Table of Contents ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 Commission File Number: 001-40367 Table of Contents We own various trademark registrations and applications, and unregistered trademarks, including the registered trademark VACCITECH, trademarks relating to the technologies acquired as part of our acquisition of Avidea Technologies, Inc. in December 2021 including the registered trademarks TRAPD, SNAPV ...

[PART I - FINANCIAL INFORMATION](index=1&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and related disclosures [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and detailed notes on the company's financial position and performance [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :----- | :--------------------------- | :------------------------------- | | Total Assets | $246,128 | $270,205 | | Cash and cash equivalents | $173,030 | $194,385 | | Total Liabilities | $28,666 | $27,004 | | Total Shareholders' Equity | $217,462 | $243,201 | - Total assets decreased by **$24.077 million** from December 31, 2022, to June 30, 2023, primarily due to a decrease in cash and cash equivalents[201](index=201&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details the company's revenues, expenses, and net loss or income over specific reporting periods | Metric | 3 Months Ended June 30, 2023 (in thousands) | 3 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Total Revenue | $334 | $17,063 | $802 | $32,081 | | Total Operating Expenses | $26,671 | $3,828 | $48,623 | $18,265 | | Net (Loss)/Income | $(23,824) | $15,689 | $(42,047) | $18,263 | | Basic EPS | $(0.62) | $0.42 | $(1.10) | $0.49 | | Diluted EPS | $(0.62) | $0.41 | $(1.10) | $0.48 | - The company reported a significant **net loss** for both the three and six months ended June 30, 2023, a reversal from net income in the prior year, primarily due to a sharp decline in license revenue[231](index=231&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) This section outlines the changes in the company's equity accounts, including accumulated deficit and share-based compensation | Metric | Balance, Jan 1, 2023 (in thousands) | Balance, June 30, 2023 (in thousands) | Balance, Jan 1, 2022 (in thousands) | Balance, June 30, 2022 (in thousands) | | :----- | :---------------------------------- | :---------------------------------- | :---------------------------------- | :---------------------------------- | | Total Shareholders' Equity | $243,201 | $217,462 | $252,562 | $254,767 | | Accumulated Deficit | $(103,243) | $(145,225) | $(108,585) | $(90,296) | | Share based compensation (6 months) | N/A | $4,212 | N/A | $6,732 | - Total shareholders' equity decreased by **$25.739 million** from January 1, 2023, to June 30, 2023, primarily due to the net loss incurred during the period[3](index=3&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by the company's operating, investing, and financing activities | Metric | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | | Net cash used in operating activities | $(20,131) | $(14,972) | | Net cash used in investing activities | $(5,530) | $(3,146) | | Net cash provided by/(used in) financing activities | $1,717 | $(159) | | Net decrease in cash and cash equivalents | $(21,355) | $(21,727) | | Cash and cash equivalents, end of period | $173,030 | $192,327 | - Net cash used in operating activities increased by **$5.159 million** for the six months ended June 30, 2023, primarily due to the net loss[89](index=89&type=chunk)[206](index=206&type=chunk) - Financing activities provided **$1.717 million** in cash for the six months ended June 30, 2023, mainly from the issuance of ordinary shares[109](index=109&type=chunk)[206](index=206&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=3&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements - The company is a clinical-stage biopharmaceutical company focused on **T cell immunotherapeutics**[192](index=192&type=chunk) - The financial statements are prepared in conformity with **GAAP and SEC rules** for interim statements, assuming the company will continue as a going concern[193](index=193&type=chunk)[9](index=9&type=chunk) - The company expects to incur **losses for the foreseeable future** and will need additional funding, with current cash sufficient for at least the next twelve months[209](index=209&type=chunk)[210](index=210&type=chunk) [1. Nature of Business and Basis of Presentation](index=8&type=section&id=1.%20Nature%20of%20Business%20and%20Basis%20of%20Presentation) This note describes the company's core business, its biopharmaceutical focus, and the accounting principles used for financial reporting - Vaccitech plc is a clinical-stage biopharmaceutical company developing novel **T cell immunotherapeutics**[192](index=192&type=chunk) - Financial statements are prepared in conformity with **GAAP and SEC rules** for interim financial statements, assuming the company will continue as a going concern[193](index=193&type=chunk)[9](index=9&type=chunk) - The company expects to incur **losses for the foreseeable future** and will need additional funding, with current cash sufficient for at least the next twelve months[209](index=209&type=chunk)[210](index=210&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting policies and estimates management uses in preparing the financial statements - Preparation of financial statements requires management to make **estimates and assumptions** affecting reported amounts[10](index=10&type=chunk) - The company qualifies as an '**emerging growth company**' and has elected to use the extended transition period for new or revised accounting standards[11](index=11&type=chunk) - Recently issued accounting standards are not expected to have a **material impact** on the condensed consolidated financial statements[243](index=243&type=chunk) [3. Foreign currency translation in General and Administrative Expenses](index=11&type=section&id=3.