 30, 2023: the Astellas Collaboration Agreement (until March 6, 2023), the Galapagos Collaboration Agreement (from May 30, 2024), the Genentech Collaboration Agreement and the GSK Termination and Transfer Agreement (from April 11, 2023).

The Astellas Collaboration Agreement

In January 2020, the Company entered into a collaboration agreement with Astellas. The Company received $50.0 million as an upfront payment after entering into the agreement. Under the agreement the parties would agree on up to three targets and would co-develop T-cell therapies directed to those targets pursuant to an agreed research plan. For each target, Astellas would fund co-development

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up until completion of a Phase 1 trial for products directed to such target. In addition, Astellas was also granted the right to develop, independently of Adaptimmune, allogeneic T-cell therapy candidates directed to two targets selected by Astellas. Astellas would have sole rights to develop and commercialize products resulting from these two targets.

The agreement consisted of the following performance obligations: (i) research services and rights granted under the co-exclusive license for each of the three co-development targets and (ii) the rights granted for each of the two independent Astellas targets. The revenue allocated to the co-development targets was recognized as the development of products directed to the targets progressed up until completion of a Phase 1 trial. The revenue allocated to each of the research licenses for the targets being independently developed by Astellas was to be recognized when the associated license commenced, which was upon designation of a target by Astellas.

The Company and Universal Cells mutually agreed to terminate the Astellas Collaboration Agreement as of the Termination Date. In connection with the termination, all licenses and sublicenses granted to either party pursuant to the Collaboration Agreement ceased as of the Termination Date. There were no termination penalties in connection with the termination, however the Company was still entitled to receive reimbursement for research and development work performed up to and including a period of 30 days after the Termination Date.

The termination was accounted for as a contract modification and the modification resulted in the remaining unsatisfied and partially satisfied performance obligations under the collaboration becoming fully satisfied. The aggregate transaction price of the contract modification was $42.4 million, which was primarily comprised of deferred income relating to the third co-development target and the two independent targets, and was recognized in full in March 2023. No revenue was recognized for Astellas in 2024.

The Genentech Collaboration Agreement

On September 3, 2021, Adaptimmune Limited, a wholly owned subsidiary of Adaptimmune Therapeutics plc, entered into a Strategic Collaboration and License Agreement with Genentech, Inc. (“Genentech”) and F. Hoffman-La Roche Ltd. The collaboration has two components:

development of allogeneic T-cell therapies for up to five shared cancer targets

development of personalized allogeneic T-cell therapies utilizing αβ T-cell receptors (TCRs) isolated from a patient, with such therapies being administered to the same patient.

The parties would collaborate to perform a research program, initially during an eight-year period (which may be extended for up to two additional two-year terms at Genentech’s election upon payment of an extension fee for each two-year term), to develop the cell therapies, following which Genentech would determine whether to further develop and commercialize such therapies. The Company received an upfront payment of $150 million in October 2021 and milestone payments of $20 million and $15 million in December 2022 and 2023, respectively.

The Company identified the following performance obligations under the agreement: (i) research services and rights granted under the licenses for each of the initial “off-the-shelf” collaboration targets, (ii) research services and rights granted under the licenses for the personalized therapies, (iii) material rights relating to the option to designate additional “off-the-shelf” collaboration targets and (iv) material rights relating to the two options to extend the research term. The revenue allocated to the initial “off-the-shelf” collaboration targets and the personalized therapies was recognized as development progressed. The revenue allocated to the material rights to designate additional ‘off-the-shelf’ collaboration targets would have been recognized from the point that the options were exercised and then as development progressed, in line with the initial “off-the-shelf” collaboration targets, or at the point in time that the rights expired. The revenue from the material rights to extend the research term would have been recognized from the point that the options were exercised and then over the period of the extension, or at the point in time that the options expired.

On April 12, 2024 we announced the termination of the strategic collaboration between us and Genentech in relation to the research, development and commercialization of cancer targeted allogeneic T-cell therapies. The termination was accounted for as a contract modification on a cumulative catch-up basis. The termination did not change the nature the performance obligations identified but resulted in a reduction in the transaction price as the additional payments and variable consideration that would have been due in periods after October 7, 2024 will now never be received. The termination resulted in a cumulative catch-up adjustment at the date of the termination of $101.3 million.

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The GSK Termination and Transfer Agreement

On April 11, 2023, the Company announced the entry of the Company and GSK into a Termination and Transfer regarding the return to Adaptimmune of rights and materials comprised within the PRAME and NY-ESO cell therapy programs. The parties will work collaboratively to ensure continuity for patients in ongoing lete-cel clinical trials forming part of the NY-ESO cell therapy program.

As part of the agreement, sponsorship of the ongoing IGNYTE and LTFU trials relating to the NY-ESO cell therapy program will transfer to Adaptimmune. In return for this, Adaptimmune received an upfront payment of £7.5 million in June 2023 following the signing of the agreement and further milestone payments of £3 million, £12 million and £6 million to Adaptimmune in September and December 2023 and June 2024, respectively. The final milestone of £1.5 million was billed in July 2024.

The Company has identified the following performance obligations under the agreement: (i) to take over sponsorship and complete the IGNYTE trial and (ii) to take over sponsorship and complete the LTFU trial. The revenue allocated to both obligations is recognized over time from the point that sponsorship of the active trials that make up the trial transfer, based on the number of patients transferred and still actively enrolled to date on the trial at a given period-end relative to the total estimated periods of active patient enrollment over the estimated duration of the trial.

