Part I [Business](index=7&type=section&id=Item%201.%20Business) Adicet Bio is a clinical-stage biotech developing allogeneic gamma delta T cell therapies for cancer, with lead candidate ADI-001 [Overview and Pipeline](index=7&type=section&id=Overview%20and%20Pipeline) Adicet Bio's pipeline includes lead candidate ADI-001 in Phase 1 for NHL, preclinical ADI-925, and licensed ADI-002 - The company is a clinical-stage biotechnology firm focused on developing "off-the-shelf" allogeneic gamma delta T cell therapies for cancer[16](index=16&type=chunk) - Lead product candidate ADI-001 is a first-in-class allogeneic gamma delta T cell therapy targeting CD20, currently in a Phase 1 study for relapsed or refractory B-cell non-Hodgkin's lymphoma (NHL)[18](index=18&type=chunk)[19](index=19&type=chunk) - The pipeline includes ADI-925, a novel engineered CAd gamma delta T cell product candidate, with an IND application planned for the second half of **2023**[23](index=23&type=chunk) - Regeneron has exercised its option to license the exclusive worldwide rights to ADI-002, a gamma delta CAR T-cell therapy for solid tumors. Regeneron is now responsible for all development, manufacturing, and commercialization[23](index=23&type=chunk)[70](index=70&type=chunk) [Strategy and Technology](index=9&type=section&id=Strategy%20and%20Technology) Strategy focuses on advancing ADI-001 and leveraging its Vδ1 gamma delta T cell platform for 'off-the-shelf' therapies - Key strategic elements include advancing ADI-001, innovating the gamma delta T cell platform, exploring outpatient administration, and expanding intellectual property[25](index=25&type=chunk) - The company's Vδ1 gamma delta T cell platform is designed to overcome limitations of autologous alpha beta T cell therapies, such as treatment delays, manufacturing variability, and high costs[33](index=33&type=chunk)[37](index=37&type=chunk) - Key advantages of gamma delta T cells include lack of GvHD, MHC-independent tumor recognition, inherent tumor localization, and potential for re-dosing, making them suitable for an allogeneic, "off-the-shelf" approach[36](index=36&type=chunk) - The company's proprietary manufacturing process involves isolating peripheral blood cells from unrelated donors, activating Vδ1 gamma delta T cells, transducing them with CAR or CAd constructs, and expanding them over **6,000**-fold at clinical scale[49](index=49&type=chunk)[51](index=51&type=chunk) [ADI-001 Clinical Program](index=14&type=section&id=ADI-001%20Clinical%20Program) ADI-001, an allogeneic anti-CD20 CAR gamma delta T cell therapy, showed promising Phase 1 efficacy and safety in NHL ADI-001 Phase 1 Interim Efficacy Results (as of Dec 5, 2022) | Metric | Result | | :--- | :--- | | Overall Response Rate (ORR) | **75% overall response rate (ORR)** (across all dose levels) | | Complete Response (CR) Rate | **69% complete response (CR) rate** (across all dose levels) | | ORR & CR in post-CAR T LBCL patients | **100% (5/5)** | | CR Rate in LBCL patients (DL3 and above) | **86% (6/7)** | - ADI-001 has been generally well-tolerated, with no occurrences of dose-limiting toxicities, Graft versus Host Disease (GvHD), or Grade **3** or higher Cytokine Release Syndrome (CRS) or immune effector cell-associated neurotoxicity syndrome (ICANS)[64](index=64&type=chunk) - The company plans to discuss a potential pivotal study path with the FDA in Q**2** **2023** and intends to initiate a study in post-CAR T large B-cell lymphoma (LBCL) patients in the second half of **2023**[19](index=19&type=chunk) [Manufacturing, IP, and Competition](index=18&type=section&id=Manufacturing%2C%20IP%2C%20and%20Competition) The company is developing internal GMP manufacturing, holds IP, and faces intense competition in cell therapy - The company relies on third-party CDMOs for manufacturing but is also establishing internal GMP cell processing and vector manufacturing operations at its Redwood City, CA facility[88](index=88&type=chunk)[89](index=89&type=chunk) - The patent portfolio for ADI-001 includes applications which, if issued, would expire in **2039**, with additional methods of treatment applications potentially extending to **2042**[77](index=77&type=chunk) - The patent portfolio for ADI-925 includes applications which, if issued, would expire between **2042** and **2043**[77](index=77&type=chunk) - The company faces competition from numerous companies in the allogeneic T-cell therapy space (e.g., Allogene, Caribou, Fate) and autologous T-cell therapy space (e.g., Gilead, Bristol-Myers Squibb, Novartis)[94](index=94&type=chunk) [Government Regulation](index=22&type=section&id=Government%20Regulation) The company's biologics are