%20Foreign%20currency%20translation%20in%20General%20and%20Administrative%20Expenses) This note details the impact of foreign currency fluctuations on the company's general and administrative expenses | Period | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Foreign Exchange Gain/(Loss) | $(4.2) million (loss) | $15.2 million (gain) | $(7.7) million (loss) | $20.5 million (gain) | - The company recognized a net foreign exchange **loss of $4.2 million** and **$7.7 million** for the three and six months ended June 30, 2023, respectively, a significant shift from gains in the prior year[12](index=12&type=chunk) [4. Net (Loss)/Income Per Share](index=11&type=section&id=4.%20Net%20(Loss)%2FIncome%20Per%20Share) This note presents the basic and diluted net loss or income per share calculations for the reporting periods | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net (loss)/income per share, basic | $(0.62) | $0.42 | $(1.10) | $0.49 | | Net (loss)/income per share, diluted | $(0.62) | $0.41 | $(1.10) | $0.48 | - Potential ordinary shares from stock options were excluded from diluted EPS computation in 2023 due to their **anti-dilutive effect**, indicating a net loss[245](index=245&type=chunk) [5. Property and equipment, net](index=11&type=section&id=5.%20Property%20and%20equipment%2C%20net) This note provides information on the company's property and equipment, including additions and depreciation expenses - Additions to property and equipment for the six months ended June 30, 2023, were **$6.4 million**, primarily for leasehold improvements in the U.S. office[246](index=246&type=chunk) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Depreciation expense | $0.5 million | $0.2 million | $0.9 million | $0.4 million | [6. Intangible assets, net](index=12&type=section&id=6.%20Intangible%20assets%2C%20net) This note details the company's intangible assets, including gross amounts, accumulated amortization, and net values | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :----- | :--------------------------- | :------------------------------- | | Gross amortizable intangible assets | $31,600 | $31,600 | | Accumulated amortization | $4,900 | $3,300 | | Net intangible assets | $26,700 | $28,300 | - Amortization expense for the three and six months ended June 30, 2023, was **$0.8 million** and **$1.6 million**, respectively, consistent with the prior year[247](index=247&type=chunk) [7. Prepaid expenses and other current assets](index=12&type=section&id=7.%20Prepaid%20expenses%20and%20other%20current%20assets) This note breaks down the components of prepaid expenses and other current assets | Component | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------- | :--------------------------- | :------------------------------- | | Prepayments and accrued income | $6,762 | $5,887 | | Employee retention and payroll tax credit | $53 | $48 | | Lease incentive receivable | — | $1,770 | | Others | $1,446 | $563 | | **Total** | **$8,261** | **$8,268** | - Prepaid expenses and other current assets remained **relatively stable** between December 31, 2022, and June 30, 2023[17](index=17&type=chunk) [8. Accrued expenses and other current liabilities](index=12&type=section&id=8.%20Accrued%20expenses%20and%20other%20current%20liabilities) This note provides a detailed breakdown of the company's accrued expenses and other current liabilities | Component | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------- | :--------------------------- | :------------------------------- | | Accrued manufacturing and clinical expenses | $3,708 | $2,997 | | Accrued board of director compensation | $29 | $9 | | Accrued bonus | $1,178 | $1,925 | | Accrued payroll and employee benefits | $374 | $928 | | Accrued professional fees | $2,620 | $1,270 | | Accrued other | $638 | $932 | | **Total** | **$8,547** | **$8,061** | - Accrued expenses and other current liabilities increased by **$0.486 million** from December 31, 2022, to June 30, 2023, driven by higher accrued manufacturing and clinical expenses and professional fees[219](index=219&type=chunk) [9. Ordinary Shares](index=12&type=section&id=9.%20Ordinary%20Shares) This note describes the rights and characteristics of the company's ordinary shares and recent share-related approvals - Each holder of ordinary shares has **voting rights** (one vote per share on a poll) and proportional distribution rights on liquidation[249](index=249&type=chunk)[219](index=219&type=chunk) - Shareholders approved the **disapplication of preemptive rights** for a five-year period from April 21, 2021, for new share issuances[250](index=250&type=chunk) [10. Deferred Shares](index=13&type=section&id=10.%20Deferred%20Shares) This note explains the nature of deferred shares, their rights, and recent cancellation events - Deferred shares do not have rights to **dividends or participation in company profits**[21](index=21&type=chunk) - In March 2023, the company **cancelled all deferred B and C shares** for nil consideration, following shareholder approval[251](index=251&type=chunk) - Deferred A shares remain in issue to satisfy **minimum share capital requirements** for a public limited company[223](index=223&type=chunk) [11. Fair value](index=13&type=section&id=11.