The Galapagos Collaboration and Exclusive License Agreement

On May 30, 2024, the Company entered into a clinical collaboration agreement with Galapagos NV. The agreement includes an option for Galapagos to exclusively license the TCR T-cell therapy candidate uza-cel, manufactured on Galapagos’ decentralized manufacturing platform, in head and neck cancer and potential future solid tumor indications. Under the agreement, we will conduct a clinical proof-of-concept trial to evaluate the safety and efficacy of uza-cel produced on Galapagos’ decentralized manufacturing platform in patients with head and neck cancer.

The Company will receive initial payments of $100 million, comprising $70 million upfront and $30 million of research and development funding, option exercise fees of up to $100 million (the amount depending on the number of indications in relation to which the option is exercised), additional development and sales milestone payments of up to a maximum of $465 million, plus tiered royalties on net sales. The $70 million upfront payment and $15 million of upfront research and development funding was received in June 2024.

The Company has identified a performance obligation relating to the various activities required to complete the POC trial and a material right associated with the exclusive license option. The Company expects to satisfy the POC Trial obligation over time over the period that the trial is completed, based on an estimate of the percentage of completion of the trial determined based on the costs incurred on the trial as a percentage of the total expected costs. The revenue allocated to the material right associated with the exclusive licence option will be recognized from the point that the option is either exercised and control of the license has passed to Galapagos or the option lapses.

Research and Development Expenses

Research and development expenditures are expensed as incurred. Research and development expenses consist principally of the following:

●

salaries for research and development staff and related expenses, including benefits;

●

costs for production of preclinical compounds and drug substances by contract manufacturers;

●

fees and other costs paid to contract research organizations in connection with additional preclinical testing and the performance of clinical trials;

●

costs associated with the development of a process to manufacture and supply our lentiviral vector and cell therapies for use in clinical trials;

●

costs to develop manufacturing capability at our U.S. facility for manufacture of cell therapies for use in clinical trials;

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In addition to currency fluctuations, adverse macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs, changes to fiscal and monetary policy, tighter credit, and higher interest rates, could materially adversely affect the Company by, for example, driving higher input costs and/or impacting the Company’s ability to raise future financing.

Taxation

We are subject to corporate taxation in the United Kingdom and the United States. We typically incur tax losses and tax credit carryforwards in the United Kingdom on an annual basis. No net deferred tax assets are recognized on our U.K. losses and tax credit carryforwards because there is currently no indication that we will make sufficient taxable profits to utilize these tax losses and tax credit carryforwards. The rate of U.K. corporation tax is 25% for the year ended December 31, 2024.

We benefit from reimbursable tax credits in the United Kingdom through the SME R&D Tax Credit Scheme as well as the RDEC Scheme which are presented as a deduction to research and development expenditure.

Our pre-existing subsidiary in the United States, Adaptimmune LLC, has generated taxable profits due to a Service Agreement between our U.S. and U.K. operating subsidiaries and is subject to U.S. federal corporate income tax of 21%. Due to its activity in the United States, and the sourcing of its revenue, the Adaptimmune LLC is not currently subject to any state or local income taxes. The Company also benefits from the U.S Research Tax Credit and Orphan Drug Credit.

TCR² Therapeutics, Inc. (“TCR²”) has incurred net losses since acquisition and generates research and development tax credits. TCR²’s operating loss and tax credit carryforwards and other tax attributes are reduced by a valuation allowance to the amount supported by reversing taxable temporary differences because there is currently no indication that we will make sufficient taxable profits to utilize these deferred tax assets.

In the future, if we generate taxable income in the United Kingdom, we may benefit from the United Kingdom’s “patent box” regime, which would allow certain profits attributable to revenues from patented products to be taxed at a rate of 10%. As we have many different patents covering our products, future upfront fees, milestone fees, product revenues, and royalties may be taxed at this favorably low tax rate.

U.K. Value Added Tax (“VAT”) is charged on all qualifying goods and services by VAT-registered businesses. An amount of 20% of the value of the goods or services is added to all relevant sales invoices and is payable to the U.K. tax authorities. Similarly, VAT paid on purchase invoices paid by Adaptimmune Limited and Adaptimmune Therapeutics plc is reclaimable from the U.K. tax authorities.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the revenues and expenses incurred during the reported periods. We base our estimates on historical experience and on various other factors that we believe are relevant under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting policies considered to be critical to the judgments and estimates used in the preparation of our financial statements are disclosed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023.

In addition, the following estimate was considered to be critical to the judgements and estimates used in the preparation of our financial statements for the three and six months ending June 30, 2024.

Allocation of transaction price using the relative standalone selling price

Upfront and other payments included in the transaction price of a contract are allocated between performance obligations using the Company's best estimate of the relative standalone selling price of the performance obligation. The relative standalone selling price is estimated by determining the market values of development and license obligations. As these inputs are not directly observable, the estimate is determined considering all reasonably available information including internal pricing objectives used in negotiating the contract, together with internal data regarding the cost and margin of providing services for each deliverable, taking into account the

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different stage of development of each development program and consideration of adjusted-market data from comparable arrangements, where applicable and available. This assessment involves significant judgment and could have a significant impact on the amount and timing of revenue recognition.

An assessment of the allocation of transaction price using the relative standalone selling price was required in the six months ending June 30, 2024 and 2023 for the Galapagos Collaboration and Exclusive License Agreement and the GSK Termination and Transfer Agreement, respectively, although the assessment for the GSK Termination and Transfer Agreement in 2023 was not considered to be a significant estimate.

