Adaptimmune Therapeutics plc
Company Number 09338148
ANNUAL REPORT AND FINANCIAL STATEMENTS
for the six month period ended
31 December 2015
__________________________________________________________________________________________________
1
Adaptimmune Therapeutics plc
Company Number 09338148
ANNUAL REPORT AND FINANCIAL STATEMENTS
for the six month period ended
31 December 2015
__________________________________________________________________________________________________
1
ADAPTIMMUNE THERAPEUTICS PLC
This page intentionally left blank
__________________________________________________________________________________________________
2
ADAPTIMMUNE THERAPEUTICS PLC
Contents
Page
Directors’ Report ……………………………………………………………………………………………………….……7
Strategic Report ……………………………………………………………………………………………………………..10
Directors’ Remuneration Report ……………………………………………………………………………………………23
Statement of Directors’ Responsibilities in Respect of the Annual Report and the Financial Statements ………….……...32
Independent Auditor’s Report to the Members of the Adaptimmune Therapeutics plc ……………………………..……..33
Consolidated Financial Statements …………………………………………………………………………………………34
__________________________________________________________________________________________________
3
ADAPTIMMUNE THERAPEUTICS PLC
This page intentionally left blank
__________________________________________________________________________________________________
4
ADAPTIMMUNE THERAPEUTICS PLC
COMPANY INFORMATION
DIRECTORS
Dr J Knowles
Mr L M Alleva
Dr A Behbahani
Mr I M Laing
Mr D M Mott
Mr J J Noble
Dr C E Sigal
Dr P A Thompson
SECRETARY
Ms M Henry
COMPANY NUMBER
09338148
REGISTERED OFFICE
AUDITOR
101 Park Drive
Milton Park
Abingdon
Oxfordshire
OX14 4RY
KPMG LLP
Arlington Business Park
Theale
Reading
RG7 4SD
__________________________________________________________________________________________________
5
ADAPTIMMUNE THERAPEUTICS PLC
This page intentionally left blank
__________________________________________________________________________________________________
6
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REPORT
For the period ended 31 December 2015
Adaptimmune Therapeutics plc was incorporated on 3 December 2014. The Directors submit this report and the
Consolidated Financial Statements of Adaptimmune Therapeutics plc and its subsidiaries, Adaptimmune Limited and
Adaptimmune LLC (which may be referred to as “the Group”, “we”, “us” or “our”) as of and for the six months ended 31
December 2015, as well as the financial statements for Adaptimmune Therapeutics plc (“the Company” or “the parent
company”) as of and for the six months ended 31 December 2015.
Adaptimmune Therapeutics plc is a public company limited by shares and incorporated and domiciled in England and Wales.
Adaptimmune Limited is registered in England and Wales. Adaptimmune LLC is registered in the United States of America.
EXPLANATION
The Company has previously published its first annual report and financial statements for the period ended 30 June 2015
and laid them before the Company in general meeting at the Annual General Meeting held on 17 December 2015.
On 13 October 2015, the Company (together with its consolidated subsidiaries) announced a change of its financial year end
to 31 December 2015 in order to align its financial reporting period with those of many of its peer group of biotechnology
companies.
As a result, the Company is required to prepare an annual report and financial statements for the period from 1 July 2015 to
31 December 2015, and lay them before the Company in general meeting at its forthcoming Annual General Meeting to be
held in 2016. The Company’s next annual report and financial statements, in respect of the year ended 31 December 2016,
will be laid before the Company in general meeting at the Annual General Meeting to be held in 2017.
BASIS OF PRESENTATION
Our Directors have elected to prepare the group financial statements in accordance with International Financial Reporting
Standards as adopted by the EU (“Adopted IFRSs”) and in compliance with IFRSs issued by the IASB. The parent company
financial statements are drawn up in accordance with the Companies Act 2006 and Financial Reporting Standard 101 (“FRS
101”).
On 1 April 2015, the Group completed a corporate reorganisation, which is described more fully in note 20 to the
consolidated financial statements. Pursuant to the first stage of this reorganisation, on 23 February 2015, all shareholders of
Adaptimmune Limited exchanged each of the Series A preferred shares and Ordinary shares held by them for newly issued
Series A preferred shares and Ordinary shares of Adaptimmune Therapeutics Limited on a one-for-100 basis, resulting in
Adaptimmune Limited becoming a wholly-owned subsidiary of Adaptimmune Therapeutics Limited. On 20 March 2015,
all holders of options over Ordinary shares of Adaptimmune Limited exchanged each of their options for equivalent options
over Ordinary shares of Adaptimmune Therapeutics Limited. On 1 April 2015, pursuant to the final step in the corporate
reorganisation, Adaptimmune Therapeutics Limited re-registered as a public limited company with the name Adaptimmune
Therapeutics plc.
Following the reorganisation, the historical consolidated financial statements of Adaptimmune Limited and its subsidiary
prior to the reorganisation became those of Adaptimmune Therapeutics plc.
PRINCIPAL ACTIVITIES
The principal activity of Adaptimmune Therapeutics plc is the development and commercialisation of T cell therapy to treat
cancer.
We are a clinical-stage biopharmaceutical company focused on novel cancer immunotherapy products based on our T-cell
receptor platform. We have developed a comprehensive proprietary platform that enables us to identify cancer targets in the
form of peptides, which are short sequences of amino acids, find and genetically engineer T-cell receptors, or TCRs, and
produce TCR therapeutic candidates for administration to patients.
__________________________________________________________________________________________________
7
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REPORT (CONTINUED)
For the period ended 31 December 2015
We engineer TCRs to increase their affinity to cancer-specific peptides, including our lead target peptides, NY-ESO-1,
MAGE-A10 and Alpha Fetoprotein, or AFP, in order to target and then destroy cancer cells in patients. Unlike current
antibodies and therapies that are based on the use of chimeric antigen receptor T-cells, or CAR-Ts, our TCR therapeutic
candidates are able to target intracellular as well as extracellular cancer antigens. This capability significantly increases the
breadth of targets, particularly as intracellular targets are known to be more closely associated with cancer, but are
inaccessible with other autologous T-cell immunotherapy approaches. We believe this approach will lead to TCR therapeutic
candidates that have the potential to significantly impact cancer treatment and clinical outcomes of patients with cancer.
RESULTS AND DIVIDENDS
The result for the period is set out in the Income Statement on page 34.
The Directors do not propose a dividend (Year ended 30 June 2015: £nil).
CHARITABLE AND POLITICAL CONTRIBUTIONS
No charitable contributions were paid during the period (Year ended 30 June 2015: £nil).
No donations were made during the period to political organisations (Year ended 30 June 2015: £nil).
FINANCIAL INSTRUMENTS
Please refer to the Financial Risk Management section included in our Strategic Report, beginning on page 20 of this
document.
STRUCTURE OF THE GROUP’S CAPITAL
Please refer to Note 20 of the Consolidated Notes to the Financial Statements.
DIRECTORS
The following Directors have held office since the dates indicated below.