%20Fair%20value) This note discusses the fair value measurements of financial instruments and liabilities, including contingent consideration - Carrying amounts of cash, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their **short-term nature**[252](index=252&type=chunk) - The contingent consideration liability of **$2.1 million** as of June 30, 2023, is a **Level 3 valuation**, requiring significant judgment for inputs like probability and timing of milestone achievement[224](index=224&type=chunk) | Metric | 3 Months Ended June 30, 2023 (in thousands) | 3 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Contingent Consideration (Ending Balance) | $2,117 | $2,727 | $2,117 | $2,727 | | Change in fair value recognized in net income/(loss) | $354 | $626 | $316 | $626 | [12. Goodwill](index=14&type=section&id=12.%20Goodwill) This note details the company's goodwill, its origin from acquisition, and impairment assessment - Goodwill of **$12.2 million** as of June 30, 2023, relates entirely to the acquisition of Avidea on December 10, 2021[56](index=56&type=chunk) - An interim qualitative impairment assessment was performed as of June 30, 2023, due to a sustained decline in the company's ADS price, but **no impairment losses were recognized**[56](index=56&type=chunk)[225](index=225&type=chunk) [13. Share-Based Compensation](index=14&type=section&id=13.%20Share-Based%20Compensation) This note outlines the accounting for share-based awards, including valuation methods and unrecognized compensation costs - Share-based awards are measured at fair value using the **Black-Scholes option-pricing model**[53](index=53&type=chunk)[279](index=279&type=chunk) - As of June 30, 2023, **$6.5 million** in unrecognized compensation cost related to stock options is expected to be recognized over a weighted average period of **2.0 years**[227](index=227&type=chunk) | Metric | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----- | :--------------------------- | :--------------------------- | | Options granted | 2,142,905 | 1,807,703 | | Weighted average grant date fair value | $2.00 | $3.72 | | Weighted average exercise price | $2.51 | $10.59 | [14. Commitments and Contingencies](index=15&type=section&id=14.%20Commitments%20and%20Contingencies) This note describes the company's lease obligations, contingent payment obligations, and other contractual commitments - The company leases laboratory and office space in Harwell, UK (expires Sept 2031) and Germantown, Maryland (expires Feb 2034)[281](index=281&type=chunk)[282](index=282&type=chunk) | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :----- | :--------------------------- | :------------------------------- | | Right-of-use asset | $7,707 | $7,753 | | Operating lease liability, current | $1,135 | $433 | | Operating lease liability, non-current | $11,044 | $8,340 | - Contingent payment obligations under licensing agreements are dependent on the ability to develop drug candidates and achieve milestones, with royalties ranging from **1-7%**[257](index=257&type=chunk) [15. Related Party Transactions](index=17&type=section&id=15.%20Related%20Party%20Transactions) This note details transactions with related parties, including license revenue and expenses with Oxford University Innovation | Related Party | Transaction Type | 3 Months Ended June 30, 2023 (in thousands) | 3 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | | :------------ | :--------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Oxford University Innovation Limited | License Revenue | $300 | $17,100 | $800 | $32,100 | | Oxford University Innovation Limited | Patent Portfolio Expenses | $300 | $70 | $400 | $300 | | Oxford Science Enterprises plc | Expenses | $0 | $100 | $0 | $50 | | University of Oxford | Clinical Study Costs | $0 | $200 | $0 | $200 | - License revenue from Oxford University Innovation Limited decreased significantly in 2023 compared to 2022[262](index=262&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Vaccitech's financial condition, operating results, and liquidity, covering business, clinical progress, and policies [Overview](index=18&type=section&id=Overview) This section provides a high-level summary of Vaccitech's business, pipeline, and key financial performance highlights - Vaccitech is a clinical-stage biopharmaceutical company focused on **T cell immunotherapeutics** for chronic infectious diseases, cancer, and autoimmunity[28](index=28&type=chunk) - The company's pipeline includes **VTP-300 (HBV), VTP-200 (HPV), VTP-850 (prostate cancer)**, and other candidates[264](index=264&type=chunk) - Revenue from Vaxzevria (COVID-19 vaccine) decreased significantly to **$0.3 million (Q2 2023)** and **$0.8 million (H1 2023)** from **$17.1 million** and **$32.1 million** in the prior year periods, respectively[289](index=289&type=chunk) - The company incurred a **net loss of $42.0 million** for the six months ended June 30, 2023, and expects continued operating losses for the foreseeable future[290](index=290&type=chunk) [Recent Developments](index=21&type=section&id=Recent%20Developments) This section highlights the latest progress in the company's clinical development programs for its key product candidates - The company presented positive topline data from the **VTP-200 HPV001 Phase 1b/2 clinical trial** in April 2023, showing it was well-tolerated and induced strong T cell responses[269](index=269&type=chunk) - The first patient was dosed in the **PCA001 Phase 1/2 clinical trial for VTP-850** (prostate cancer) in June 2023[324](index=324&type=chunk) - Positive final data from the **HBV002 clinical trial for VTP-300** (chronic HBV) was presented in June 2023, showing meaningful and durable reductions in HBsAg[325](index=325&type=chunk) [VTP-200: Developing a Non-Invasive Treatment for Persistent High-Risk HPV](index=21&type=section&id=VTP-200%3A%20Developing%20a%20Non-Invasive%20Treatment%20for%20Persistent%20High-Risk%20HPV) This section details the clinical trial progress and results for VTP-200, targeting persistent high-risk HPV - VTP-200 HPV001 Phase 1b/2 clinical trial showed VTP-200 was generally **well-tolerated** with no