Results of Operations

Comparison of three months ended June 30, 2024 and 2023

The following table summarizes the results of our operations for the three months ended June 30, 2024 and 2023, together with the changes to those items (in thousands):


	Three months ended
	June 30,
	2024		2023		Increase/decrease
Revenue	$	128,231	$	5,130	$	123,101	2,400	%
Research and development expenses		(40,448)		(29,965)		(10,483)	35	%
General and administrative expenses		(19,083)		(20,073)		990	(5)	%
Total operating expenses		(59,531)		(50,038)		(9,493)	19	%
Operating loss		68,700		(44,908)		113,608	(253)	%
Interest income		1,376		1,543		(167)	(11)	%
Interest expense		(526)		—		(526)	—	%
Gain on bargain purchase		—		22,155		(22,155)	(100)	%
Other (expense) income, net		497		501		(4)	(1)	%
Loss before income tax expense		70,047		(20,709)		90,756	(438)	%
Income tax expense		(526)		(680)		154	(23)	%
Profit/(loss) for the period	$	69,521	$	(21,389)	$	90,910	(425)	%

Revenue

Revenue increased by $123.1 million to $128.2 million for the three months ended June 30, 2024 compared to $5.1 million for the three months ended June 30, 2023. The increase is primarily due to the termination of the Genentech collaboration in April 2024, resulting in a cumulative catch-up adjustment of $101.3 million, representing the majority of deferred revenue at March 31, 2024 being recognized as revenue in the current quarter.

Research and Development Expenses

Research and development expenses increased by 35% to $40.4 million for the three months ended June 30, 2024 from $30.0 million for the three months ended June 30, 2023.

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Our research and development expenses comprise the following (in thousands):


	Three months ended
	June 30,
	2024		2023		Increase/decrease
Salaries, materials, equipment, depreciation of property, plant and equipment and other employee-related costs⁽¹⁾	$	25,089	$	21,608	$	3,481	16	%
Subcontracted expenditure		13,962		9,480		4,482	47	%
Manufacturing facility expenditure		2,772		1,884		888	47	%
Share-based compensation expense		994		1,285		(291)	(23)	%
In-process research and development costs		11		(1,863)		1,874	(101)	%
Reimbursements receivable for research and development tax and expenditure credits		(2,380)		(2,429)		49	(2)	%
	$	40,448	$	29,965	$	10,483	35	%

(1)

These costs are not analyzed by project since employees may be engaged in multiple projects simultaneously.

The net increase in our research and development expenses of $10.5 million for the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to the following:

●

an increase of $3.5 million in salaries, materials, equipment, depreciation of property, plant and equipment and other employee-related costs, which is driven by an increase in the average number of employees engaged in research and development following the acquisition of TCR² in June 2023 and increased costs relating to property due to additional lease properties acquired following the acquisition of TCR²;

●

an increase of $4.5 million in subcontracted expenditure due primarily to an increase in clinical trial expenses which includes the impact of TCR² clinical trial expenses that were only incurred for one month in the second quarter of 2023 compared to the full quarter in 2024, and companion diagnostic development costs; and

●

an increase of $1.9 million in in-process research and development costs due to a credit of $1.9 million in 2023 that was not repeated in 2024.

Our subcontracted costs for the three months ended June 30, 2024 were $14.0 million, compared to $9.5 million in the same period of 2023. This includes $9.7 million of costs directly associated with our afami-cel, lete-cel and uza-cel T-cells and $4.3 million of other development costs.

General and Administrative Expenses

General and administrative expenses decreased by 5% to $19.1 million for the three months ended June 30, 2024 from $20.1 million in the same period in 2023. Our general and administrative expenses consist of the following (in thousands):


	Three months ended
	June 30,
	2024		2023		Increase/decrease
Salaries, depreciation of property, plant and equipment and other employee-related costs	$	10,128	$	12,296	$	(2,168)	(18)	%
Other corporate costs		10,692		7,703		2,989	39	%
Share-based compensation expense		2,063		2,552		(489)	(19)	%
Reimbursements		(3,800)		(2,478)		(1,322)	53	%
	$	19,083	$	20,073	$	(990)	(5)	%

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The net decrease in our general and administrative expenses of $1.0 million for the three months ended June 30, 2024 compared to the same period in 2023 was largely due to

●

a decrease of $2.2 million in salaries, depreciation of property, plant and equipment and other employee-related costs, due primarily to these costs being high in the second quarter of 2023 due to severance and other related costs for former TCR² leadership and employees in June 2023, which was partially offset by an increase in depreciation; offset by

●

an increase of $3.0 million in other corporate costs due to an increase in accounting, legal and professional fees, due to a combination of fees relating to business development work (including the Hercules Capital loan facility and Galapagos agreement) and fees relating to preparation for commercialization.

Gain on Bargain Purchase

The gain on bargain purchase arose in June 2023 from the strategic combination with TCR2 Therapeutics Inc on June 1, 2023.

Income Taxes

Income taxes arise in the United States due to Adaptimmune LLC generating taxable profits. We typically incur taxable losses in the United Kingdom on an annual basis and have incurred losses in TCR² Therapeutics Inc. since acquisition.

Comparison of six months ended June 30, 2024 and 2023

The following table summarizes the results of our operations for the six months ended June 30, 2024 and 2023, together with the changes to those items (in thousands):


	Six months ended
	June 30,
	2024		2023		Increase/decrease
Revenue	$	133,909	$	52,731	$	81,178	154	%
Research and development expenses		(75,655)		(55,513)		(20,142)	36	%
General and administrative expenses		(38,815)		(40,470)		1,655	(4)	%
Total operating expenses		(114,470)		(95,983)		(18,487)	19	%
Operating loss		19,439		(43,252)		62,691	(145)	%
Interest income		2,721		2,219		502	23	%
Interest expense		(526)		—		(526)	—	%
Gain on bargain purchase		—		22,155		(22,155)	(100)	%
Other (expense) income, net		436		(170)		606	(356)	%
Loss before income tax expense		22,070		(19,048)		41,118	(216)	%
Income tax expense		(1,052)		(1,305)		253	(19)	%
Loss for the period	$	21,018	$	(20,353)	$	41,371	(203)	%

Revenue

Revenue increased by $81.2 million to $133.9 million in the three months ended June 30, 2024 compared to $52.7 million for the six months ended June 30, 2023 primarily due to the termination of the Genentech collaboration in April 2024, resulting in a cumulative catch-up adjustment of $101.3 million, compared to the termination of the Astellas collaboration in the first quarter of 2023, which resulted in the remaining deferred revenue for the collaboration of $42.4 million being recognized as revenue in March 2023. The revenue recognized in the six months ended June 30, 2024 relates to development revenue under the Genentech collaboration agreement and the GSK termination and transfer agreement.