Mr L M Alleva
Dr A Behbahani
Dr J Knowles
Mr I M Laing
Mr D M Mott
Mr J J Noble
Dr C E Sigal
Dr P A Thompson
(Appointed 5 March 2015)
(Appointed 12 February 2015)
(Appointed 12 February 2015)
(Appointed 12 February 2015)
(Appointed 12 February 2015)
(Appointed 3 December 2014)
(Appointed 12 February 2015)
(Appointed 12 February 2015)
During the period from 1 July 2015 to 31 December 2015, there were six full meetings of the Board of Directors. All of our
Directors attended each of the six meetings.
One-third of the Directors are subject to retirement by rotation at each Annual General Meeting of shareholders effective
from the Annual General Meeting in 2016.
THIRD PARTY INDEMNITY PROVISION FOR DIRECTORS
At the time the report is approved, there are no qualifying third party indemnity provisions in place for the benefit of one or
more of the Directors.
__________________________________________________________________________________________________
8
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REPORT (CONTINUED)
For the period ended 31 December 2015
EMPLOYEE INVOLVEMENT
The Group is committed to the continued development of employee involvement by an effective communications and
consultative framework.
DISABLED PERSONS
Applications for employment by disabled persons are always fully considered, bearing in mind the respective aptitudes and
abilities of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that
their employment with the Group continues and the appropriate training is arranged. It is the policy of the Group that the
training, career development and promotion of a disabled person should, as far as possible, be identical to that of a person
who does not suffer from a disability.
ENVIRONMENTAL MATTERS
Please refer to the Environmental Matters section included in our Strategic Report, beginning on page 21 of this document.
GOING CONCERN
Our business activities, together with the factors likely to affect our future development, performance and position, are set
out in the Strategic Report on pages 10 to 22.
In determining whether our financial statements can be prepared on a going concern basis, our Directors considered the
Group’s business activities, together with the factors likely to affect our future development and performance. The review
also included our financial position and cash flows.
As of the date of this report, our Directors have a reasonable expectation that we have adequate resources to continue in
business for the foreseeable future. Accordingly, the financial statements have been prepared on the going concern basis.
AUDITOR
A resolution to reappoint KPMG LLP will be proposed at the forthcoming Annual General Meeting.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITOR
All Directors in office at the time the report is approved confirm the following:
(i)
(ii)
so far as each Director is aware, there is no relevant audit information of which the Company’s auditors are unaware;
and
each Director has taken all the steps that he ought to have taken in his duty as a Director in order to make himself
aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
The Directors’ Report was approved by the Board on 16 March 2016.
On behalf of the Board
James J Noble
Director
16 March 2016
__________________________________________________________________________________________________
9
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT
For the period ended 31 December 2015
INTRODUCTION
Adaptimmune Therapeutics plc (“the Company”) was incorporated on 3 December 2014. Adaptimmune Therapeutics plc
on behalf of itself and its subsidiaries, Adaptimmune Limited and Adaptimmune LLC (which may be referred to as “the
Group”, “we”, “us” or “our”), is required to produce a strategic report complying with the requirements of the Companies
Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 (the “Regulations”).
We are a clinical-stage biopharmaceutical company focused on novel cancer immunotherapy products based on our T-cell
receptor platform. We have developed a comprehensive proprietary platform that enables us to identify cancer targets in the
form of peptides, which are short sequences of amino acids, find and genetically engineer T-cell receptors, or TCRs, and
produce TCR therapeutic candidates for administration to patients.
We engineer TCRs to increase their affinity to cancer-specific peptides, including our lead target peptides, NY-ESO-1,
MAGE-A10 and AFP, in order to target and then destroy cancer cells in patients. Unlike current antibodies and therapies
that are based on the use of chimeric antigen receptor T-cells, or CAR-Ts, our TCR therapeutic candidates are able to target
intracellular as well as extracellular cancer antigens. This capability significantly increases the breadth of targets, particularly
as intracellular targets are known to be more closely associated with cancer, but are inaccessible with other autologous T-
cell immunotherapy approaches. We believe this approach will lead to TCR therapeutic candidates that have the potential to
significantly impact cancer treatment and clinical outcomes of patients with cancer.
Cancer is a leading cause of death worldwide and is characterised by the uncontrolled growth of abnormal cells whose ability
to evade the immune system’s surveillance is a key factor in their proliferation and persistence. Despite advances made in
the treatments available to cancer patients, there continues to be a high unmet need for additional products and treatments,
especially for patients with recurrent tumours or cancer types that are resistant to current therapeutic alternatives. We believe
that immunotherapy has the potential to become the primary cancer treatment for recurrent tumours or cancer types that are
resistant to current therapeutic alternatives.
We have a series of ongoing programmes. One of our programmes is an affinity-enhanced TCR therapeutic targeting the
NY-ESO-1, or NY-ESO, cancer antigen, which is under option to GlaxoSmithKline (“GSK”). We are conducting Phase 1/2
clinical trials in the US for our NY-ESO TCR therapeutic candidate in patients with solid tumours and haematological
malignancies including synovial sarcoma, multiple myeloma, melanoma and ovarian cancer. As of 31 December 2015, we
had administered our NY-ESO TCR therapeutic candidate to 53 patients across several cancer indications. Our NY-ESO
TCR therapeutic candidate is also being evaluated as part of an investigator-initiated clinical trial in the UK in patients with
oesophageal cancer.
In February 2016, we agreed with GSK to accelerate the development of our NY-ESO TCR therapeutic candidate towards
pivotal trials in synovial sarcoma as well as exploring development in myxoid round-cell liposarcoma. There is also the
opportunity for up to eight combination trials using our NY-ESO TCR therapeutic candidate.
Our other programmes are affinity-enhanced TCR therapeutic candidates directed at MAGE-A10 and at AFP, both of which
are wholly-owned by the Company. Our Investigational New Drug Application, or IND, for our TCR therapeutic candidate
directed at MAGE-A10 was accepted by the FDA in June 2015. The clinical trial was initiated in December 2015 and is
directed at patients with Stage IIIb or Stage IV non-small cell lung cancer (“NSCLC”). The initial clinical programme will
be an open label Phase 1/2 dose escalating study of our MAGE-A10 TCR therapeutic candidate in patients with advanced
NSCLC and will assess safety and tolerability of our therapeutic candidate in those patients. An IND for our TCR directed
at AFP is targeted for submission in 2016.
In addition to the above programmes, we expect to leverage our TCR technology platform to continue to build our pipeline
of proprietary TCR therapeutic candidates. We have identified over 30 intracellular target peptides that are preferentially
expressed in cancer cells and have ongoing unpartnered research programmes on twelve of these. We believe these twelve
unpartnered research programmes are relevant to a wide range of cancer indications. We also have ongoing early stage
research programmes relevant to autoimmune indications.
__________________________________________________________________________________________________
10
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
Our Product Pipeline
Our expertise and leadership in the field of TCRs is underscored by the large pipeline of TCRs we have identified and
validated, and by the promising early data with our NY-ESO TCR therapeutic candidate in both solid tumours and
haematological malignancies. The following table summarises our ongoing programmes for NY-ESO(1) :
(1)
GSK retains an exclusive option to license NY-ESO TCR for all indications.