product-related Grade 3 unsolicited adverse events or SAEs[269](index=269&type=chunk) - **26 of 29 women** receiving VTP-200 showed antigen-specific T cell responses, with average responses greater than **1,000 spot-forming units per million**[269](index=269&type=chunk) - Final data on clearance of infection and cervical lesions at 12 months post-treatment is expected in the **second quarter of 2024**[269](index=269&type=chunk) [VTP-850: An Immunotherapeutic Targeting Prostate Cancer](index=22&type=section&id=VTP-850%3A%20An%20Immunotherapeutic%20Targeting%20Prostate%20Cancer) This section describes the development and clinical trial initiation for VTP-850, an immunotherapeutic for prostate cancer - VTP-850 is a next-generation prostate cancer immunotherapeutic candidate using a **sequential dosing approach** with ChAdOx and MVA viral vectors[296](index=296&type=chunk) - The PCA001 Phase 1/2 clinical trial for VTP-850 dosed its **first patient in June 2023**, enrolling participants in the US with plans for sites in Italy and Spain[324](index=324&type=chunk)[296](index=296&type=chunk) - VTP-850 targets four prostate-associated antigens: **PSA, PAP, STEAP1, and 5T4**[296](index=296&type=chunk) [VTP-300: An Immunotherapeutic Targeting Chronic HBV Infection](index=22&type=section&id=VTP-300%3A%20An%20Immunotherapeutic%20Targeting%20Chronic%20HBV%20Infection) This section provides updates on the clinical trial results and ongoing development for VTP-300, targeting chronic HBV infection - HBV002 clinical trial showed meaningful, durable reductions of **HBsAg** in participants receiving VTP-300 monotherapy or in combination with low-dose nivolumab[325](index=325&type=chunk)[272](index=272&type=chunk)[299](index=299&type=chunk) - **Two of five patients** with baseline HBsAg below 100 IU/mL in the combination group (Group 3) developed non-detectable HBsAg levels, which persisted for eight months[325](index=325&type=chunk) - A Phase 2b clinical trial (HBV003) is ongoing in the Asia-Pacific region, with **over 60% enrollment**, and interim data expected in **Q4 2023**[329](index=329&type=chunk) [Impact of Global Economic Conditions and Geopolitical Matters](index=24&type=section&id=Impact%20of%20Global%20Economic%20Conditions%20and%20Geopolitical%20Matters) This section discusses how global economic instability, inflation, and geopolitical events may affect the company's financial outlook - Instability in global economic conditions, inflationary pressures, and rising interest rates could adversely affect the company's **future financing capability** or ability to access capital markets[42](index=42&type=chunk) - The company may incur future increases in operating costs due to **additional inflationary increases**[42](index=42&type=chunk) - The impact of the Ukraine crisis on the company has been assessed as **minimal**, with no operations or suppliers in Ukraine, Belarus, or Russia[331](index=331&type=chunk) [Components of Our Operating Results](index=24&type=section&id=Components%20of%20Our%20Operating%20Results) This section breaks down the key components contributing to the company's financial performance, including revenue and expenses - Operating expenses since inception have consisted of **research and development costs** and **general and administrative costs**[67](index=67&type=chunk) - Revenue to date has been primarily derived from the **OUI License Agreement Amendment** relating to Vaxzevria[332](index=332&type=chunk) - The company benefits from the **UK research and development tax credit regime** (SME Program and RDEC Program)[335](index=335&type=chunk) [Revenue](index=24&type=section&id=Revenue) This section analyzes the sources and trends of the company's revenue, primarily from license agreements - Revenue for the three and six months ended June 30, 2023, was **$0.3 million** and **$0.8 million**, respectively, a substantial decrease from **$17.1 million** and **$32.1 million** in the prior year periods[43](index=43&type=chunk) - The company has no further performance obligations under the OUI License Agreement Amendment and recognizes revenue when earned[44](index=44&type=chunk) - The company does not expect to generate revenue from any of its own product candidates (excluding Vaxzevria) until **regulatory authorization and commercialization or out-licensing**[39](index=39&type=chunk) [Operating Expenses](index=26&type=section&id=Operating%20Expenses) This section details the company's operating expenses, including research and development and general and administrative costs - Operating expenses consist primarily of **research and development costs** and **general and administrative costs**[67](index=67&type=chunk) - The company expects general and administrative expenses to increase due to **expansion in the UK and US**, increased headcount, and public company compliance costs[334](index=334&type=chunk) [Research and Development Expenses](index=26&type=section&id=Research%20and%20Development%20Expenses) This section outlines the costs associated with the company's research and development activities and future expectations - Research and development activities account for a **large portion of operating expenses** and are expected to increase in the future[45](index=45&type=chunk) - Costs include expenses for preclinical studies, clinical trials, third-party contractors, manufacturing, and licensing technology[45](index=45&type=chunk)[311](index=311&type=chunk) - The company benefits from the UK SME program for R&D tax credits, though the **cash rebate rates have decreased** from April 2023[48](index=48&type=chunk)[70](index=70&type=chunk) [General and Administrative Expenses](index=27&type=section&id=General%20and%20Administrative%20Expenses) This section describes the components of general