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Research and Development Expenses

Research and development expenses increased by 36% to $75.7 million for the six months ended June 30, 2024 from $55.5 million for the six months ended June 30, 2023.

Our research and development expenses comprise the following (in thousands):


	Six months ended
	June 30,
	2024		2023		Increase/decrease
Salaries, materials, equipment, depreciation of property, plant and equipment and other employee-related costs⁽¹⁾	$	49,114		39,715	$	9,399	24	%
Subcontracted expenditure		25,419		20,645		4,774	23	%
Manufacturing facility expenditure		5,172		3,392		1,780	52	%
Share-based compensation expense		1,808		1,401		407	29	%
In-process research and development costs		21		(1,863)		1,884	(101)	%
Reimbursements receivable for research and development tax and expenditure credits		(5,879)		(7,777)		1,898	(24)	%
	$	75,655	$	55,513	$	20,142	36	%

(1)

These costs are not analyzed by project since employees may be engaged in multiple projects simultaneously.

The net increase in our research and development expenses of $20.1 million for the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to the following:

●

an increase of $9.4 million in salaries, materials, equipment, depreciation of property, plant and equipment and other employee-related costs, which is driven primarily by an increase in the average number of employees engaged in research and development following the acquisition of TCR² in June 2023 and increased costs relating to property due to additional lease properties acquired following the acquisition of TCR²;

●

an increase of $4.8 million in subcontracted expenditure due primarily to an increase in clinical trial expenses which includes the impact of TCR² clinical trial expenses that were only incurred from June 1, 2023 compared to the full period in the six months to June 30, 2024, and an increase in companion diagnostic development costs. This was partially offset by a decrease in external lentiviral vector manufacturing costs;

●

an increase of $1.8 million in manufacturing facility expenditure due to pre-commercialization purchases and to the consumption of batches of clinical materials that had not previously been impaired, compared to 2023 where clinical materials consumed were primarily those that had been impaired to nil in previous years and therefore no corresponding expense was recognised;

●

an increase of $1.9 million in in-process research and development costs due to a credit of $1.9 million in 2023 that was not repeated in 2024; and

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a decrease of $1.9 million in reimbursements receivable for research and development tax and expenditure credits due to decreases in the associated research and development costs for which the credits may be claimed and a reduction in the effective rate at which the tax credits can be claimed which was effective from April 1, 2023.

Our subcontracted costs for the six months ended June 30, 2024 were $25.4 million, compared to $20.6 million in the same period of 2023. This includes $18.0 million of costs directly associated with our afami-cel, lete-cel and uza-cel T-cells and $7.4 million of other development costs.

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General and Administrative Expenses

General and administrative expenses decreased by 4% to $38.8 million for the six months ended June 30, 2024 from $40.5 million in the same period in 2023. Our general and administrative expenses consist of the following (in thousands):


	Six months ended
	June 30,
	2024		2023		Increase/decrease
Salaries, depreciation of property, plant and equipment and other employee-related costs	$	20,008	$	20,664	$	(656)	(3)	%
Restructuring charges		—		1,703		(1,703)	(100)	%
Other corporate costs		18,255		16,469		1,786	11	%
Share-based compensation expense		4,352		4,112		240	6	%
Reimbursements		(3,800)		(2,478)		(1,322)	53	%
	$	38,815	$	40,470	$	(1,655)	(4)	%

The net decrease in our general and administrative expenses of $1.7 million for the six months ended June 30, 2024 compared to the same period in 2023 was largely due to:

●

a reduction in restructuring charges of $1.7 million, which related to the restructuring programme completed in the first quarter of 2023; offset by

●

an increase of $1.8 million in other corporate costs due to an increase in accounting, legal and professional fees, due to a combination of fees relating to business development work (including the Hercules Capital loan facility and Galapagos agreement) and fees relating to preparation for commercialization.

Gain on Bargain Purchase

The gain on bargain purchase arose in June 2023 from the strategic combination with TCR2 Therapeutics Inc on June 1, 2023.

Income Taxes

Liquidity and Capital Resources

Sources of Funds

Since our inception, we have incurred significant net losses and negative cash flows from operations. We financed our operations primarily through sales of equity securities, cash receipts under our collaboration arrangements and research and development tax and expenditure credits. From inception through to June 30, 2024, we have raised:

●

$900.2 million, net of issuance costs, through the issuance of shares;

●

$24.5 million, net of discount, drawn from the Hercules Capital loan facility;

●

$530.9 million through collaborative arrangements with Galapagos, Genentech, GSK and Astellas; and

●

$141.3 million in the form of reimbursable U.K. research and development tax credits and receipts from the U.K. RDEC Scheme.

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$45.3 million in cash and cash equivalents and restricted cash and $39.5 million of marketable securities were also acquired as part of the strategic combination with TCR² Therapeutics Inc.