The following table summarises our new programmes for NY-ESO following the expansion of our agreement with GSK:
__________________________________________________________________________________________________
11
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
We retain full ownership of the remainder of our current pipeline of engineered TCR therapeutic candidates, including our
MAGE-A10 and AFP TCR therapeutic candidates together with 12 additional unpartnered research programmes. The
following table summarises our pipeline of wholly-owned targets:
Our TCR Therapeutic Candidates
The immune system plays an important role in targeting and destroying cancer cells. Specifically, T-cells, which are a type
of white blood cell, and their receptors create a natural system that is designed to scan the body for diseased cells. In general,
cells process proteins internally and then convert these proteins into peptide fragments which are then presented on the cell
surface by a protein complex called the Human Leukocyte Antigen, or HLA. TCRs naturally scan these peptide fragments
to search for abnormalities. Binding of naturally occurring TCRs to cancer targets, however, tends to be very poor because
cancer proteins appear very similar to naturally occurring proteins on healthy cells and TCRs that recognise what the body
sees as “self-proteins” are eliminated during early human development.
We engineer naturally occurring TCRs and enhance their ability to target and bind to cancer peptides, thereby enabling a
highly targeted immunotherapy. Our proprietary technology platform includes the identification of target peptides,
successful engineering of affinity-enhanced TCRs, preclinical safety testing and optimised manufacturing processes suitable
for producing engineered TCR therapeutic candidates for use in clinical trials and commercialisation.
Once we identify a specific cancer target, we create an engineered affinity-enhanced TCR, which then undergoes extensive
preclinical safety testing before administration to patients. The process for treating a patient with an engineered TCR
therapeutic candidate involves extracting the patient’s T-cells and then combining the extracted cells with our delivery
system containing the gene for our affinity-enhanced TCR, through a process known as transduction. Our delivery system
uses a type of virus, known as lentivirus, to transduce the patient’s T-cells and is referred to as a lentiviral vector. The
transduced T-cells are then expanded and infused into the patient. When these T-cells encounter an HLA-peptide complex,
they multiply and initiate the destruction of the targeted cancer cells.
In our NY-ESO clinical programmes for synovial sarcoma and multiple myeloma, we have seen responses and preliminary
evidence of tumour reduction in patients with highly refractory cancers. In our synovial sarcoma trial, enrolment into the
first cohort of 12 evaluable patients is now complete. In a second cohort, which is enrolling patients with low NY-ESO
antigen expression, as at 31 December 2015, two patients had received our NY-ESO therapeutic candidate. In a third cohort,
which is evaluating removal of fludarabine from the treatment protocol, two patients had received our therapy as at 31
December 2015. In the first cohort, and as reported in November 2015, response rates of 60% were seen in patients receiving
the target dose. As a result of these encouraging responses the NY-ESO TCR therapeutic candidate is being accelerated
__________________________________________________________________________________________________
12
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
towards pivotal trials in synovial sarcoma. We are also exploring development in myxoid round cell liposarcoma with our
NY-ESO TCR therapy.
Results from the multiple myeloma trial following autologous stem cell transplant, or auto-SCT, showed a 59% complete or
near complete response rate at 100 days post-administration in 22 patients with active disease at the time of transplant. The
NY-ESO engineered T-cells have persisted in the myeloma trial for six months in all but one patient and, in a subset of
patients, for two years following administration. Based on our clinical data to date for both synovial sarcoma and multiple
myeloma, we believe our NY-ESO TCR therapeutic candidate has a promising benefit/risk profile.
We have also utilised our proprietary TCR technology platform to develop a pipeline of TCR therapeutic candidates that we
believe may be effective in a variety of cancer types that are unresponsive to currently available and experimental therapies.
GSK Collaboration
Under our collaboration and licence agreement with GSK (the “GSK Collaboration and License Agreement”), GSK funds
the development of, and has an option to obtain an exclusive licence to, our NY-ESO TCR therapeutic candidate. In addition,
GSK has the right to nominate four additional target peptides. The first of these additional targets will be selected from a
pool of three target peptides, with the pool having already been jointly chosen by GSK and us. Following completion of
initial research on these three target peptides, GSK is entitled to nominate one TCR therapeutic candidate, and we will retain
all rights to the other two TCR therapeutic candidates. In addition, three other target peptides may be selected by GSK in
the future. These target peptides are outside of our twelve unpartnered research programmes and any other programmes
relating to target peptides where Adaptimmune initiates development of a TCR therapeutic candidate.
The GSK Collaboration and License Agreement was amended in February 2016 to provide for acceleration of the
development of our NY-ESO TCR therapeutic candidate towards pivotal trials in synovial sarcoma as well as exploring
development in myxoid round-cell liposarcoma. The amendment also provides the opportunity for up to eight combination
trials using our NY-ESO TCR therapeutic candidate.
Unpartnered portfolio
We retain full ownership of our current pipeline of engineered TCR therapeutic candidates, including our MAGE-A10 and
AFP TCR therapeutic candidates together with TCR therapeutic candidates in twelve additional unpartnered research
programmes.
BUSINESS STRATEGY
Our strategic objective is to build a global oncology business with an extensive portfolio of engineered TCR therapeutic
candidates that have the potential to significantly impact the clinical outcomes of patients with cancer. In order to achieve
our objective, we are focused on the following strategies:
Rapidly advance our NY-ESO TCR therapeutic candidate into registrational trials. We are collaborating with GSK
to advance our NY-ESO TCR therapeutic candidate and expand and accelerate our clinical trials into additional sites. We
are conducting Phase 1/2 clinical trials in the US in multiple cancer types including synovial sarcoma, multiple myeloma,
melanoma and ovarian cancer and are commencing an additional clinical trial for non-small cell lung cancer. We have also
agreed with GSK to accelerate development of our NY-ESO TCR therapeutic candidate into pivotal trials in synovial
sarcoma, with the aim of starting pivotal trials in the United States around the end of 2016. The amendment to the
collaboration agreement with GSK, agreed in February 2016, also provides the opportunity for up to eight combination trials
with our NY-ESO TCR therapeutic candidate.
Advance our MAGE-A10, AFP and other therapeutic candidates through clinical development. We retain full
development and commercialisation rights to our MAGE-A10 and AFP therapeutic candidates. The IND for our MAGE-
A10 therapeutic candidate was approved by the FDA in June 2015 and clinical trials initiated in the United States in
December 2015. We received Recombinant DNA Advisory Committee approval for our AFP therapeutic candidate in
November 2015 and we currently plan to file an IND for our AFP therapeutic candidate in 2016. We believe that our MAGE-
A10 TCR therapeutic candidate has the potential to be effective in many solid tumours, including lung cancer.
__________________________________________________________________________________________________
13
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
Advance further TCR therapeutic candidates from our unpartnered portfolio to the product development stage. We
currently have twelve active unpartnered research programmes on potential TCR therapeutic candidates. We intend to
advance some of these research programmes into preclinical and clinical development as soon as practicable.
Leverage our TCR technology platform by continuing to identify cancer targets that are not accessible by current
antibody and CAR-T approaches. We intend to continue to generate TCR therapeutic candidates from our fully integrated
technology platform, which enables the systematic identification and validation of suitable target peptides, T-cell cloning,
engineering of TCRs and preclinical testing processes.