and administrative expenses and anticipated future increases - General and administrative expenses primarily include **personnel costs**, consulting fees, professional services, rent, depreciation, and foreign exchange gains/losses[334](index=334&type=chunk) - General and administrative expenses are expected to increase due to **operational expansion**, increased headcount, and public company compliance costs[334](index=334&type=chunk) - For the three months ended June 30, 2023, general and administrative expenses were **$13.1 million**, including a foreign exchange loss of **$4.2 million**[347](index=347&type=chunk) [Other Income (Expense)](index=27&type=section&id=Other%20Income%20(Expense)) This section covers other non-operating income and expenses, such as interest income and R&D incentives - Other income (expense) includes **interest income, interest expense, research and development incentives**, and other income[231](index=231&type=chunk) [Interest Income](index=27&type=section&id=Interest%20Income) This section details the interest earned on the company's cash deposits | Metric | 3 Months Ended June 30, 2023 (in thousands) | 3 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Interest Income | $522 | $669 | $2,110 | $752 | - Interest income primarily results from interest earned on **short-term cash deposits** held by Vaccitech (UK) Limited[47](index=47&type=chunk) [Research and Development Incentives](index=27&type=section&id=Research%20and%20Development%20Incentives) This section explains the R&D tax credits received from the UK government and recent changes to the program - R&D incentives are payments from the UK government for **corporation tax relief** on R&D projects, accounted for as other income[69](index=69&type=chunk) | Metric | 3 Months Ended June 30, 2023 (in thousands) | 3 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | R&D Incentives | $559 | $826 | $1,716 | $1,874 | - Changes in the SME program from April 2023 have reduced the additional deduction, credit rate, and **cash rebate** for the company[70](index=70&type=chunk) [Tax benefit](index=33&type=section&id=Tax%20benefit) This section discusses the tax benefits recognized by the company, primarily related to deferred tax movements | Metric | 3 Months Ended June 30, 2023 (in thousands) | 3 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Tax benefit | $1,136 | $915 | $1,652 | $1,778 | - The tax benefit primarily relates to **movements in deferred tax**[81](index=81&type=chunk)[103](index=103&type=chunk) [Critical Accounting Policies and Use of Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) This section describes the significant accounting policies and the critical estimates and judgments made by management - Management makes significant judgments and estimates in areas such as revenue, expenses, accruals, fair value of contingent consideration, impairment of goodwill and intangible assets, and share-based compensation[309](index=309&type=chunk) - Actual results could differ from these estimates, and any such differences may be **material**[241](index=241&type=chunk) [Recognition of Revenue from Contracts with Customers](index=28&type=section&id=Recognition%20of%20Revenue%20from%20Contracts%20with%20Customers) This section explains the company's policy for recognizing revenue from collaboration and licensing agreements - Revenue from collaboration and licensing arrangements is evaluated under **ASC 606**[338](index=338&type=chunk) - Judgment is used to determine whether milestones or other variable consideration should be included in the transaction price[338](index=338&type=chunk) - Sales-based royalties are recognized when related sales or milestone achievement occurs[338](index=338&type=chunk) [Research and Development Costs](index=28&type=section&id=Research%20and%20Development%20Costs) This section details the company's policy for expensing research and development costs as incurred - Research and development costs are **expensed as incurred**[311](index=311&type=chunk) - Costs include personnel, facilities, laboratory supplies, depreciation, manufacturing, and external vendor costs for preclinical and clinical development[311](index=311&type=chunk) - Patent-related costs and upfront payments for licensing technology are generally expensed as R&D in the period incurred[73](index=73&type=chunk) [Share-based Compensation](index=28&type=section&id=Share-based%20Compensation) This section outlines the accounting treatment for share-based awards, including valuation and expense recognition - Share-based awards are measured at grant date fair value using the **Black-Scholes option-pricing model**[312](index=312&type=chunk) - Compensation expense is generally recognized over the vesting period using the '**multiple option**' method[340](index=340&type=chunk) | Metric | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----- | :--------------------------- | :--------------------------- | | Expected volatility | 97.2% | 92.7% | | Expected term (years) | 6.0 | 6.0 | | Risk-free interest rate | 3.6% | 2.0% | | Expected dividend yield | 0.0% | 0.0% | [Business Combinations](index=30&type=section&id=Business%20Combinations) This section describes the accounting for business combinations, including asset and liability recognition and goodwill allocation - Tangible and identifiable intangible assets acquired and liabilities assumed are recognized at their **estimated fair values** as of the acquisition date[76](index=76&type=chunk) - Any excess purchase price over net tangible and identifiable intangible assets is allocated to **goodwill**[76](index=76&type=chunk) - The acquisition of Avidea on December 10, 2021, was accounted for as a **business combination**[313](index=313&type=chunk) [Goodwill and Purchased