We use a non-GAAP measure, Total Liquidity, which is defined as the total of cash and cash equivalents and marketable securities, to evaluate the funds available to us in the near-term. A description of Total Liquidity and reconciliation to cash and cash equivalents, the most directly comparable U.S. GAAP measure, are provided below under “Non-GAAP measures”.

As of June 30, 2024, we had cash and cash equivalents of $211.8 million and Total Liquidity of $214.8 million.

Cash Flows

The following table summarizes the results of our cash flows for the six months ended June 30, 2024 and 2023 (in thousands):


		Six months ended
		June 30,
	2024		2023
Net cash provided by/(used in) operating activities	$	15,449	$	(81,045)
Net cash (used in)/provided by investing activities		(1,101)		51,035
Net cash provided by financing activities		53,747		210
Cash, cash equivalents and restricted cash		214,676		80,200

Operating Activities

Net cash provided by operating activities was $15.4 million for the six months ended June 30, 2024 compared to net cash used in operating activities of $81.0 million for the six months ended June 30, 2023. Our activities typically result in net use of cash in operating activities. The net cash provided by operating activities for the six months ended June 30, 2024 increased primarily due to the receipt of Research and development credits of $30.8 million, an $85 million upfront payment from Galapagos and a $7.7 million milestone payment from GSK which was offset by an increase in Research and development operating expenditure.

Net cash used in operating activities of $15.4 million for the six months ended June 30, 2024 comprised a net profit of $21.0 million and a net cash outflow of $17.0 million from changes in operating assets and liabilities, offset by non-cash items of $11.4 million. The changes in operating assets and liabilities include the impact of a $25.0 million decrease in reimbursements receivable for research and development tax credits and the recognition of deferred revenue following the termination of the Genentech agreement. The non-cash items consisted primarily of depreciation expense on plant and equipment of $5.5 million, share-based compensation expense of $6.2 million, unrealized foreign exchange losses of $0.3 million and other items of $0.1 million.

Investing Activities

Net cash used in investing activities was $1.1 million for the six months ended June 30, 2024 compared to $51.0 million provided investing activities for the six months ended June 30, 2023. The net cash used in or provided by investing activities for the respective periods consisted primarily of:

●

purchases of property, plant and equipment of $0.5 million and $3.6 million for the six months ended June 30, 2024 and 2023, respectively. Purchases of property, plant and equipment were higher in 2023 compared to 2024 due to expanding our manufacturing facilities, which was largely completed in 2022 and finalised in 2023; and

●

there were no cash inflows from maturity or redemption of marketable securities in the six months ended June 30, 2024 compared to $76.1 million for the three months ended March 31, 2023.

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The Company invests surplus cash and cash equivalents in marketable securities.

Financing Activities

Net cash provided by financing activities was $53.7 million and $0.2 million for the six months ended June 30, 2024 and 2023, respectively. The net cash provided by financing activities in the six months ended June 30, 2024 consisted of net proceeds of $29.2 million from shares issued in an At-The-Market offering, net of commissions and issuance costs, and $24.5 million proceeds from the issuance of borrowings, net of discount. The net cash provided by financing activities in the six months ended June 30, 2023 consisted primarily of net proceeds of $0.2 million from shares issued in an At-The-Market offering, net of commissions and issuance costs.

Non-GAAP Measures

Total Liquidity (a non-GAAP financial measure)

Total Liquidity (a non-GAAP financial measure) is the total of cash and cash equivalents and marketable securities. Each of these components appears in the condensed consolidated balance sheet. The U.S. GAAP financial measure most directly comparable to Total Liquidity is cash and cash equivalents as reported in the condensed consolidated financial statements, which reconciles to Total Liquidity as follows (in thousands):


	June 30,		December 31,
	2024		2023
Cash and cash equivalents	$	211,810	$	143,991
Marketable securities - available-for-sale debt securities		2,979		2,947
Total Liquidity	$	214,789	$	146,938

We believe that the presentation of Total Liquidity provides useful information to investors because management reviews Total Liquidity as part of its management of overall solvency and liquidity, financial flexibility, capital position and leverage. The definition of Total Liquidity includes marketable securities, which are highly-liquid and available to use in our current operations.

Safe Harbor

See the section titled “Information Regarding Forward-Looking Statements” at the beginning of this Quarterly Report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes to the Company’s market risk during the three and six months ended June 30, 2024. For a discussion of the Company’s exposure to market risk, please refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”) as of June 30, 2024.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at June 30, 2024.

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Changes in Internal Control over Financial Reporting

No changes in our internal control over financial reporting (as defined in Rules 13a-15(e) and 15d – 15(e)) under the Exchange Act) occurred during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

As of June 30, 2024 we were not a party to any material legal proceedings.

Item 1A. Risk Factors.

Our business has significant risks. You should carefully consider the risk factors set out in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 and the disclosures and risk factors set out in this Quarterly Report, including our condensed consolidated financial statements and the related notes, before making an investment decision regarding our securities. The risks and uncertainties described are those material risk factors currently known and specific to us that we believe are relevant to our business, results of operations and financial condition. Additional risks and uncertainties not currently known to us or that we now deem immaterial may also impair our business, results of operations and financial condition.

As of and for the period ended June 30, 2024, save as provided below there have been no material changes from the risk factors previously disclosed by us in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2023.

Our business is, in part, dependent on the successful commercialization of Tecelra in the United States.

Tecelra received FDA approval in August 2024. Tecelra is a genetically modified autologous T-cell immunotherapy indicated for the treatment of adult patients with unresectable or metastatic synovial sarcoma who have received prior systemic therapy, are positive for HLA-A*02:01P, -A*02:02P, -A*02:03P, or -A*02:06P, and negative for HLA-A*02:05P, and whose tumor expresses the MAGE-A4 antigen as detected by an FDA-approved test. The success of our business, including our ability to finance our company and generate any revenue in the future, will, at this point, depend on the successful commercialization of Tecelra in the U.S. Any failure to successfully commercialize Tecelra in the U.S. would have a material and adverse impact on our business.