Continue to improve response to our TCR therapeutic candidates. We intend to continue further developing our TCR
therapeutic candidates by exploring the addition of other components in our lentiviral vector, which would be expressed in
the TCR therapeutic candidate alongside the engineered TCR.
Optimise and expand our process development and manufacturing capabilities to maintain our leadership position
in the TCR space. We plan to optimise the manufacture, supply, associated analytical expertise and quality systems for our
TCR therapeutic candidates to ensure that our manufacturing capability is sufficient for later-stage clinical trials and,
potentially, initial commercial supply.
Leverage our existing strategic alliance with GSK. We expect to apply knowledge gained from our NY-ESO TCR
therapeutic candidate collaboration programme with GSK to the development and commercialisation of other TCR
therapeutic candidates in our pipeline.
Expand our intellectual property portfolio. We intend to continue building on our technology platform, comprising
intellectual property, proprietary methods and know-how in the field of TCRs. These assets form the foundation for our
ability not only to strengthen our product pipeline, but also successfully to defend and expand our position as a leader in the
field of TCRs.
REVIEW OF THE BUSINESS
Overview
Adaptimmune Therapeutics plc was founded on 3 December 2014 as part of a corporate restructuring and is a public limited
company incorporated under the laws of England and Wales. On 6 May 2015, we completed our Initial Public Offering
(“IPO”) of American Depositary Shares (“ADSs”), on The NASDAQ Global Select Market (“NASDAQ”). We issued
11,250,000 ADSs under the symbol ADAP, representing 67,500,000 Ordinary shares for proceeds before expenses of
£124,058,000. Funding costs of £9,899,000, including underwriter fees, were incurred.
Our UK subsidiary, Adaptimmune Limited, was founded in July 2008 and is focused on our research and development
activities. Our US subsidiary, Adaptimmune LLC, was founded in February 2011 and is focused on our clinical trials
operations.
On 1 April 2015, we completed a corporate reorganisation. Pursuant to this reorganisation, on 23 February 2015, all
shareholders of Adaptimmune Limited exchanged each of the Series A preferred shares and Ordinary shares held by them
for newly issued Series A preferred shares and Ordinary shares of Adaptimmune Therapeutics Limited on a one-for-100
basis, resulting in Adaptimmune Limited becoming a wholly-owned subsidiary of Adaptimmune Therapeutics Limited. On
20 March 2015, all holders of options over Ordinary shares of Adaptimmune Limited exchanged each of their options for
equivalent options over Ordinary shares of Adaptimmune Therapeutics Limited. On 1 April 2015, pursuant to the final step
in our corporate reorganisation, Adaptimmune Therapeutics Limited re-registered as a public limited company with the name
Adaptimmune Therapeutics plc.
Since our inception, we have incurred significant net losses and negative cash flows from operations. To date, we have
financed our operations primarily through placements of equity securities, an initial public offering, cash receipts under the
GSK Collaboration and License Agreement, government grants and research and development tax credits.
__________________________________________________________________________________________________
14
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
DEVELOPMENT AND PERFORMANCE DURING THE PERIOD
Revenue
Revenue was £5.5 million for the six months ended 31 December 2015 compared to £6.8 million for the year ended 30
June 2015. The increase in pro-rata revenue (i.e. six months to 31 December 2015 compared to half of the previous twelve
month period) was due to recognition of revenue relating to an increase in the services performed, and the achievement of
development milestones, under the GSK Collaboration and License Agreement in the period.
The GSK Collaboration and License Agreement was expanded by an amendment agreement, effective from 2 February 2016
(the “Amendment Agreement”). The Amendment Agreement enables us and GSK to accelerate the development of our NY-
ESO TCR therapeutic candidate towards pivotal trials in synovial sarcoma and to explore development in myxoid round-
cell liposarcoma. The Amendment Agreement also provides the opportunity for up to eight combination trials using our NY-
ESO TCR therapeutic candidate and increases the potential development milestones that we are eligible to receive.
Research and Development Expenses
Research and development (“R&D”) expenses were £16.5 million for the six months ended 31 December 2015 compared to
£14.7 million for the year ended 30 June 2015. Our R&D expenses are highly dependent on the phases of our research
projects and therefore fluctuate from year to year.
The increase in our pro-rata R&D expenses (i.e. six months to 31 December 2015 compared to half of the previous twelve
month period) was primarily due to increases in two key components of our expenses:
•
•
an increase in the average number of employees engaged in R&D from an average of 63 for the year ended 30 June
2015 to 137 for the six months ended 31 December 2015. These costs include salaries, facilities, materials,
equipment, depreciation of tangible fixed assets, and expenses for share-based compensation; and
an increase in subcontracted expenditures, including clinical trial expenses, CRO costs, and manufacturing expenses,
driven by increased recruitment in our clinical trials.
General and Administrative Expenses
General and administrative expenses were £7.3 million for the six months ended 31 December 2015 compared to £7.2 million
for the year ended 30 June 2015.
The increase in our pro-rata general and administrative expenses (i.e. six months to 31 December 2015 compared to half of
the previous twelve month period) was due to: increased personnel costs, primarily due to the addition of key management
and other professionals to support our growth; increased share-based payment expenses; increased property costs; and
increased other corporate costs, including costs in relation to our NASDAQ listing, legal entity restructuring, consultants,
additional audit costs and investor relations.
Other Income
Other income consists of grant income primarily generated through R&D grant programmes offered by the UK and EU
governments, income arising from the UK R&D Expenditure Credit Scheme (the “UK RDEC Scheme”), which entitles the
Company to a taxable receipt for eligible R&D expenditure, and income from Immunocore Limited (“Immunocore”) under
a transitional services agreement. Grant income is recognised as we incur and pay for qualifying costs and services under
the applicable grant.
Other income was £0.9 million for the six months ended 31 December 2015 compared to £0.5 million for the year ended 30
June 2015. The pro-rata increase is due to an increase in grant income resulting from an increase in qualifying costs and
services on projects subject to UK grants and credits received under the UK RDEC Scheme.
Finance Income
Finance income was £8.8 million for the six months ended 31 December 2015 compared to £0.3 million for the year ended
30 June 2015. Finance income consisted of foreign exchange gains of £8.4 million and bank interest on cash balances and
short-term deposits. Finance income has increased due to foreign exchange gains on cash and cash equivalents and short-
__________________________________________________________________________________________________
15
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
term deposits held in US dollars.
Finance Expense
Finance expense was £nil million for the six months ended 31 December 2015 compared to £0.7 million for the year ended
30 June 2015. Finance expense consisted of foreign exchange losses on foreign currency transactions.
Taxation Credit
The R&D tax credit was £1.2 million for the six months ended 31 December 2015 compared to £1.3 million for the year
ended 30 June 2015. The increase in our pro-rata tax credits was driven by the increase in our R&D expenditures that are
eligible for R&D tax credits. We expect to continue to be eligible to receive United Kingdom R&D tax credits for the year
to 31 December 2016 and will elect to do so.