subject to extensive FDA and international regulations, including BLA and healthcare laws - The company's cell therapy products are regulated as biologics and require submission and approval of a Biologics License Application (BLA) from the FDA before marketing[101](index=101&type=chunk) - The FDA provides expedited development programs for serious conditions, including Fast Track, Priority Review, Accelerated Approval, and Regenerative Medicine Advanced Therapy (RMAT) designation, which the company may pursue[126](index=126&type=chunk)[131](index=131&type=chunk) - The company's operations are subject to various U.S. healthcare laws, including the federal Anti-Kickback Statute, the False Claims Act, HIPAA, and the Physician Payments Sunshine Act[144](index=144&type=chunk)[145](index=145&type=chunk)[148](index=148&type=chunk)[154](index=154&type=chunk) - Recent healthcare reform, such as the Inflation Reduction Act of **2022** (IRA), may impact the business through provisions allowing government price negotiation for Medicare drugs and imposing rebates for price increases faster than inflation[165](index=165&type=chunk)[166](index=166&type=chunk) - International operations are subject to foreign regulations, including the EU's Clinical Trials Regulation and the General Data Protection Regulation (GDPR), which imposes stringent requirements for processing personal data[180](index=180&type=chunk)[186](index=186&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from limited operating history, net losses, ADI-001 dependency, and regulatory challenges - The business is highly dependent on the success of its lead product candidate, ADI-001. Any failure or delay in its development or commercialization would significantly harm the company[209](index=209&type=chunk)[211](index=211&type=chunk) - The company's gamma delta T cell candidates represent a novel approach, making it difficult to predict development time, cost, and the likelihood of regulatory approval[212](index=212&type=chunk)[215](index=215&type=chunk) - The company has a history of net losses (**$69.8 million** in **2022**) and expects to incur substantial losses in the future, which could raise doubts about its ability to continue as a going concern without additional financing[204](index=204&type=chunk)[207](index=207&type=chunk) - Reliance on third-party suppliers and manufacturers increases the risk of not having sufficient quantities of product candidates at an acceptable cost, which could impair development and commercialization[250](index=250&type=chunk) - Termination of or material breach by Regeneron of the collaboration agreement would materially harm the company's business, prospects, and financial condition[313](index=313&type=chunk) - Unstable market and economic conditions, including rising inflation and interest rates, could adversely affect the company's business, financial condition, and ability to raise capital[433](index=433&type=chunk)[437](index=437&type=chunk) [Unresolved Staff Comments](index=92&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - Not applicable[465](index=465&type=chunk) [Properties](index=92&type=section&id=Item%202.%20Properties) The company leases executive offices in Boston and significant office/lab space, including GMP facilities, in Redwood City - The company leases office and laboratory space in Boston, MA (lease expires July **2023**) and Redwood City, CA (leases expire Feb **2030** and June **2025**)[465](index=465&type=chunk) [Legal Proceedings](index=92&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[466](index=466&type=chunk) [Mine Safety Disclosures](index=92&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[466](index=466&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=93&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under 'ACET' and does not anticipate paying cash dividends - The company's common stock trades on The Nasdaq Global Market under the symbol "ACET"[468](index=468&type=chunk) - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future[469](index=469&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=94&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's **2022** financials show increased revenue, higher expenses, a net loss, and cash for operations into H**1** **2025** [Results of Operations](index=99&type=section&id=Results%20of%20Operations) In **2022**, revenue surged from a Regeneron payment, while R&D and G&A expenses increased, leading to a wider net loss Comparison of Operations (Years Ended Dec 31) | Financial Metric | 2022 ($) | 2021 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | **$24.99M** | **$9.73M** | **157%** | | Research & Development | **$71.25M** | **$48.94M** | **46%** | | General & Administrative | **$26.30M** | **$22.22M** | **18%** | | Total Operating Expenses | **$97.54M** | **$71.16M** | **37%** | | Net Loss | **($69.79M)** | **($62.00M)** | **13%** | - The **$15.3 million** increase in revenue was primarily due to the **$20.0 million** payment received from Regeneron for the exercise of its option related to ADI-002[497](index=497&type=chunk) - R&D expenses increased by **$22.3 million**, mainly from a **$9.9 million** increase in payroll due to higher headcount, a **$4.4 million** increase in CDMO/CRO costs for ADI-001, and a **$4.2 million** increase in facility expenses[499](index=499&type=chunk) [Liquidity and Capital Resources](index=100&type=section&id=Liquidity%20and%20Capital%20Resources) As of December **31**, **2022**, the company held **$257.7 million** in cash, expected to fund operations into H**1** **2025** - As of December **31**, **2022**, the company had cash and cash equivalents of **$257.7 million**[508](index=508&type=chunk) - Management expects current cash and cash equivalents to be sufficient to fund operations into the first half of **2025**[261](index=261&type=chunk)[508](index=508&type=chunk) - In August **2022**, the company sold **2,611,723** shares of common stock through its ATM program, resulting in net proceeds of approximately **$43.4 million**[507](index=507&type=chunk) Summary Statement of Cash Flows (Years Ended Dec 31) | Cash Flow Activity | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Net cash used in Operating | **($44.77M)** | **($51.05M)** | | Net cash used in Investing | **($16.78M)** | **($2.80M)** | | Net cash provided by Financing | **$41.51M** | **$242.69M** | [Quantitative and Qualitative Disclosures About Market Risk](index=105&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on cash, but a **10%** change is not expected to be material - The company's primary market risk is interest rate risk on its **$257.7 million** of cash and cash equivalents, but an immediate **10%** change in rates is not expected to have a material impact[538](index=538&type=chunk) - Foreign currency exchange risk and inflation risk were not considered to have a material effect on the business during **2022** and **2021**[539](index=539&type=chunk)[540](index=540&type=chunk) [Financial Statements and Supplementary Data](index=105&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates by reference the company's consolidated financial statements and supplementary data from Part IV - All required financial statements and supplementary data are filed under Item **15**(a) of the Annual Report on Form **10**-K[541](index=541&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=105&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[541](index=541&type=chunk) [Controls and Procedures](index=105&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December **31**, **2022** - Management concluded that the company's disclosure controls and procedures were effective as of December **31**, **2022**[542](index=542&type=chunk) - Management assessed internal control over financial reporting and concluded it was effective as of December **31**, **2022**, based on the COSO framework[546](index=546&type=chunk) - No material changes in internal control over financial reporting occurred during the year ended December **31**, **2022**[548](index=548&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=107&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the **2023** Proxy Statement - The required information for this item is incorporated by reference from the company's **2023** Proxy Statement[551](index=551&type=chunk) [Executive Compensation](index=107&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the **2023** Proxy Statement - The required information for this item is incorporated by reference from the company's **2023** Proxy Statement[553](index=553&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=107&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the **2023** Proxy Statement - The required information for this item is incorporated by reference from the company's **2023** Proxy Statement[553](index=553&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=107&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the **2023** Proxy Statement - The required information for this item is incorporated by reference from the company's **2023** Proxy Statement[554](index=554&type=chunk) [Principal Accountant Fees and Services](index=107&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the **2023** Proxy Statement - The company's independent public accounting firm is KPMG LLP. Information on fees and services