PART I Item 3. Key Information This section details key investment risks, including financial losses, operational challenges, and dependence on KIMMTRAK's commercial success Risk Factors This section details financial, clinical, commercial, and operational risks, emphasizing historical losses and reliance on the ImmTAX platform - The company has incurred significant net losses each year since inception, with a loss of £131.5 million in 2021 and an accumulated deficit of £481.4 million as of December 31, 2021, with losses expected to continue for the foreseeable future34 - Future prospects are highly dependent on the successful commercialization of KIMMTRAK, approved by the FDA in January 2022 for metastatic uveal melanoma (mUM), with revenue generation subject to achieving significant market acceptance3241 - The business is heavily reliant on the success of its ImmTAX platform to develop new product candidates, where any significant delays or failures could harm the business3560 - The COVID-19 pandemic has adversely impacted and may continue to impact business operations, including the commercialization of KIMMTRAK, clinical trials, and the supply chain3266 - The company will require substantial additional funding, with existing cash and cash equivalents expected to fund operations until at least Q3 2023, and with expected KIMMTRAK revenue, into the second half of 20243247 Item 4. Information on the Company This section provides a comprehensive overview of Immunocore's history, structure, and business, highlighting its ImmTAX platform and KIMMTRAK product History and Development of the Company Immunocore Holdings plc was incorporated in January 2021, completed its IPO in February 2021, and focuses capital expenditures on UK assets - The company was incorporated as Immunocore Holdings plc on January 7, 2021, and completed its IPO on February 9, 2021, listing its ADSs on the Nasdaq under the symbol IMCR398400 Capital Expenditures (£M) | Year | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Capital Expenditures | £1.0M | £3.1M | £4.3M | Business Overview Immunocore is a commercial-stage biotech company focused on ImmTAX immunotherapies, with FDA-approved KIMMTRAK and a pipeline in oncology and infectious diseases - On January 26, 2022, the FDA approved KIMMTRAK (tebentafusp-tebn) for unresectable or metastatic uveal melanoma (mUM), marking the first TCR therapeutic and first bispecific T cell engager for a solid tumor to receive FDA approval404 - The company's proprietary ImmTAX platform engineers soluble, off-the-shelf, bispecific TCRs designed to target a wide range of intracellular proteins, expanding the therapeutic landscape beyond what is accessible to antibody-based therapies403409 Clinical Pipeline Overview (as of Dec 31, 2021) | Candidate | Target | Indication | Phase 1 / 2 | Phase 3 | Approved | | :--- | :--- | :--- | :--- | :--- | :--- | | Oncology | | | | | | | KIMMTRAK® | gp100 | Uveal melanoma | | ✓ | ✓ | | | | Cutaneous melanoma | ✓ | | | | IMC-C103C | MAGE-A4 | NSCLC, gastric, head & neck, ovarian, etc. | ✓ | | | | IMC-F106C | PRAME | NSCLC, breast, endometrial, ovarian, etc. | ✓ | | | | Infectious Diseases | | | | | | | IMC-1109V | Envelope | Hepatitis B Virus (HBV) | ✓ | | | | IMC-M113V | Gag | Human Immunodeficiency Virus (HIV) | Pre-clinical | | | - The company has active strategic collaborations with Genentech for its MAGE-A4 program (IMC-C103C), and with Eli Lilly for other targets, while the collaboration with GSK was terminated in January 2022462472473 Organizational Structure Immunocore Holdings plc, a UK-incorporated parent, oversees wholly-owned subsidiaries in the UK, US, and Ireland - The parent company is Immunocore Holdings Plc, incorporated in the UK, with subsidiaries in the UK, US, and Ireland576 Property, Plant and Equipment The company leases corporate headquarters and R&D facilities in Oxfordshire, UK, and additional office space in the US and Ireland - The main corporate headquarters and R&D facilities are leased in Oxfordshire, UK, with leases expiring between 2037 and 2040577 - The company maintains U.S. headquarters in Pennsylvania and Maryland through leased office space577 Item 5. Operating and Financial Review and Prospects This section analyzes financial performance, reporting a £131.5 million net loss in 2021, and discusses liquidity and critical accounting estimates Operating Results In 2021, Immunocore reported a £131.5 million net loss, with decreased revenue and significantly increased administrative expenses Consolidated Statement of Loss Summary (£'000) | | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | 26,520 | 30,114 | | Research and development expenses | (73,226) | (74,809) | | Administrative expenses | (88,399) | (45,740) | | Operating loss | (135,162) | (86,193) | | Loss before taxes | (140,928) | (87,360) | | Income tax credit | 9,405 | 13,267 | | Loss for the period | (131,523) | (74,093) | - Collaboration revenue decreased from £30.1 million in 2020 to £23.5 million in 2021, mainly due to a pause in revenue recognition from the Lilly collaboration and reduced reimbursable costs from Genentech630 - Administrative expenses increased by £42.7 million, primarily due to a £23.8 million increase in non-cash share-based payment charges related to the IPO and a £17.4 million increase in pre-commercial expenditure for tebentafusp638 Liquidity and Capital Resources As of December 2021, the company held £237.9 million in cash, funded by IPO proceeds, and expects to fund operations into 2024 - The company completed its IPO in February 2021, raising gross proceeds of $297.1 million, plus an additional $15.0 million from a concurrent private placement648 Cash and Cash Flow Summary (£'000) | | 2021 | 2020 | | :--- | :--- | :--- | | Cash and cash equivalents at end of year | 237,886 | 129,716 | | Net cash used in operating activities | (96,110) | (61,250) | | Net cash from / (used in) investing activities | (367) | 1,143 | | Net cash from financing activities | 204,631 | 115,941 | - Management projects that existing cash and expected revenues will fund operations into 2024, however, future funding requirements are significant and depend on the progress of clinical trials and commercialization efforts666 Critical Accounting Estimates Critical accounting estimates include revenue recognition for collaboration agreements and the valuation of share options, both requiring significant judgment - Revenue from collaboration agreements is recognized over time using a percentage of completion method, which requires management to estimate project timelines, where a six-month underestimation of project life would have increased deferred revenue by £5.3 million as of year-end 2021678679 - The valuation of share options requires subjective assumptions, including expected life and share price volatility, with the fair value of ordinary shares prior to the IPO determined using third-party valuations and other factors, introducing significant judgment680681682 Item 6. Directors, Senior Management and Employees This section details the company's leadership, including executive officers, directors, their compensation, board practices, and employee headcount Directors and Senior Management The company's executive team is led by CEO Bahija Jallal, Ph.D., supported by a seven-member Board of Directors - The executive team is led by CEO Bahija Jallal, Ph.D., formerly President of MedImmune at AstraZeneca687 - The Board of Directors is composed of seven members, including distinguished scientists and industry veterans such as Chairman Professor Sir John Bell and Nobel laureate Professor Sir Peter Ratcliffe686691696 Compensation In 2021, aggregate compensation for directors and executive officers totaled £2.0 million, including salaries, bonuses, and equity awards - Aggregate compensation for directors and executive officers in 2021 was £2.0 million, including salaries, benefits, and bonuses701 2021 Director and Executive Officer Compensation Summary | Name | Total Fixed Remuneration ($) | Annual Bonus ($) | Share-Based Awards ( options) | | :--- | :--- | :--- | :--- | | Bahija Jallal, Ph.D. (CEO) | 745,414 | 525,000 | 2,076,080 | | Other Executive Officers (Group) | 989,309 | 518,100 | 875,507 | | Non-Executive Directors (Group) | 222,477 | — | 58,383 | Board Practices The Board of Directors comprises seven members, with six independent, and operates through three standing committees - The board is composed of seven directors, with six determined to be independent under Nasdaq rules715 - The board has three standing committees: Audit, Remuneration, and Nominating and Corporate Governance719 Employees As of December 2021, Immunocore had 324 full-time employees, with 247 in R&D, primarily based in the UK Employee Headcount by Function and Geography | | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Function | | | | | Administrative | 77 | 55 | 67 | | Research and development | 247 | 236 | 392 | | Total | 324 | 291 | 459 | | Geography | | | | | United Kingdom | 264 | 242 | 409 | | United States | 58 | 47 | 47 | | European Union | 2 | 2 | 3 | Item 7. Major Shareholders and Related Party Transactions This section details major shareholders as of December 2021 and outlines the company's policy for related party transactions Major Shareholders As of December 2021, General Atlantic was the largest shareholder at 11.2%, with other significant holders including Baker Brothers and Eli Lilly Principal Shareholders (as of December 31, 2021) | Name of Beneficial Owner | Percent of Ordinary Shares Beneficially Owned (%) | | :--- | :--- | | Entities affiliated with General Atlantic | 11.2% | | Entities affiliated with Baker Brothers | 7.6% | | Eli Lilly S.A. | 5.8% | | Entities affiliated with Rock Springs Capital | 5.6% | | Malin Life Sciences