POSITION OF GROUP AT THE PERIOD END
Liquidity and Capital Resources
Sources of Funds
Since our inception, we have incurred significant net losses and negative cash flows from operations. We financed our
operations primarily through, placements of equity securities, an initial public offering, cash receipts under our GSK
Collaboration and License Agreement, government grants and R&D tax credits. From inception through to 31 December
2015, we have raised:
• £195.0 million, net of issue costs, through the issuance of shares;
• £36.5 million upfront fees and milestones under our GSK Collaboration and License Agreement;
• £1.4 million of income in the form of government grants from the United Kingdom; and
• £3.3 million in the form of R&D tax credits and receipts from the UK RDEC Scheme.
As at 31 December 2015, we had cash and cash equivalents of £131.0 million, in addition to short-term investments of £36.8
million. We therefore consider our total liquidity position to be £167.9 million, the sum of these two amounts. We believe
that our total liquidity position as at 31 December 2015 of £167.9 million will be sufficient to fund our operations, including
currently anticipated R&D activities and planned capital spending, for at least the next twelve months.
SUMMARY OF CASH FLOWS
Operating Activities
Net cash used in operating activities was £10.3 million for the six months ended 31 December 2015 compared to £20.8
million for the year ended 30 June 2015. Net cash used in operating activities is significantly impacted by the timing of
milestone payments received from GSK under the GSK Collaboration and License Agreement. In the six months ended 31
December 2015, the Company received £7.0 million of milestone payments from GSK compared to £4.5 million in the year
ended 30 June 2015, and in the year ended 30 June 2015 the Company made a VAT payment of £5 million relating to a GSK
milestone payment received in June 2014. After taking into account the GSK milestone payments, the pro-rata increase in
cash used in operations (i.e. six months to 31 December 2015 compared to half of the previous twelve month period) was
primarily the result of an increase in R&D costs due to the ongoing advancement of our preclinical programmes and clinical
trials and an increase in general and administrative expenses.
Net cash used in operating activities of £10.3 million for the six months ended 31 December 2015 comprised a loss before
taxation of £8.6 million, non-cash items of £5.5 million, net cash inflow of £2.8 million from changes in operating assets
and liabilities, bank interest received of £0.2m and tax credits of £0.8 million. The non-cash items consisted primarily of
unrealised foreign exchange gains of £8.4 million and bank interest income of £0.3 million, partially offset by depreciation
expense on plant and equipment of £0.8 million and equity-settled share-based compensation expense of £2.4 million.
Net cash used in operating activities of £20.8 million for the year ended 30 June 2015 comprises loss before taxation of
£15.1 million, non-cash items of £3.2 million, a net cash outflow of £8.7 million from changes in operating assets and
liabilities and tax paid of £0.2 million. The non-cash items consisted primarily of depreciation expense on plant and
equipment of £0.4 million and equity-settled share-based compensation expense of £2.6 million.
__________________________________________________________________________________________________
16
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
Investing Activities
Net cash used in investing activities was £11.1 million and £38.3 million for the six months ended 31 December 2015 and the
year ended 30 June 2015 respectively. These amounts included purchases of property and equipment of £6.3 million and
£3.1 million for the six months ended 31 December 2015 and the year ended 30 June 2015, respectively, related predominantly
to the expansion of our laboratory facilities in the United Kingdom, and acquisition of intangible assets of £1.8 million in the
six months ended 31 December 2015 primarily relating to an upfront payment of £1.7 million for in-process R&D licensed
from Universal Cells, Inc. The net cash used in investing activities in the six months ended 31 December 2015 also included
£3.0 million of restricted cash associated with letters of credit for lease agreements. The net cash used in investing activities
in the year ended 30 June 2015 also included the investment of £35.2 million in short-term cash deposits with maturities
greater than three months but less than 12 months.
Financing Activities
Net cash used in financing activities was £nil and £174.7 million for the six months ended 31 December 2015 and the year
ended 30 June 2015 respectively. Net cash from financing activities for the year ended 30 June 2015 consisted of proceeds of
£60.6 million, after the deduction of fees of £3.0 million, from issuing 1,758,418 Series A Preferred Shares and proceeds of
£114.2 million, after the deduction of fees of £9.9 million, from issuing 67,500,000 ordinary shares. The Preferred Shares
were automatically converted to ordinary shares on a 1:1 basis immediately prior to the admission to trading of our ADSs on
NASDAQ.
KEY PERFORMANCE INDICATORS
As a measurement of liquidity, the Group reviews its total liquidity position (including cash and cash equivalents in addition
to short-term deposits), as well as its operating cash flow. At 31 December 2015 the total liquidity position was £167,881,000
(At 30 June 2015: £180,830,000). The operating cash outflow for the six months ended 31 December 2015 was £10,291,000
million and for the year ended 30 June 2015 was £20,818,000.
PRINCIPAL RISKS AND UNCERTAINTIES
Financial
We are a clinical-stage biopharmaceutical company with no products approved for commercial sale. We have not generated
any revenue from any product sales or royalties. We have a history of losses and anticipate that we will incur continued losses
for at least the next few years. We cannot be certain that we will achieve or sustain profitability and it is very difficult to
predict any future financial performance. Our resources will continue to be devoted substantially to research and development
for the foreseeable future and our ability to generate any revenue from any of our current therapeutic candidates cannot be
guaranteed. There is also a risk that should we fail to obtain additional funding we will be unable to complete the further
development of our therapeutic candidates necessary to take those candidates to market.
Our current cash projections include reliance on our ability to obtain certain tax credits and our ability to obtain or continue
to obtain such tax credits cannot be guaranteed.
Dependence on Clinical Candidates
Our business is dependent on a small number of clinical candidates, in particular our NY-ESO TCR therapeutic candidate and
MAGE A-10 TCR therapeutic candidate. There is no certainty that the results obtained in clinical trials of our existing clinical
candidates will be sufficient to enable progression of those candidates through our clinical programmes or the obtaining of
regulatory approval or marketing authorisation. There can also be no guarantee that clinical candidates will progress through
clinical programmes within anticipated timescales or that we will be able to recruit sufficient clinical trial subjects within
anticipated timescales. The outcome of clinical trials is inherently uncertain. Negative results seen in clinical programmes
with one clinical candidate may impact on our other clinical programmes or prevent other clinical programmes from starting.
T-cell therapy is a novel approach for cancer treatment which is not completely understood and the impact of such therapy
cannot be predicted. Our clinical candidates may cause adverse events or fatalities which result in the suspension or halting
of clinical programmes. There may be an increased risk of adverse events in clinical programmes which we do not sponsor or
control for example, the investigator-initiated programmes using our NY-ESO TCR therapeutic candidate.
__________________________________________________________________________________________________
17
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
Research Programmes
We have a number of pre-clinical and other candidates under development. Development of further candidates and pre-clinical
assessment of those candidates takes a substantial amount of time, effort and money and we may encounter significant delays
in taking further candidates into clinical programmes or in finding suitable further candidates to further develop.