The commercial success of Tecelra will depend on a number of factors, including the following:

●

our ability to obtain any additional required capital or equivalent sources of finance to support the commercialization on acceptable terms, or at all;

●

our ability to consistently manufacture Tecelra on a timely basis and sufficient to meet demand;

●

our ability to activate authorized treatment centres (ATC) capable of administering Tecelra and the timing of activation of those authorized treatment centres;

●

the ability of our authorized treatment centres to facilitate treatments with Tecelra given Tecelra is a novel T-cell therapy requiring patient specific administration;

●

the availability of the tests required to assess for the required HLA types and antigen presentation ahead of treatment with Tecelra and the ability of third party suppliers of such tests to make those tests available when required;

●

the prevalence, duration and severity of potential side effects or other safety issues that patients may experience with Tecelra;

●

achieving and maintaining, and, where applicable, ensuring that our third-party contractors (including those responsible for supply of Tecelra or any raw or intermediate materials required for such supply) achieve and maintain, compliance with our contractual obligations and with all regulatory requirements applicable to Tecelra;

●

the willingness of physicians, operators of hospitals and clinics and patients to adopt and administer Tecelra;

●

the availability of coverage and adequate reimbursement from managed care plans, private insurers, government payors (such as Medicare and Medicaid and similar foreign authorities) and other third-party payors for Tecelra;

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●

patients’ ability and willingness to pay out-of-pocket for Tecelra in the absence of coverage and/or adequate reimbursement from third-party payors;

●

patient demand for Tecelra;

●

the identification of patients eligible for treatment by the authorized treatment centres (including by referral from other hospitals and treatment centres) and the ability of the authorized treatment centres to progress such patients through to treatment;

●

prevalence of the required HLA types and antigen within the synovial sarcoma population and the ability of the tests for HLA and antigen to function as expected;

●

our ability to avoid third-party patent interference, intellectual property challenges or intellectual property infringement claims; and

●

our ability to comply with any post marketing requirements and obligations including those imposed by the FDA as part of the authorization for Tecelra.

These factors, many of which are beyond our control, could cause us to experience significant delays or an inability to obtain regulatory approvals or commercialize Tecelra. While we have obtained regulatory approval of Tecelra in the United States, we may never be able to successfully commercialize Tecelra in the United States or receive regulatory approval of Tecelra outside the United States. Accordingly, we cannot provide assurances as to the revenue obtainable through the sale of Tecelra.

Tecelra is approved under accelerated approval in the United States, and additional confirmatory work is required in order to maintain that approval. Inability to maintain approval or to otherwise meet the requirements imposed by the FDA will have a significant impact on our ability to commercialize Tecelra.

Tecelra is approved under accelerated approval in the U.S. based on overall response rate and duration of response. Continued approval for this indication is contingent upon verification and description of clinical benefit in a confirmatory trial. Our ability to obtain traditional approval for Tecelra may require the conduction of additional studies and will require ongoing discussions with the FDA. Any additional work required to satisfy the conditions of accelerated approval will require additional finances, and any ability to obtain any additional required capital or equivalent sources of finance may delay or prevent our ability to maintain approval for Tecelra.

As part of the approval of Tecelra, certain post approval requirements apply which, if not satisfied, could impact continued approval of Tecelra.

Tecelra is subject to continuing regulation by the FDA Failure to meet any of these requirements may result in negative consequences including adverse publicity, judicial or administrative enforcement, warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties.

These requirements include submissions of safety and other postmarketing information and reports, registration and listing, as well as continued compliance with cGMPs and cGCPs for any clinical trials that we conduct post-approval. In addition, the FDA and other regulatory authorities may impose additional restrictions or require amendments to our product label after marketing approval in the event of additional adverse events with our cell therapy or of other adverse events seen with similar cell therapy products.

As part of the approval of Teclera, the FDA has imposed certain Postmarketing Commitments (“PMCs”) and Postmarketing Requirements (“PMRs”), including certain requirements to conduct additional studies under proscribed timelines. Failure to conduct these PMCs and PMRs in a timely manner could result in enforcement action from the FDA.

We and our contract manufacturers will be subject to periodic unannounced inspections by the FDA to monitor and ensure compliance with cGMPs. We must also comply with requirements concerning advertising and promotion for any cell therapies for which we obtain marketing approval. Promotional communications with respect to prescription drugs, including biologics, are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved labeling. Thus, we will not be able to promote any cell therapies we develop for indications or uses for which they are not approved.

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The approval of Tecelra is limited to adult patients with unresectable or metastatic synovial sarcoma who have received prior systemic therapy, are positive for HLA-A*02:01P, -A*02:02P, -A*02:03P, or -A*02:06P, and negative for HLA-A*02:05P, and whose tumor expresses the MAGE-A4 antigen.

As is common for initial approval of cancer therapies, Tecelra has been approved by the FDA for use in a limited patient population, who have unresectable or metastatic synovial sarcoma and who have already received prior systemic therapy. As a result, our ability to market Tecelra is generally limited to that patient population.

The use of prior therapies or treatment for synovial sarcoma may reduce the effectiveness of our cell therapies.

This is the first time we as an organization are marketing a product and we have limited experience as a commercial company and have never generated revenue from product sales.