is incorporated by reference from the **2023** Proxy Statement[555](index=555&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=108&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section includes consolidated financial statements, the independent auditor's report, and an index of all filed exhibits - This section includes the Report of Independent Registered Public Accounting Firm and the Consolidated Financial Statements for the years ended December **31**, **2022** and **2021**[557](index=557&type=chunk) - An index of all exhibits filed as part of the Annual Report is provided[558](index=558&type=chunk) Financial Statements [Consolidated Financial Statements](index=111&type=section&id=Consolidated%20Financial%20Statements) In **2022**, Adicet Bio reported **$330.7M** total assets, **$25.0M** revenue, **$69.8M** net loss, and **$257.7M** cash Consolidated Balance Sheet Data (as of Dec 31) | Account | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | **$257.7M** | **$277.5M** | | Total Assets | **$330.7M** | **$338.9M** | | Total Liabilities | **$38.4M** | **$35.8M** | | Total Stockholders' Equity | **$292.3M** | **$303.1M** | Consolidated Statement of Operations Data (Year Ended Dec 31) | Account | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Revenue | **$25.0M** | **$9.7M** | | Total Operating Expenses | **$97.5M** | **$71.2M** | | Loss from Operations | **($72.6M)** | **($61.4M)** | | Net Loss | **($69.8M)** | **($62.0M)** | | Net Loss Per Share | **($1.70)** | **($2.00)** | Consolidated Statement of Cash Flows Data (Year Ended Dec 31) | Activity | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | **($44.8M)** | **($51.1M)** | | Net cash used in investing activities | **($16.8M)** | **($2.8M)** | | Net cash provided by financing activities | **$41.5M** | **$242.7M** | [Notes to Consolidated Financial Statements](index=115&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, liquidity, Regeneron revenue, operating leases, stock compensation, and federal net operating loss carryforwards - The company has an accumulated deficit of **$238.1 million** as of December **31**, **2022**, but expects its cash and cash equivalents to be sufficient to fund operations for at least the next twelve months[582](index=582&type=chunk)[586](index=586&type=chunk) - All revenue for **2022** and **2021** was generated from the License and Collaboration Agreement with Regeneron. The company's performance obligations under this agreement were completed in the first quarter of **2022**[607](index=607&type=chunk)[649](index=649&type=chunk) - As of December **31**, **2022**, the company had federal net operating loss carryforwards of approximately **$271.2 million**, of which **$263.6 million** can be carried forward indefinitely[709](index=709&type=chunk) - In August **2022**, the company sold **2,611,723** shares of common stock under its ATM offering, raising net proceeds of **$43.4 million**[585](index=585&type=chunk)[715](index=715&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-38359 Adicet Bio, Inc. (Exact name of registrant as specified in its charter) Delaware 81-3305277 (State or other jurisdiction ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-38359 Adicet Bio, Inc. (Exact name of registrant as specified in its charter) Delaware 81-3305277 (State or other jurisdiction of in ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | --- | --- | |----------------|--------------------|-----------------------------------------------------------|---------------------------------------------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-38359 Adicet Bio, Inc. (Exact name of registrant as specified in its charter) Delaware 81-3305277 (State or other jurisdiction of incorp ...

PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's analysis of financial condition and operations [Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited consolidated financial statements show increased cash and assets due to a public offering, with continued net losses driven by rising R&D expenses [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) The balance sheets reflect a significant increase in cash and total assets primarily from financing activities Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $192,226 | $84,330 | | Total current assets | $199,025 | $100,336 | | Total assets | $257,195 | $153,835 | | **Liabilities & Equity** | | | | Total current liabilities | $20,032 | $22,479 | | Total liabilities | $39,971 | $44,008 | - Cash and cash equivalents significantly increased from **$84.3 million** at the end of 2020 to **$192.2 million** as of September 30, 2021, reflecting proceeds from