Adaptimmune(US:ADAP)2023-11-07 16:00PART I — FINANCIAL INFORMATION Financial Statements The unaudited condensed consolidated financial statements reflect a net loss, decreased total assets, and the financial impact of the TCR2 Therapeutics acquisition Unaudited Condensed Consolidated Balance Sheets Total assets decreased to $296.6 million, while stockholders' equity increased to $88.1 million as of September 30, 2023 Condensed Consolidated Balance Sheet Data (in thousands) | Balance Sheet Items | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $90,059 | $108,033 | | Marketable securities | $71,669 | $96,572 | | Total current assets | $219,368 | $255,370 | | Total assets | $296,638 | $328,916 | | Liabilities & Equity | | | | Total current liabilities | $75,146 | $64,501 | | Total liabilities | $208,509 | $247,038 | | Total stockholders' equity | $88,129 | $81,878 | | Total liabilities and stockholders' equity | $296,638 | $328,916 | Unaudited Condensed Consolidated Statements of Operations The company reported a Q3 net loss of $45.6 million and a nine-month net loss of $66.0 million, influenced by a gain from the TCR2 acquisition Statement of Operations Highlights (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $7,319 | $7,007 | $60,050 | $16,120 | | Research and development | $(37,788) | $(33,182) | $(93,301) | $(104,674) | | General and administrative | $(16,164) | $(16,815) | $(56,634) | $(48,169) | | Operating loss | $(46,633) | $(42,990) | $(89,885) | $(136,723) | | Gain on bargain purchase | $(106) | — | $22,049 | — | | Net loss | $(45,601) | $(41,421) | $(65,954) | $(136,206) | | Net loss per share (basic and diluted) | $(0.03) | $(0.04) | $(0.06) | $(0.14) | Unaudited Condensed Consolidated Statements of Cash Flows Net cash used in operations was $126.2 million, with investing activities providing $108.3 million, primarily from the TCR2 acquisition Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(126,204) | $(143,811) | | Net cash provided by investing activities | $108,341 | $68,185 | | Net cash provided by financing activities | $806 | $11,464 | | Net decrease in cash, cash equivalents and restricted cash | $(16,530) | $(70,953) | | Cash, cash equivalents and restricted cash at end of period | $93,072 | $80,713 | - Investing activities included $45.3 million in cash from the acquisition of TCR2 Therapeutics Inc. and a net inflow from marketable securities activities26 Notes to the Unaudited Condensed Consolidated Financial Statements Notes detail the TCR2 acquisition, which resulted in a $22.0 million gain, and revenue recognition from key collaboration agreements - The company is a clinical-stage biopharmaceutical company with an accumulated deficit of $975.3 million as of September 30, 20232829 - Revenue is primarily from collaborations; the Astellas agreement termination led to recognizing $42.4 million in deferred revenue455254 - The company acquired TCR2 Therapeutics Inc. in an all-stock deal, resulting in a gain on bargain purchase of $22.0 million102103109 - A restructuring program incurred $4.0 million in costs, with an additional $6.7 million in severance post-TCR2 acquisition949599 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses T-cell therapy development, financial results impacted by the TCR2 acquisition, and a cash runway into early 2026 Overview The company is advancing its T-cell therapy pipeline, with a BLA submission for afami-cel planned for Q4 2023 and progress in multiple clinical trials - The BLA submission for lead product afami-cel is on track for Q4 2023, supported by data from the pivotal SPEARHEAD-1 trial showing a ~39% overall response rate in synovial sarcoma116117 - The IGNYTE Phase 2 trial for lete-cel met its primary endpoint for efficacy, with a 40% response rate in patients with synovial sarcoma or MRCLS119 - The SURPASS Phase 1 trial for ADP-A2M4CD8 reported a 50% response rate across several cancers, leading to the Phase 2 SURPASS-3 trial122123 - The company plans to file an IND for its PRAME cell therapy in 2024 and targets IND readiness for TC-520 by the end of 2024126 Results of Operations Nine-month revenue surged to $60.1 million due to an agreement termination, while R&D expenses fell and G&A expenses rose Comparison of Three Months Ended September 30 (in thousands) | Item | 2023 | 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $7,319 | $7,007 | $312 | 4% | | Research and development expenses | $(37,788) | $(33,182) | $(4,606) | 14% | | General and administrative expenses | $(16,164) | $(16,815) | $651 | (4)% | | Net loss | $(45,601) | $(41,421) | $(4,180) | 10% | Comparison of Nine Months Ended September 30 (in thousands) | Item | 2023 | 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $60,050 | $16,120 | $43,930 | 273% | | Research and development expenses | $(93,301) | $(104,674) | $11,373 | (11)% | | General and administrative expenses | $(56,634) | $(48,169) | $(8,465) | 18% | | Net loss | $(65,954) | $(136,206) | $70,252 | (52)% | - The significant increase in nine-month revenue was primarily due to the termination of the Astellas collaboration169 - The increase in nine-month G&A expenses was largely driven by $6.8 million in corporate costs related to the TCR2 merger and $1.7 million in restructuring charges177 Liquidity and Capital Resources With $161.7 million in total liquidity, the company projects its cash runway extends into early 2026, supported by reduced operating cash burn - The company projects its cash runway will extend into early 2026 based on current operational plans and liquidity182 Total Liquidity (Non-GAAP, in thousands) | Component | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $90,059 | $108,033 | | Marketable securities | $71,669 | $96,572 | | Total Liquidity | $161,728 | $204,605 | - Net cash used in operating activities decreased to $126.2 million for the nine months ended Sep 30, 2023, from $143.8 million in the prior year period185 Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risk exposure during the reporting period - There have been no material changes to the Company's market risk during the nine months ended September 30, 2023192 Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2023193 - No material changes to internal control over financial reporting were identified during the quarter ended September 30, 2023194 PART II — OTHER INFORMATION Legal Proceedings The company reports no involvement in any material legal proceedings as of the reporting date - As of September 30, 2023, the company was not involved in any material legal proceedings196 Risk Factors A new risk factor has emerged regarding a Nasdaq deficiency notice for the ADS price falling below the $1.00 minimum bid requirement - A new risk factor was added regarding the potential delisting of the company's ADSs from the Nasdaq Global Select Market198 - The company received a deficiency letter from Nasdaq on August 31, 2023, for failing to meet the $1.00 minimum bid price requirement199 - The company has a 180-day compliance period to regain compliance with the minimum bid price rule to avoid potential delisting199 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None200 Exhibits This section lists the exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications and iXBRL financial data - Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Act rules203 - The filing includes financial statements formatted in iXBRL (Inline eXtensible Business Reporting Language)201