Tecelra is the first product for which we have obtained FDA approval. As a company we have not yet launched any approved products for commercial sale and have not previously generated any revenue from product sales. Accordingly, we will need to continue to transition from a company with a research and development focus to a company capable of supporting commercial activities. We may not be successful in such a transition. We have recruited experienced commercial and medical affairs teams and we will need to continue to develop those teams and the associated support network in order to supply Tecelra on a commercial basis.

We will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train, and retain suitably skilled and experienced marketing and sales personnel. This process may result in additional delays in bringing our cell therapies to market or in certain cases require us to enter into alliances with third parties in order to do so. However, there can be no assurance that we will be able to establish or maintain such collaborative arrangements, or even if we are able to do so, that they will result in effective sales forces. Any revenue we receive will depend upon the efforts of such third parties, which may not be successful. We may have little or no control over the efforts of such third parties, and our revenue from cell therapy sales may be lower than if we had commercialized our cell therapies ourselves.

For Tecelra, we are using certain third parties to supplement the internal commercial facing teams. We are also using a third party distributor to supply Tecelra and third parties to provide some of the systems required to supply Tecelra and support patients prescribed with Tecelra. We are reliant on those third parties to provide the services we require in accordance with our planned timelines. If any critical third party supplier fails to provide the services as required that may result in a delay to the commercialization of Tecelra. Any inability on our part to develop inhouse sales and commercial distribution capabilities or to establish and maintain relationships with third-party collaborators that can successfully commercialize any cell therapy in the U.S. or elsewhere will have a materially adverse effect on our business and results of operations.

As a novel cell therapy, Tecelra may not gain market acceptance among physicians, patients, hospitals, cancer treatment centers and others in the medical community, including referral centers.

The use of engineered T-cells and cell therapies more generally as a potential cancer treatment is a recent development and may not become broadly accepted by physicians, patients, hospitals, cancer treatment centers and others in the medical community. For example, the product labelling and prescribing information for Tecelra describe certain limitations of use, adverse events, and warnings and precautions, including a boxed warning related to Cytokine Release Syndrome (CRS), which may be severe or life threatening and which occurred in patients receiving Tecelra in clinical trials. Additional factors will influence whether Tecelra is accepted in the market, including:

●

physicians, hospitals, cancer treatment centers and patients considering Tecelra as a safe and effective treatment;

●

the potential and perceived advantages of Tecelra over alternative treatments;

●

the prevalence and severity of any side effects;

●

willingness of treating centers to test for the required HLA types and MAGE A4 antigen using the FDA approved tests;

●

our product labeling and prescribing information describe certain limitations of use, adverse events, and warnings and precautions;

●

the cost of Tecelra in relation to alternative treatments;

●

the willingness of referral centers and awareness of referral centers to refer patients to our authorized treatment centers;

●

the availability of coverage, adequate reimbursement and pricing by third-party payors and government authorities;

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●

the willingness of patients to pay for Tecelra on an out-of-pocket basis in the absence of coverage by third-party payors and government authorities;

●

relative convenience and ease of administration as compared to alternative treatments and competitive therapies; and

●

the effectiveness of our sales and marketing efforts.

The product labelling and prescribing information for Tecelra includes a boxed warning for CRS as well as other warnings and precautions. As Tecelra is used commercially, the rate and nature of adverse reactions may increase and as afamitresgene autoleucel (afami-cel) is studied in additional indications and populations, toxicities may further limit its development and use.

Coverage, price flexibility, and reimbursement may be limited or unavailable in certain market segments for Tecelra.

Successful sales of Tecelra may depend on the availability of coverage and adequate reimbursement from third-party payors. In addition, because Tecelra represents a new approach to the treatment of synovial sarcoma, we cannot accurately estimate the potential revenue from Tecelra.

Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Obtaining coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drugs and treatments they will cover and the amount of reimbursement. Reimbursement by a third-party payor may depend upon a number of factors, including, but not limited to, the third-party payor’s determination that use of a product is:

●

a covered benefit under its health plan;

●

safe, effective and medically necessary;

●

appropriate for the specific patient; and

●

cost-effective.

Obtaining coverage and reimbursement approval of Tecelra from a government or other third-party payor is a time consuming and costly process which could require us to provide to the payor supporting scientific, clinical and cost-effectiveness data for the use of our products. Even if we obtain coverage for Tecelra, the resulting reimbursement payment rates might not be adequate for us to achieve or sustain profitability or may require co-payments that patients find unacceptably high. Patients are unlikely to use Tecelra unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of Tecelra.

In the U.S., no uniform policy of coverage and reimbursement for products exists among third-party payors. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our cell therapies to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.

There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, national and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare, including the Affordable Care Act (“ACA”) or provisions of the Inflation Reduction Act (“IRA”). Such regulatory changes may bring prescription drug pricing reform or healthcare affordability programs that, for example, seek to lower prescription drug costs by allowing governmental healthcare programs to negotiate prices with drug companies, put an inflation cap on drug prices, and lower out-of-pocket expenses for recipients of governmental healthcare programs. We cannot predict the initiatives that may be adopted in the future.

Tecelra represents a novel approach to treatment of synovial sarcoma that could result in heightened regulatory scrutiny.

Use of Tecelra to treat a patient involves genetically engineering a patient’s T-cells. This is a relatively novel treatment approach that carries inherent development risks including the following, any of which can result in delays to our ability to provide confirmatory evidence of Tecelra’s effectiveness:

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●

Further development, characterization and evaluation may be required if post-marketing or clinical data suggest any potential safety risk for patients. The need to develop further assays, or to modify in any way the protocols related to Tecelra to improve safety or effectiveness, may delay the commercialization and further clinical development;

●

End users and medical personnel require a substantial amount of education and training in their administration of Tecelra either to engage in confirmatory clinical trials and recruit patients or ultimately to provide Tecelra to patients.