Intangible Asset](index=31&type=section&id=Goodwill%20and%20Purchased%20Intangible%20Asset) This section explains the company's policy for testing goodwill and intangible assets for impairment - Goodwill is tested for impairment at least **annually** or more frequently if events or changes in circumstances indicate potential impairment[56](index=56&type=chunk) - The company performs a **qualitative assessment** to determine if the fair value of the reporting unit is less than its carrying amount[56](index=56&type=chunk) - Despite a sustained decline in ADS price, **no impairment losses** related to goodwill or intangible assets were recognized for the three or six months ended June 30, 2023[56](index=56&type=chunk) [Results of Operations Comparison](index=31&type=section&id=Results%20of%20Operations%20Comparison) This section provides a comparative analysis of the company's financial performance for the reported periods - The company experienced a significant shift from **net income in H1 2022 to a substantial net loss in H1 2023**, primarily driven by reduced license revenue and increased operating expenses[231](index=231&type=chunk) [Comparison of the Three Months Ended June 30, 2023 and 2022](index=31&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202023%20and%202022) This section compares the company's financial results for the three-month periods, highlighting key changes in revenue and expenses | Metric | 3 Months Ended June 30, 2023 (in thousands) | 3 Months Ended June 30, 2022 (in thousands) | Change (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Revenue from Licenses, Grants & Services | $334 | $17,063 | $(16,729) | | Research & development expenses | $13,543 | $9,720 | $3,823 | | General and administrative expenses | $13,128 | $(5,892) | $19,020 | | Net (loss)/income | $(23,824) | $15,689 | $(39,513) | - Direct R&D expenses increased by **$2.4 million**, primarily due to new VTP-1000/VTP-1100 programs and VTP-200, offset by decreases in VTP-300 and VTP-850[96](index=96&type=chunk) - General and administrative expenses increased significantly, mainly due to a **foreign exchange loss of $4.2 million** in 2023 compared to a gain in 2022, and higher personnel costs[347](index=347&type=chunk)[60](index=60&type=chunk) [Comparison of the Six Months Ended June 30, 2023 and 2022](index=33&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) This section compares the company's financial results for the six-month periods, focusing on significant shifts in performance | Metric | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | Change (in thousands) | | :----- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Revenue from Licenses, Grants & Services | $802 | $32,081 | $(31,279) | | Research & development expenses | $23,357 | $20,421 | $2,936 | | General and administrative expenses | $25,266 | $(2,156) | $27,422 | | Net (loss)/income | $(42,047) | $18,263 | $(60,310) | - Direct R&D expenses increased by **$0.6 million**, driven by VTP-1000/VTP-1100 and VTP-200 programs, offset by decreases in VTP-300 and VTP-850[64](index=64&type=chunk) - General and administrative expenses increased substantially due to a **foreign exchange loss of $7.7 million** in 2023 compared to a gain of **$20.4 million** in 2022, and higher personnel expenses[84](index=84&type=chunk)[352](index=352&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to generate and manage cash, including funding sources and future requirements - As of June 30, 2023, cash and cash equivalents were **$173.0 million**[104](index=104&type=chunk) - Existing cash and cash equivalents are expected to fund operating expenses and capital expenditure requirements into the **second quarter of 2025**[94](index=94&type=chunk) - The company expects to incur **net negative cash flows from operations** for at least the next few years and will require substantial additional financing[106](index=106&type=chunk)[112](index=112&type=chunk) [Sources of Liquidity](index=35&type=section&id=Sources%20of%20Liquidity) This section identifies the various funding sources the company has utilized since its inception - Since inception, funding has come from private/public equity placements, grants, research incentives, convertible loan notes, and payments from the OUI License Agreement Amendment[104](index=104&type=chunk) | Funding Source | Gross Proceeds (in millions) | Period | | :------------- | :--------------------------- | :----- | | Seed round ordinary shares | $14.0 | March 2016 | | Series A shares | $33.9 | Nov 2017 - Dec 2018 | | Convertible loan notes | $41.2 | July 2020 - Nov 2020 | | Series B shares | $125.2 | March 2021 | | IPO (ADSs) | $110.5 | May 2021 | | OUI for Vaxzevria sales | $44.2 | April 2022 - June 2023 | | "At-the-market" offerings (ADSs) | $2.7 (net) | Dec 2022 - June 2023 | [Cash Flows](index=37&type=section&id=Cash%20Flows) This section analyzes the company's cash flows from operating, investing, and financing activities - Net cash used in operating activities was **$20.1 million** for H1 2023, primarily due to a net loss of **$42.0 million**[89](index=89&type=chunk) - Net cash used in investing activities was **$5.5 million** for H1 2023, mainly for leasehold improvements in the Germantown, Maryland office[108](index=108&type=chunk) - Net cash provided by financing activities was **$1.7 million** for H1 2023, mainly from 'at-the-market' share issuances[109](index=109&type=chunk) - Foreign exchange rates had a **positive effect** on cash and cash equivalents in H1 2023 (**$2.6 million gain**) compared to a loss in H1 2022 (**$3.5 million loss**)[110](index=110&type=chunk) [Future Funding Requirements](index=38&type=section&id=Future%20Funding%20Requirements) This section discusses the company's anticipated capital needs