financing activities during the period[20](index=20&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The statements show increased R&D expenses and a higher net loss, while revenue decreased due to milestone timing Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenue—related party | $3,429 | $3,028 | $4,262 | $12,493 | | Research and development | $11,926 | $8,942 | $34,285 | $24,651 | | General and administrative | $5,213 | $7,741 | $15,868 | $17,684 | | Loss from operations | $(13,710) | $(13,655) | $(45,891) | $(29,842) | | Net loss | $(14,013) | $(14,779) | $(46,186) | $(27,720) | | Net loss per share | $(0.44) | $(2.84) | $(1.54) | $(8.69) | - Research and development expenses increased to **$34.3 million** for the nine months ended Sep 30, 2021, up from **$24.7 million** in the prior year period, reflecting increased clinical development activities[23](index=23&type=chunk) - Revenue for the nine months ended Sep 30, 2021, decreased significantly to **$4.3 million** from **$12.5 million** in the prior year period, primarily due to the timing of milestone achievements under the Regeneron agreement[23](index=23&type=chunk)[195](index=195&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flows indicate significant funding from financing activities, offsetting operational cash burn and driving overall cash increase Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(37,608) | $(28,207) | | Net cash provided by investing activities | $282 | $102,769 | | Net cash provided by financing activities | $145,222 | $36 | | Net change in cash | $107,896 | $74,598 | - Financing activities provided **$145.2 million** in cash for the first nine months of 2021, primarily from the issuance of common stock, which was the main driver of the increase in the company's cash position[32](index=32&type=chunk)[225](index=225&type=chunk) - Investing activities in the first nine months of 2020 included **$64.1 million** in cash acquired from the Merger with resTORbio, which was not present in 2021[32](index=32&type=chunk)[224](index=224&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's clinical-stage progress, financial performance, and liquidity, highlighting increased R&D and a strengthened cash position - The company is developing "off-the-shelf" gamma delta T cell therapies, with its lead product candidate, ADI-001, in a Phase 1 clinical trial for Non-Hodgkin's Lymphoma (NHL) initiated in March 2021[156](index=156&type=chunk) - Interim clinical data from the initial dose escalation portion of the ADI-001 study is expected by the **end of 2021**[156](index=156&type=chunk) - The company plans to file an Investigational New Drug (IND) application for ADI-002, its first solid tumor candidate, in the **second quarter of 2022** and initiate Phase 1 trials in the **second half of 2022**[156](index=156&type=chunk) - In February 2021, the company raised approximately **$128.7 million** in net proceeds from an underwritten public offering and an additional **$15.0 million** from a concurrent private placement[161](index=161&type=chunk)[162](index=162&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Operating results show increased R&D expenses and a decrease in revenue, contributing to a higher net loss Comparison of Operating Results (in thousands) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenue – related party | $3,429 | $3,028 | $4,262 | $12,493 | | Research and development | $11,926 | $8,942 | $34,285 | $24,651 | | General and administrative | $5,213 | $7,741 | $15,868 | $17,684 | | Net loss | $(14,013) | $(14,779) | $(46,186) | $(27,720) | - R&D expenses for the nine months ended Sep 30, 2021 increased by **$9.6 million (39%)** compared to the same period in 2020, driven by a **$4.0 million** increase in payroll/personnel costs from higher headcount, a **$2.1 million** increase in stock-based compensation, and increased CRO and facility expenses related to ADI-001 development[198](index=198&type=chunk) - G&A expenses for the nine months ended Sep 30, 2021 decreased by **$1.8 million (10%)** compared to the prior year period, mainly due to a **$5.9 million** reduction in professional fees associated with the 2020 Merger, partially offset by higher payroll, insurance, and facility costs[199](index=199&type=chunk) - Revenue for the nine months ended Sep 30, 2021 decreased by **$8.2 million (66%)** year-over-year, primarily due to a **$10.0 million** milestone payment in June 2020 and a **$4.0 million** revenue reduction in Q1 2021 from an extended performance obligation timeline[195](index=195&type=chunk)[196](index=196&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash position significantly improved due to recent