Manufacturing
Manufacturing and administration of our TCR therapeutic candidates is complex and as a result we may encounter difficulties
or delays in scaling up or further development of our manufacturing process or any associated development activities. Should
such difficulties be encountered then we may not be able to supply any end products at acceptable cost or in required
timescales. The manufacture of our existing TCR therapeutic candidates is heavily reliant on third parties who are outside of
our control. A delay or problem with any of our third party contract manufacturers can result in delays to the overall
manufacturing process or inability to supply our therapeutics to clinical trial sites when required or increased cost being
incurred in the manufacture and supply of our TCR therapeutic candidates. Our manufacturing process needs to comply with
regulatory requirements in the United States and going forward in other countries. Any failure to comply with the relevant
regulatory requirements could result in delays in or termination of our clinical programmes or suspension or withdrawal of
regulatory approvals for our TCR therapeutic candidates or manufacturing process.
Commercialisation
Our ability to commercialise any TCR therapeutic candidate is dependent on the progression of clinical candidates through
regulatory approval processes and on the results seen in clinical trials. Clinical trials are expensive, time-consuming and
difficult to implement and there is no guarantee that the results seen in any clinical trials will be sufficient to progress to the
next stage of any clinical approval or ultimately to the obtaining of a marketing approval for any of our TCR therapeutic
candidates.
The market opportunities for our TCR therapeutic candidates may be limited in terms of geographic scope or type of patients
which can be treated. Our estimates of the potential patient population which can be treated may be inaccurate affecting the
amount of revenue obtainable for any product. Likewise the amount of revenue that can be obtained in relation to any TCR
therapeutic candidate may be impacted by the nature of pricing reimbursement coverage or schemes available or in place in
any specific country and the continuation of such coverage and schemes. We currently have no marketing or sales force and
we will have to establish a marketing capability prior to bringing any TCR therapeutic candidate to market. Even if we are
successful in obtaining regulatory approval, our candidates may not gain market acceptance or utility.
In addition, we will face increasing competition from third parties as we proceed through clinical programmes, and such third
parties may have more funding and resources than us, impacting on our end ability to bring our therapeutic candidates to
market.
Regulation
Our clinical candidates are highly regulated and the regulatory process is lengthy and time-consuming. We may experience
significant delays in obtaining regulatory approval or be required to make changes to our clinical programmes or therapeutic
candidates by regulatory authorities. Our ability to obtain accelerated approval or orphan drug designation for any clinical
candidate is difficult to predict and may require the development of additional processes or assays. Even if we are successful
in obtaining regulatory approvals in one country, this does not mean that we will be successful in other countries and further
clinical programmes may be required to obtain required regulatory approvals in such other countries. Should we obtain
regulatory approval for any of our TCR therapeutic candidates we will be subject to ongoing regulatory obligations and
requirements which may result in significant additional expense or delays to commercialisation of our products. Any failure
to comply with regulatory requirements at any stage in the development of our TCR therapeutic candidates may harm our
reputation and significantly affect our operating results.
We are also subject to regulation as a company both in the UK and US including in relation to financial controls, anti-bribery
and other internal policies and controls. If we fail to establish and maintain proper internal controls our ability to comply with
applicable regulations could be impaired.
__________________________________________________________________________________________________
18
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
Litigation
We face an inherent risk of product liability given the nature of our business and will face an even greater risk upon
commercialisation of any candidates. We cannot guarantee that any insurance coverage we obtain will be sufficient to cover
any product liability that arises. We may also face claims brought by third parties in relation to the way in which we run or
manage our business, report the results of our business, or the impact our operations have on such third parties.
Third Parties
We rely heavily on GSK for our clinical programme for our NY-ESO TCR therapeutic candidate. Our ability to continue to
develop and ultimately commercialise our NY-ESO TCR therapeutic candidate depends heavily on the ongoing collaboration
with GSK and the payments made to us by GSK upon the achievement of specified milestones. We also rely heavily and are
dependent on Thermo Fisher Scientific Inc and the technology we obtain from them for the activation and expansion of T-
cells. Inability to obtain the relevant technology from Thermo Fisher Scientific Inc would cause delays to our clinical
programmes and our ability to manufacture, supply and administer our TCR therapeutic candidates. We have a shared
development history with Immunocore and rely on certain resources and support from Immunocore which if not present could
result in delays in our ability to bring new TCR therapeutic candidates into clinical programmes. We also rely heavily on third
parties to conduct our clinical trials including universities, medical institutions, Contract Research Organisations (“CROs”)
and other clinical supply organisations.
Intellectual Property
We may be forced to litigate to enforce or defend our intellectual property rights and to protect our trade secrets. We may also
not be able to obtain suitable protection for our technology or products, or the cost of doing so may be prohibitive or excessive.
We cannot provide any assurance that the intellectual property rights that we own or license provide protection from
competitive threats or that we would prevail in any challenge mounted to our intellectual property rights. Third parties may
claim that our activities or products infringe upon their intellectual property which will adversely affect our operations and
prove costly and time-consuming to defend against. We have licensed, and expect to continue to license, certain intellectual
property rights from third parties. We cannot provide any assurances that we will be successful in obtaining and retaining
licences or proprietary or patented technologies in the future. Further, our products may infringe the intellectual property
rights of others and we may be unable to secure necessary licences to enable us to continue to manufacture or sell our products.
Suppliers
We depend upon a limited number of suppliers, and certain components or raw materials for our TCR therapeutic candidates
may only be available from a sole source or limited number of suppliers. Even if the key components that we source are
available from other parties, the time and effort involved in obtaining any necessary regulatory approvals for substitutes
could impede our ability to replace such components timely or at all. The loss of a sole or key supplier would impair our
ability to deliver products to our customers or clinical sites in a timely manner, adversely affect our sales and operating
results and negatively impact our reputation.
Employees
We rely on the ongoing involvement of certain key employees. Our ability to further progress our clinical candidates and
develop further clinical candidates is dependent on our ability to grow the size and capabilities of our organisation and we
may experience difficulties in managing this growth or achieving this growth within anticipated timescales.
Facilities
If any of our existing facilities or any future facilities, infrastructure or our equipment, including our information technology
systems, were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability
to continue to operate our business could be materially harmed. We maintain insurance coverage against damage to our
property and equipment and business interruption and research and development.
__________________________________________________________________________________________________
19
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
FINANCIAL RISK MANAGEMENT
The Group’s finance department has policies and procedures to manage credit risk, foreign exchange risk and liquidity risk
and circumstances where it would be appropriate to use financial instruments to manage those risks.
Market risk arises from our exposure to fluctuation in interest rates and currency exchange rates, in particular, the exchange
rate between pounds sterling and US dollar. These risks are managed by maintaining an appropriate mix of cash deposits in
sterling and dollar, placed with a variety of financial institutions for varying periods according to expected liquidity
requirements.
We are exposed to market risks in the ordinary course of our business, which are principally limited to interest rate
fluctuations and foreign currency exchange rate fluctuations.
Interest Rate Risk
Our exposure to interest rate sensitivity is impacted by changes in the underlying UK and US bank interest rates. Our surplus
cash and cash equivalents are invested in interest-bearing savings and money market accounts from time to time. We have
not entered into investments for trading or speculative purposes. Due to the conservative nature of our investment portfolio,
which is predicated on capital preservation of investments with short-term maturities, we do not believe an immediate change
in interest rates would have a material effect on the fair market value of our portfolio, and therefore we do not expect our
operating results or cash flows to be significantly affected by changes in market interest rates.