Holdings Limited | 5.4% | | Ian Laing | 5.4% | | All current directors and executive officers as a group | 5.7% | Item 8. Financial Information This section presents consolidated financial statements, dividend policy, and legal proceedings, including a concluded internal investigation - The company has not declared or paid any dividends since its incorporation and does not plan to in the foreseeable future, intending to retain earnings for business use746 - The company is involved in a patent opposition proceeding at the European Patent Office and a trademark opposition for IMMTAX, but does not believe the outcomes will materially harm the business748 - An internal investigation into a kickback scheme involving an employee and vendors between 2018-2020 was concluded, and the company recovered its estimated losses of £1.8 million in December 2020749 Item 9. The Offer and Listing The company's ADSs have been listed and traded on the Nasdaq Global Select Market under "IMCR" since February 5, 2021 - The company's ADSs are listed on the Nasdaq Global Select Market under the ticker symbol "IMCR" since February 5, 2021752754 Item 10. Additional Information This section provides supplementary information on material contracts, exchange controls, and U.K. and U.S. tax considerations for ADS holders Taxation This subsection details U.S. and U.K. tax implications for ADS holders, including PFIC risk for U.S. holders and U.K. dividend tax - For U.S. tax purposes, there is a risk the company could be classified as a Passive Foreign Investment Company (PFIC), and while the company believes it was not a PFIC for the 2021 taxable year, this is an annual determination and its status could change377771 - Because the company has U.S. subsidiaries, its non-U.S. subsidiaries are treated as controlled foreign corporations (CFCs), and U.S. holders owning 10% or more of the company's shares may be subject to specific anti-deferral tax rules373 - For U.K. tax purposes, dividends paid by the company are not expected to be subject to U.K. withholding tax799 - Transfers of ADSs are generally not subject to U.K. stamp duty or Stamp Duty Reserve Tax (SDRT), however, the issuance or transfer of ordinary shares to a depositary may be subject to a 1.5% SDRT charge811814 Item 11. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks including interest rate, currency, and credit risk, with currency risk being significant due to global operations - The company is exposed to interest rate risk through its variable-rate loan from Oxford Finance, which has an interest rate of LIBOR plus 8.85% within a defined cap and collar824 - Currency risk is significant due to global operations, where as of December 31, 2021, 54% of cash held in the UK was denominated in U.S. dollars and 2% in euros, and a 5 percentage point change in exchange rates would impact the carrying value of net financial assets by £2.6 million827828 - Credit risk is considered low, as cash is held with high-quality financial institutions and trade receivables are primarily from large, reputable pharmaceutical collaboration partners829 PART II Item 15. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and internal control over financial reporting as of December 31, 2021 - Management concluded that as of December 31, 2021, the company's disclosure controls and procedures were effective845 - Based on an assessment using the COSO 2013 framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2021848 - A material weakness related to procurement processes, identified in 2020, was remediated as of December 31, 2020670 Item 16. Corporate Governance and Other Matters This section covers corporate governance, including the audit committee expert, code of conduct, accountant fees, and foreign private issuer exemptions - The Board has identified Mr. Coy as an "audit committee financial expert"852 Principal Accountant Fees (£'000) | | 2021 | 2020 | | :--- | :--- | :--- | | Audit fees | 650 | 470 | | Audit-related fees | 125 | 237 | | Total | 775 | 707 | - As a foreign private issuer, the company follows U.K. corporate governance practices and is exempt from certain Nasdaq rules, including those related to shareholder approval for certain security issuances and the composition of the compensation committee861863 PART III Item 17. Financial Statements This section presents the audited consolidated financial statements for 2019-2021, prepared under IFRS, including statements of loss, position, equity, and cash flows Key Financial Metrics (£'000) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Revenue | 26,520 | 30,114 | 25,669 | | Operating Loss | (135,162) | (86,193) | (118,320) | | Loss for the year | (131,523) | (74,093) | (103,931) | | Total Assets | 301,773 | 197,194 | N/A | | Total Equity | 171,547 | 55,346 | 14,771 | | Cash at Year End | 237,886 | 129,716 | 73,966 |
Immunocore(IMCR) - 2021 Q4 - Annual Report