financing, providing sufficient funds for the next twelve months - As of September 30, 2021, the company had **$192.2 million** in cash and cash equivalents[205](index=205&type=chunk) - The company believes its current cash and cash equivalents are sufficient to fund operations, capital expenditures, and debt service for at least the **next twelve months** from the report's issuance date[206](index=206&type=chunk)[212](index=212&type=chunk) - The company has a loan agreement with Pacific Western Bank for up to **$15.0 million**, primarily for financing leasehold improvements, with no funds drawn as of September 30, 2021[206](index=206&type=chunk)[207](index=207&type=chunk) - As of September 30, 2021, the company had an accumulated deficit of **$152.5 million**[211](index=211&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure on cash equivalents, deemed immaterial due to short-term, low-risk investments - The company's main market risk stems from potential adverse changes in interest rates on its **$192.2 million** of cash and cash equivalents[237](index=237&type=chunk) - Due to the short-term maturities and low-risk profile of its cash equivalents, the company does not expect a **10%** change in interest rates to materially affect its fair value or future interest income[237](index=237&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Material weaknesses in internal controls were identified, leading to ineffective disclosure controls, with remediation efforts underway - Management identified material weaknesses in internal control over financial reporting during the preparation of its financial statements for the quarter ended September 30, 2021[240](index=240&type=chunk) - The identified weaknesses include: - Lack of sufficient accounting professionals with appropriate experience - Lack of formal accounting policies, procedures, and monitoring controls - Ineffective controls over segregation of duties - Lack of formal processes to account for complex transactions[242](index=242&type=chunk) - Due to these material weaknesses, the CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of September 30, 2021[243](index=243&type=chunk) - Remediation efforts are underway, including hiring a permanent VP Corporate Controller, implementing a new ERP system (Microsoft 365 Business Central) in January 2021, and re-evaluating and implementing additional internal controls[245](index=245&type=chunk) PART II. OTHER INFORMATION This section details legal proceedings, significant risk factors, and the exhibits filed with the report [Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to materially impact its financial condition or operations - The company is not currently party to any legal proceedings that it expects to have a material adverse impact on its financial condition or operations[249](index=249&type=chunk) [Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks including clinical trial uncertainties, manufacturing dependencies, financial control weaknesses, and reliance on key collaborations - The company's business is highly dependent on the success of its two lead product candidates, ADI-001 and ADI-002, which are based on novel gamma delta T cell technologies with significant development and regulatory challenges[3](index=3&type=chunk)[259](index=259&type=chunk)[265](index=265&type=chunk) - The company has a history of net losses (**$152.5 million** accumulated deficit as of Sep 30, 2021) and expects to incur substantial losses for the foreseeable future[254](index=254&type=chunk) - Adicet relies on third-party manufacturers for its product candidates, which increases risks related to supply, cost, and quality control, potentially impairing development and commercialization efforts[4](index=4&type=chunk)[300](index=300&type=chunk) - Material weaknesses have been identified in the company's internal control over financial reporting, which could harm the business and negatively impact stock value[5](index=5&type=chunk)[353](index=353&type=chunk) - The collaboration with Regeneron is critical; termination of the agreement or a material breach by Regeneron would materially harm the company's business and financial condition[6](index=6&type=chunk)[357](index=357&type=chunk) [Exhibits](index=90&type=section&id=Item%206.%20Exhibits) This section lists key exhibits filed, including corporate agreements and officer certifications - Key filed exhibits include a Sublease Agreement dated July 19, 2021, and a Fourth Amendment to the Loan and Security Agreement with Pacific Western Bank, dated October 21, 2021[486](index=486&type=chunk) - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act[486](index=486&type=chunk)