Currency Risk
The functional currency of our UK operations is pounds sterling (GBP) and the functional currency of our US operations is
US dollars. Commonly our transactions, including revenue, are denominated in the currency of the operation in which they
arise. However, the UK operations incur a significant proportion of expenses in other currencies, particularly US dollars,
and are exposed to the effects of exchange rates. We seek to minimise this exposure by passively maintaining other currency
cash balances at levels appropriate to meet foreseeable expenses in these other currencies. We do not use forward exchange
contracts to manage exchange rate exposure.
Liquidity Risk
The cash utilisation is monitored to provide a lead time for raising further funding. The Group’s treasury policy gives
guidance on how much investment should be held with differing counterparties when significant cash balances are on hand.
We will need further financing to further our research and to bring our products to market and may not be able to raise
further finance on acceptable terms.
Commodity Price Risk
We are exposed to commodity price risk as a result of our operations. However, given the size of our operations, the costs
of managing exposure to commodity price risk exceed any potential benefits. We will revisit the appropriateness of this
policy should our operations change in size or nature. We have no exposure to equity securities price risk as we hold no
listed or other equity investments.
Going Concern
Our financial position, including our cash flows and liquidity position, are fully described in the consolidated financial
statements. Having reviewed cash flow forecasts for the 12 month period following the date of signing the financial
statements, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus, they continue to adopt the going concern basis in preparing these financial
statements despite the current uncertain economic climate.
__________________________________________________________________________________________________
20
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
ENVIRONMENTAL MATTERS
Our operations require the use of hazardous materials, which, among other matters, subjects us to a variety of federal, state,
local and foreign environmental, health and safety laws, regulations and permitting requirements, including those relating to
the handling, storage, transportation and disposal of biological and hazardous materials and wastes. The primary hazardous
materials we handle or use include human blood samples and solvents. Some of the regulations under the current regulatory
structure provide for strict liability, holding a party liable for contamination at currently and formerly owned, leased and
operated sites and at third-party sites without regard to fault or negligence. We could be held liable for damages and fines as
a result of our, or others’, operations or activities should contamination of the environment or individual exposure to hazardous
substances occur. We could also be subject to significant fines for failure to comply with applicable environmental, health
and safety requirements. We cannot predict how changes in laws or development of new regulations will affect our business
operations or the cost of compliance.
GREENHOUSE GAS REPORT
Our greenhouse gas emissions estimate for the six months ended 31 December 2015 has been prepared in accordance with
the UK Government’s Department for Environment, Food and Rural Affairs (Defra) guidance document “Environmental
Reporting Guidelines: Including Mandatory GHG emissions reporting guidance, from June 2013”.
Greenhouse Gas Emissions for the Group
Period
Source
Estimated greenhouse gas emissions from our own activities, including
the combustion of fuel and the operation of our facilities
Estimated greenhouse gas emissions from purchased electricity, heat,
steam or cooling for own use
Total estimated greenhouse gas emissions
Intensity ratio: Total greenhouse gas emissions per employee on the
basis of the average number of 173 full-time equivalent employees
during the six months ended 31 December 2015 (Year ended 30 June
Six months ended
31 December 2015
Year ended
30 June 2015
Tonnes carbon
dioxide equivalent
(tCO2-e)
Tonnes carbon
dioxide equivalent
(tCO2-e)
0.00
410.87
410.87
2.375
0.00
318.77
318.77
4.035
We have used the most recent evidence or estimates provided by our energy supply partners to generate our disclosure of
emissions for the period. These include the purchase of electricity, heat, steam or cooling. Standard emissions factors from
Defra’s GHG Conversion Factor Repository were applied to estimate emissions. The Group considers that the intensity ratio
of tonnes of carbon dioxide per full-time equivalent employee is a suitable metric for its operations.
Electricity usage at our leased facilities in the United States and the United Kingdom drive the majority of our greenhouse gas
emissions. Our estimate reflects the use of coolant gasses for refrigeration purposes at our laboratories in Oxfordshire with
our records indicating some leakage of refrigerant gases during the six months ended 31 December 2015, which was fully-
repaired within the period.
Some activity data relating to emissions from our reportable activities were unavailable for the year ended 30 June 2015. This
includes electricity usage at our previous US office facility where it was impractical for us to obtain these data. Therefore, we
estimated this amount at 8% of the above total estimated greenhouse gas emissions for the Group, based on applying the
greenhouse gas emissions for our UK operations to our US office facility.
The Group actively looks to minimise indirect areas of emissions by promoting online conferencing facilities to reduce
business travel.
__________________________________________________________________________________________________
21
ADAPTIMMUNE THERAPEUTICS PLC
STRATEGIC REPORT (CONTINUED)
For the period ended 31 December 2015
EMPLOYEES
As at 31 December 2015, we had 215 full-time equivalent employees, compared to 116 at 30 June 2015. Of these employees,
173 were in R&D (including in manufacturing and operations, and quality control and quality assurance) and 42 were in
management and administrative functions (including business development, finance, intellectual property, information
technology and general administration). The average number of full-time equivalent employees during the six months ended
31 December 2015 was 173 (Year ended 30 June 2015: 79).
We have never had a work stoppage and none of our employees are covered by collective bargaining agreements or
represented by a labour union. We believe our employee relations are good.
Diversity
Appointments within the Group are made on merit according to the balance of skills and experience offered by prospective
candidates. Whilst acknowledging the benefits of diversity, individual appointments are made irrespective of personal
characteristics such as race, disability, gender, sexual orientation, religion or age. A breakdown of the employment statistics
on the basis of full-time equivalent employees as at 31 December 2015 is as follows:
Position
Company Director (1)
Senior Manager
Other Employees
Total Employees (2)
(1) Includes our Chief Executive Officer
(2) Excludes our Chief Executive Officer
Male
Female
Total
8 0 8
2 2 4
98 112 210
100 114 214
EMPLOYEE CONSULTATION AND HUMAN RIGHTS
The Group places considerable value on the involvement of its employees. Meetings are held with employees to discuss the
operations and progress of the business and employees are encouraged to become involved in the success of the Group through
share option schemes (see note 23 - Share Based Payments).
The Group endeavours to impact positively on the communities in which it operates. The Group does not, at present, have a
specific policy on human rights. However, we have several policies that promote the principles of human rights. We will
respect the human rights of all our employees, including: provision of a safe, clean working environment; ensuring employees
are free from discrimination and coercion; not using child or forced labour and respecting the rights of privacy and protecting
access and use of employee personal information. We also have an equal opportunities policy which promotes the right of
every employee to be treated with dignity and respect and not to be harassed or bullied on any grounds.
The Strategic Report was approved by the Board on 16 March 2016.
On behalf of the Board
James J Noble
Director
16 March 2016
__________________________________________________________________________________________________
22
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT
For the period ended 31 December 2015
Remuneration Committee Chairman’s Statement
On behalf of the Board of Directors of Adaptimmune Therapeutics plc, I am pleased to present the Directors’ Remuneration
Report for the period ended 31 December 2015. Shareholders will be invited to approve the Report on Remuneration (which
will be a non-binding advisory vote) at the Annual General Meeting of shareholders to be held on 16 June 2016.