for product development and operational expansion - Substantial resources will be expended for preclinical studies, clinical trials, regulatory approvals, and potential in-house manufacturing and supply[92](index=92&type=chunk) - Future capital requirements depend on factors like the number of product candidates, success of collaborations, commercialization costs, and intellectual property maintenance[94](index=94&type=chunk)[113](index=113&type=chunk)[116](index=116&type=chunk) - Failure to obtain necessary capital could force **delays, reductions, or termination** of product development programs[112](index=112&type=chunk) [Lease, Purchase, and Other Obligations](index=40&type=section&id=Lease%2C%20Purchase%2C%20and%20Other%20Obligations) This section outlines the company's contractual obligations, including operating leases and contingent payments - Operating lease obligations are detailed in Note 14 'Commitment and Contingencies' of the financial statements[135](index=135&type=chunk) - Contingent payment obligations may arise upon achievement of clinical, regulatory, and commercial milestones or royalty payments under licenses, but the amount, timing, and likelihood are not known as of June 30, 2023[136](index=136&type=chunk) - Contracts with CROs and other third parties for clinical trials are generally **cancellable upon prior notice**[117](index=117&type=chunk) [Emerging Growth Company Status](index=40&type=section&id=Emerging%20Growth%20Company%20Status) This section explains the company's status as an 'emerging growth company' and its implications for accounting standards - The company is an '**emerging growth company**' under the JOBS Act[137](index=137&type=chunk) - This status allows the company to **delay the adoption of certain accounting standards** until they apply to private companies[137](index=137&type=chunk) - The company will remain an EGC until the earliest of specific criteria, including revenue thresholds, filer status, or debt issuance[118](index=118&type=chunk) [Recent Accounting Pronouncements](index=40&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses the impact of recently issued accounting standards on the company's financial statements - Recently issued accounting pronouncements that may potentially impact the company's financial position and results of operations are disclosed in Note 2 to the condensed consolidated financial statements[119](index=119&type=chunk) - The company has reviewed all recently issued standards and determined they will not have a **material impact** on its condensed consolidated financial statements or current operations[243](index=243&type=chunk) [Foreign Currency and Currency Translation](index=40&type=section&id=Foreign%20Currency%20and%20Currency%20Translation) This section addresses the company's exposure to foreign currency exchange rate fluctuations and their potential impact - The company is subject to the risk of fluctuations in foreign currency exchange rates, specifically with respect to the **euro, pound sterling, Swiss franc, and Australian dollar**[138](index=138&type=chunk) - Reporting currency is USD; functional currency for UK subsidiaries is pound sterling, US subsidiary is USD, Australian subsidiary is AUD, Italian subsidiary is EUR, and Swiss subsidiary is CHF[138](index=138&type=chunk) - A hypothetical **10% weakening of the USD** relative to the pound sterling would have increased UK expenses by approximately **$2.7 million** for the three months ended June 30, 2023[139](index=139&type=chunk) [Interest Rate Sensitivity](index=41&type=section&id=Interest%20Rate%20Sensitivity) This section assesses the company's exposure to market risk from changes in interest rates - The company is not currently exposed significantly to market risk related to changes in interest rates, as it has **no significant interest-bearing liabilities**[140](index=140&type=chunk) - A hypothetical **10% relative change in interest rates** would not have a material impact on the condensed consolidated financial statements[140](index=140&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section reiterates the company's exposure to foreign currency exchange rate fluctuations and its limited exposure to interest rate risk - The company is subject to the risk of fluctuations in foreign currency exchange rates, specifically with respect to the **euro, pound sterling, Swiss franc, and Australian dollar**[138](index=138&type=chunk) - The company is not currently exposed significantly to market risk related to changes in interest rates, as it has **no significant interest-bearing liabilities**[140](index=140&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of June 30, 2023, due to material weaknesses, with remediation efforts ongoing [Evaluation of Disclosure Controls and Procedures](index=41&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section details the assessment of the company's disclosure controls and procedures and their effectiveness - Disclosure controls and procedures were **not effective** as of June 30, 2023[122](index=122&type=chunk) - The ineffectiveness is due to **material weaknesses** in IT general control environment and accounting/reporting policies and procedures[142](index=142&type=chunk) [Remediation Efforts](index=41&type=section&id=Remediation%20Efforts) This section outlines the actions being taken to address identified material weaknesses in internal controls - Remediation efforts include implementing a **new ERP system** (UK in Q1 2023, US in July 2023) to align systems across the group[123](index=123&type=chunk) - Implementation of **IT general controls** for program change management, user access, and computer operations is underway for the new ERP and other significant IT systems[144](index=144&type=chunk) - Plans