Adaptimmune(ADAP) - 2020 Q3 - Quarterly Report

PART I Financial Statements Unaudited condensed consolidated financial statements for Q3 2020 reveal significant asset growth and a narrowed net loss Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $78,466 | $50,412 | | Marketable securities | $321,442 | $39,130 | | Total Assets | $479,022 | $181,543 | | Liabilities & Equity | | | | Total liabilities | $102,816 | $57,905 | | Total stockholders' equity | $376,206 | $123,638 | | Total Liabilities & Equity | $479,022 | $181,543 | Condensed Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Revenue | $2,456 | $394 | | Research and development | $(65,791) | $(77,147) | | General and administrative | $(32,557) | $(32,662) | | Operating loss | $(95,892) | $(109,415) | | Net loss | $(93,479) | $(107,801) | | Net loss per share | $(0.11) | $(0.17) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(24,375) | $(99,979) | | Net cash (used in) provided by investing activities | $(286,532) | $71,262 | | Net cash provided by financing activities | $339,929 | $366 | | Net increase (decrease) in cash | $27,999 | $(28,749) | Notes to the Unaudited Condensed Consolidated Financial Statements Notes detail accounting policies, collaboration revenue recognition, and public offering impact on stockholders' equity - The company entered a collaboration agreement with Astellas on January 13, 2020, receiving a $50.0 million non-refundable upfront payment for co-development of T-cell therapies for up to three targets[41] - Deferred revenue increased from $2.1 million at the start of 2020 to $49.8 million at September 30, 2020, primarily due to the upfront payment from the Astellas collaboration[39] - The company raised net proceeds of $90.5 million from a public offering in January 2020 and $243.8 million from another public offering in June 2020[65][66] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results of operations, covering business overview, performance analysis, and liquidity Overview The company, a leader in engineered T-cell therapies for solid tumors, aims for a 2022 commercial launch of ADP-A2M4 and advances other clinical programs and collaborations - The company aims to commercially launch its lead product, ADP-A2M4, in 2022, subject to successful completion of the SPEARHEAD-1 study and FDA approval[71] - Enrollment is ongoing in the SURPASS Phase 1 trial for the next-generation SPEAR T-cell, ADP-A2M4CD8, which has shown partial responses in patients with EGJ and head and neck cancers[73] - The company is collaborating with Astellas to co-develop and co-commercialize up to three targets for "off-the-shelf" allogeneic cell therapies[77] Results of Operations This section analyzes financial results for the three and nine months ended September 30, 2020 and 2019, noting increased revenue and decreased R&D expenses Comparison of Results for the Nine Months Ended September 30 (in thousands) | Line Item | 2020 | 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $2,456 | $394 | $2,062 | 523% | | R&D Expenses | $(65,791) | $(77,147) | $11,356 | (15)% | | G&A Expenses | $(32,557) | $(32,662) | $105 | (0)% | | Operating Loss | $(95,892) | $(109,415) | $13,523 | (12)% | - The decrease in R&D expenses for the nine-month period was primarily driven by a $5.0 million decrease in accrued purchase commitments and a $3.7 million decrease in in-process R&D costs compared to the same period in 2019[121] Liquidity and Capital Resources The company's liquidity significantly strengthened to $399.9 million by September 30, 2020, primarily from public offerings and collaboration payments, sufficient for operations into 2022 Total Liquidity (Non-GAAP, in thousands) | Component | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $78,466 | $50,412 | | Marketable securities | $321,442 | $39,130 | | Total Liquidity | $399,908 | $89,542 | - Financing activities in the first nine months of 2020 provided $339.9 million in cash, primarily from net proceeds of $334.4 million from public offerings[136] - Net cash used in operating activities decreased significantly to $24.4 million for the nine months ended Sep 30, 2020, from $100.0 million in the prior year, largely due to the receipt of the $50.0 million upfront payment from Astellas[133] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Adaptimmune is not required to provide the information requested in this item - The company is exempt from this disclosure requirement due to its status as a smaller reporting company[143] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of September 30, 2020, with no material changes in internal control over financial reporting - The CEO and CFO concluded that as of September 30, 2020, the company's disclosure controls and procedures were effective[144] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[145] PART II — OTHER INFORMATION Legal Proceedings As of September 30, 2020, the company was not a party to any material legal proceedings Risk Factors This section outlines significant risks including the COVID-19 pandemic, financial condition, development of cell therapies, and reliance on third parties Risks Related to the COVID-19 pandemic The COVID-19 pandemic poses material risks, potentially delaying clinical trials, disrupting supply chains, and impacting workforce effectiveness - The pandemic has delayed the company's ability to obtain data from clinical trials and will extend the time required to complete enrollment[151] - Work-from-home policies and social distancing requirements limit workforce effectiveness and may cause delays in manufacturing, development, and research activities[150] Risks Related to Financial Condition and Capital Requirements The company has a history of net losses and requires substantial future financing, with failure to raise capital potentially impacting development and commercialization efforts - The company has incurred net losses every year since inception and expects to continue incurring them, with an accumulated deficit of $549.1 million as of September 30, 2020[158][159] - Although current liquidity is believed to be sufficient into 2022, the company will require additional capital for further development and commercialization of its cell therapies[162][168] Risks Related to the Development of Our Cell Therapies The company's business is highly dependent on novel, unproven SPEAR T-cell candidates, facing risks including cross-reactivity, complex manufacturing, and uncertain clinical trial outcomes with reported serious adverse events - The business is highly dependent on its wholly-owned SPEAR T-cell candidates (ADP-A2M4, ADP-A2M4CD8, ADP-A2AFP), which require significant additional clinical testing[172] - Manufacturing and administering cell therapies is complex, costly, and subject to potential failures in process, logistics, or starting materials, which can delay trials and affect patient outcomes[236][237][238] - Serious adverse events (SAEs) have been reported across trials, including CRS, neurotoxicity, and pancytopenia, with two treatment-related fatal SAEs in the ADP-A2M4 pilot trial[213][262] Risks Related to Reliance Upon Third Parties The company heavily relies on third parties for collaborations, technology, manufacturing, and supply, with their performance largely outside the company's control and critical to clinical and commercial plans - The company's collaboration with GSK is subject to GSK's decisions on progressing targets, and GSK can terminate the agreement or specific programs with 60 days' notice[362][363] - The collaboration with Universal Cells (Astellas) is critical for developing allogeneic 'off-the-shelf' therapies, but milestone payments and program progression are not guaranteed[368][370] - The company relies on a limited number of third-party manufacturers for clinical trial supplies, exposing it to risks of supply disruption, quality issues, and regulatory compliance failures at these external sites[382][383] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period Defaults Upon Senior Securities The company reported no defaults upon senior securities Other Information The company reported no other information Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and financial data in iXBRL format