●

Regulatory requirements governing gene and cell therapy products have changed frequently and may continue to change in the future.

●

There is the potential for delayed adverse events following exposure to gene therapy products due to persistent biological activity of the genetic material or other components of products used to carry the genetic material. In part for this reason, the FDA recommends a 15-year follow-up observation period for all surviving patients who receive treatment using gene therapies in clinical trials.

●

Negative results seen in third party clinical trials utilizing gene therapy products may result in regulators halting development and commercialization of our cell therapies, including Tecelra, or in requiring additional data or requirements prior to our cell therapies progressing to the next stage of development.

Manufacturing and supply of cell therapies is complex, and if we encounter any difficulties in manufacture or supply of Tecelra or our ability to provide supply for confirmatory clinical trials commercial supply of Tecelra could be delayed or stopped.

The process of manufacturing and administering Tecelra is complex and highly regulated. Manufacture requires the harvesting of white blood cells from the patient, isolating certain T-cells from these white blood cells, combining patient T-cells with our lentiviral delivery vector through a process known as transduction, expanding the transduced T-cells to obtain the desired dose, and ultimately infusing the modified T-cells back into the patient. As a result of the complexities, our manufacturing and supply costs are likely to be higher than those at more traditional manufacturing processes and the manufacturing process is less reliable and more difficult to reproduce.

Delays or failures in the manufacture of Tecelra (whether by us, any collaborator or our third party contract manufacturers) may result in a patient being unable to receive Tecelra or a requirement to re-manufacture which itself then causes delays in manufacture for other patients. Any delay or failure or inability to manufacture on a timely basis can adversely affect a patient’s outcomes and delay the timelines for our confirmatory clinical trials and commercialization. With a commercial product delays or failure to manufacture could additionally lead to claims by patients for reimbursement or damages. Such delays or failure or inability to manufacture can result from:

●

a failure in the manufacturing process itself for example, by an error in manufacturing process (whether by us or our third party contract manufacturing organization), equipment or reagent failure, failure in any step of the manufacturing process, failure to maintain a GMP environment, failure in quality systems applicable to manufacture, sterility failures, contamination during process;

●

variations in patient starting material or apheresis product resulting in less product than expected or product which is not viable, or which cannot be used to successfully manufacture a cell therapy;

●

product loss or failure due to logistical issues including issues associated with the differences between patients’ white blood cells or characteristics, interruptions to process, contamination, failure to supply patient apheresis material within required timescales (for example, as a result of an import or export hold-up) or supplier error;

●

inability to have enough manufacturing slots to manufacture cell therapies for patients as and when those patients require manufacture;

●

inability to procure components, consumables, ingredients, or starting materials, or to manufacture starting materials (including at our U.K. vector facility), as a result of supply chain issues;

●

loss of or close-down of any manufacturing facility used in the manufacture of our cell therapies. For example, we will be manufacturing Tecelra at our Navy Yard manufacturing facility. Should there be a contamination event at the facility resulting in the close-down of that facility, it would not be possible to find alternative manufacturing capability for Tecelra within the timescales required for patient supply including for commercial supply.

●

loss or contamination of patient starting material, requiring the starting material to be obtained again from the patient or the manufacturing process to be re-started. In the context of commercial supply, this could result in cancellation of order for the commercial cell therapy or a claim from the patient;

●

a requirement to modify or make changes to any manufacturing process. Such changes may additionally require comparability testing which then may reduce the amount of manufacturing slots available for manufacture of Tecelra. Delays in our ability to

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the three-month period ended June 30, 2024, none of our directors or officers adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as such terms are defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits.

The following exhibits are either provided with this Quarterly Report on Form 10-Q or are incorporated herein by reference:


Exhibit Number	Description of Exhibit
10.1**†		Loan and Security Agreement, dated May 14, 2024, by and among Adaptimmune Therapeutics plc, Adaptimmune LLC, CM Intermediate Sub I, Inc., CM Intermediate Sub II, Inc., TCR²Therapeutics Inc., TRUCS Therapeutics Limited, Adaptimmune Limited and Hercules Capital, Inc.

10.2**†		Collaboration and Exclusive License Agreement, dated May 30, 2024, by and among Adaptimmune Limited and Galapagos NV.

31.1**		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1***		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2***		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101**		The following financial information from Adaptimmune Therapeutics plc’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023, (ii) Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income/Loss for the three and six months ended June 30, 2024 and 2023, (iv) Unaudited Condensed Consolidated Statements of Change in Equity for the three and six months ended June 30, 2024 and 2023, (v) Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 and (vi) Notes to the Unaudited Condensed Consolidated Financial Statements.

104**		Cover Page Interactive data File (formatted in Inline XBRL and contained in Exhibit 101).

** Filed herewith.


	ADAPTIMMUNE THERAPEUTICS PLC


Date: August 12, 2024	/s/ Adrian Rawcliffe
	Adrian Rawcliffe
	Chief Executive Officer


Date: August 12, 2024	/s/ Gavin Wood
	Gavin Wood
	Chief Financial Officer


PART I — FINANCIAL INFORMATION		4

Item 1.	Financial Statements:	4

	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	4

	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023	5

	Unaudited Condensed Consolidated Statements of Comprehensive Income/Loss for the three and six months ended June 30, 2024 and 2023	6

	Unaudited Condensed Consolidated Statements of Change in Equity for the three and six months ended June 30, 2024 and 2023	7

	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	9

	Notes to the Unaudited Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

PART II — OTHER INFORMATION		40

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 3.	Defaults Upon Senior Securities	46

Item 4.	Mine Safety Disclosures	46

Item 5.	Other Information	46

Item 6.	Exhibits	46

Signatures		47