include hiring appropriate personnel, enhancing policies and procedures for review/supervision of accounting functions, and refining control design and testing protocols[126](index=126&type=chunk)[145](index=145&type=chunk)[155](index=155&type=chunk) [Changes in Internal Control over Financial Reporting](index=43&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the period - No material changes in internal control over financial reporting occurred during Q2 2023, other than those related to **ongoing remediation activities** for identified material weaknesses[146](index=146&type=chunk) [PART II - OTHER INFORMATION](index=44&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal, risk, and equity matters [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently party to any legal proceedings expected to have a material adverse effect on its business - As of June 30, 2023, the company does not believe it is party to any claim or litigation that would have a **material adverse effect** on its business[260](index=260&type=chunk)[157](index=157&type=chunk) - Litigation can have an adverse impact due to **defense and settlement costs** and diversion of management resources[260](index=260&type=chunk)[157](index=157&type=chunk) [Item 1A Risk Factors](index=44&type=section&id=Item%201A%20Risk%20Factors) No material changes to risk factors from the prior Annual Report on Form 10-K, with forward-looking statements subject to uncertainties - No **material changes** from the risk factors previously disclosed in the Annual Report on Form 10-K filed on March 24, 2023[129](index=129&type=chunk) - The report contains **forward-looking statements** that involve substantial risks and uncertainties, which could cause actual results to differ materially[148](index=148&type=chunk) - Key risk factors include success of product development, regulatory approvals, market acceptance, manufacturing capabilities, intellectual property, funding, and global economic conditions[130](index=130&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales occurred in Q2 2023, and no material change in IPO proceeds use is reported - No **unregistered sales of equity securities** or options granted during the three months ended June 30, 2023[152](index=152&type=chunk)[153](index=153&type=chunk) - No **material change** in the planned use of net proceeds from the IPO (**$102.8 million net proceeds**)[163](index=163&type=chunk)[162](index=162&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - Not Applicable[165](index=165&type=chunk)[173](index=173&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - Not Applicable[166](index=166&type=chunk)[174](index=174&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - None[167](index=167&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report, including corporate documents and officer certifications | Number | Description | | :----- | :---------- | | 3.1 | Articles of Association of the Registrant | | 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) | | 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) | | 32.1** | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 | | 101.INS* | Inline XBRL Instance Document | | 104* | Cover Page Interactive Data File | [SIGNATURES](index=48&type=section&id=SIGNATURES) This section contains the official signatures of the company's Chief Executive Officer and Chief Financial Officer, certifying the report - The report was signed by **William Enright** (Chief Executive Officer) and **Gemma Brown** (Chief Financial Officer) on August 10, 2023[172](index=172&type=chunk)

We determined that we have no further performance obligations under the terms of the OUI License Agreement Amendment, which comprised the transfer of intellectual property rights only. Accordingly, we plan to recognize these and any future amounts as revenue when earned, and it is probable that a significant reversal of revenue will not occur. Operating Expenses Our operating expenses since inception have consisted of research and development costs and general and administrative costs. Research and Developm ...

Table of Contents | --- | --- | --- | |-------|-------|------------------------------------------------------------------------------------| | | | UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON , DC 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 fro ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 Number: 001-40367 | --- | --- | --- | |-------|----------------|-------| | | | | | | | | | | | | | | | | | | | | | | Not | | ...

| --- | --- | --- | --- | --- | --- | |-------------------------------------------------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Inducing T Cells to Treat and Prevent Disease | | | | | | | Corporate Presentation May 2022 | | | | | | This presentation includes express and implied "forward-looking statements," including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements inc ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 For the transition period from to Commission File Number: 001-40367 VACCITECH PLC (Exact Name of Registrant as Specified in its Charter) England and Wales Not Applicable (St ...

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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 (Mark One) FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 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 Number: 001-40367 VACCITECH PLC (Exact Name of Registrant as Specified in its Charter) England an ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 (Mark One) 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, 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 Number: 001-40367 VACCITECH PLC (Exact Name of Registrant as Specified in its Charter) England and Wal ...