Period Covered by the Directors’ Remuneration Report
Adaptimmune Therapeutics plc was incorporated under the laws of England and Wales on 3 December 2014. The Company
laid its first annual report and financial statements for the period ended 30 June 2015 before the Company in general meeting
at the Annual General Meeting held on 17 December 2015. These included a report on directors’ remuneration for the period
ended 30 June 2015 and a directors’ remuneration policy, which were approved by shareholders at that Annual General
Meeting.
On 13 October 2015, the Company (together with its consolidated subsidiaries) announced a change in its financial year end
to 31 December 2015 in order to align its financial reporting period with those of many of its peer group of biotechnology
companies. As a result, the Company is required to prepare an annual report and financial statements for the period from 1
July 2015 to 31 December 2015, including the Directors' Remuneration Report that follows, and lay them before the
Company in general meeting at its forthcoming Annual General Meeting.
The Directors’ Remuneration Report that follows is for the period from 1 July 2015 to 31 December 2015 except where
otherwise stated. The Company’s next annual report and financial statements, in respect of the year ended 31 December
2016, will include a report on directors’ remuneration for the year ended 31 December 2016 and will be laid before the
Company in general meeting at the Annual General Meeting to be held in 2017.
The Remuneration Committee
The Committee is responsible for reviewing and establishing our executive remuneration policy and philosophy, including
making recommendations regarding the remuneration of our Chief Executive Officer (“CEO”) to the Board for its approval,
and determining and approving the remuneration of other senior executive officers. While the Board sets the remuneration of
our CEO, who is our sole Executive Director, the Committee makes recommendations on such matters to the Board.
Philosophy
We seek to attract and retain outstanding employees, who have the potential to support the growth of the Company and to
attract and retain Non-Executive Directors who can substantially contribute to our success as an innovative, clinical-stage
biopharmaceutical company. As the Company has operations in the United Kingdom and the United States, our senior
executives and our Non-Executive Directors live and work in Europe and the US, and we are listed on a US stock exchange,
we assess the competitiveness of our policies against both European and US benchmarks and practices.
Business Strategy
Our primary goal in 2015 was to achieve a successful IPO, listing our shares for trading in the United States. This
achievement, accomplished in May 2015, provided us with financial resources to grow our existing business and to invest
in the development of our pipeline. Importantly, it also affords our shareholders a mechanism to achieve liquidity.
The remuneration awarded to our CEO and senior executive officers for the period ended 31 December 2015 is compliant
with the remuneration policy previously approved by shareholders and reflects their performance, which enabled us to
substantially achieve our corporate objectives, as well as their ongoing responsibilities and experience. The remuneration
arrangements adopted in 2016 are also in line with the approved remuneration policy and recognise the greater demands
placed on our CEO and senior executive team to deliver on our strategy and create value for our shareholders.
David M Mott
Director and Chairman of Remuneration Committee
16 March 2016
__________________________________________________________________________________________________
23
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (CONTINUED)
For the period ended 31 December 2015
PART I - REPORT ON REMUNERATION
The information provided in this part of the Directors’ Remuneration Report is subject to audit.
The Remuneration Committee presents the Report on Remuneration for the period ended 31 December 2015, which will
be put to shareholders for a non-binding vote at the Annual General Meeting to be held on 16 June 2016.
Summary of remuneration policy – Executive Directors
As Adaptimmune Therapeutics plc is a UK incorporated company listed on NASDAQ, the Committee considers it
appropriate to examine and be informed by compensation practices in both the UK and US, particularly in the matter of
equity-based incentives. The Committee considers that the Directors’ Remuneration Policy, approved at the Annual General
Meeting on 17 December 2015, continues to be appropriate and fit for purpose, but the Committee is committed to reviewing
the remuneration policy on an ongoing basis in order to ensure that it remains effective and competitive.
The last approved Directors’ Remuneration Policy is used to determine the remuneration for our CEO, our sole Executive
Director, as well as for our other senior executives, and would also apply to other Executive Directors and senior executives
that we appointed.
As described in the last approved Directors’ Remuneration Policy, the elements of remuneration for our Executive Director
and senior executives comprise: base salary, pension, benefits (currently, access to death-in-service life insurance, family
private medical cover and ill-health income protection), annual bonus and long term equity incentives (currently, share
option awards).
The remuneration of our CEO is determined by the Board after having considered recommendations from the Committee.
The remuneration of other senior executives in the Company is determined by the Committee.
In 2015, the Committee retained an independent remuneration consultant, Radford, an Aon Hewitt company, to assist the
Committee in ensuring that our remuneration arrangements for the Executive Director and senior executives are competitive
for the calendar year commencing 1 January 2016. Radford provided data from comparable publicly traded
biopharmaceutical companies and otherwise assisted the Committee in its design of competitive remuneration for the
Executive Director and senior executives. We expect to continue to use remuneration consultants to assist the Committee in
determining competitive levels of executive remuneration and specific design elements of our remuneration programme.
Summary of remuneration policy – Non-Executive Directors
Our Non-Executive Directors do not currently receive any fees for their services. In line with the Directors’ Remuneration
policy approved by shareholders at our Annual General Meeting on 17 December 2015, the Board has the discretion to pay
fees to any or all Non-Executive Directors; and/or to pay Non-Executive Directors in the form of a mixture of cash and share
options. We may establish cash remuneration for Non-Executive Directors at then-competitive amounts taking into account
the individual’s experience and peer data from comparable companies, and Radford consultants have been engaged to
undertake a benchmarking survey of market data.
The Non-Executive Directors do not receive any pension from the Company nor do they participate in any performance-
related incentive plans.
Our Non-Executive Directors participate in the Group’s long-term incentive plans on terms similar to those used for
Executive Directors. In accordance with their Letters of Appointment entered into on 22 April 2015, all Non-Executive
Directors were awarded options, which were granted effective from 11 May 2015, being the closing of our IPO. Each Non-
Executive Director is entitled to receive an annual award of share options, with such number to be determined by the Board,
on each anniversary of 11 May 2015, provided that he/she continues to serve as a Director.
The option awards will be determined by the Board as a whole, working within the last approved Directors’ Remuneration
policy and benchmarking guidelines provided by Radford consultants. All options are granted with an exercise price that is
no lower than the fair market value at the time of grant and may become exercisable immediately. Expected values are
calculated in accordance with generally accepted methodologies based on Black-Scholes models.
__________________________________________________________________________________________________
24
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (CONTINUED)
For the period ended 31 December 2015
Single Total Figure of Remuneration for each Director
The following table shows the remuneration received by the Directors for the six month period ended 31 December 2015,
except that the annual bonus amount is shown for the 12 months ended 31 December 2015.
For reference only, the table also shows the remuneration received by the Directors for the year ended 30 June 2015, which
information was included in the Company’s annual report and financial statements for the year ended 30 June 2015 and
approved by shareholders at the Annual General Meeting held on 17 December 2015.
For the six months ended 31 December 2015:
For the year ended 30 June 2015:
Fixed Pay (1)
Variable Pay (1)
Fixed Pay (1)
Variable Pay (1)
Name of Director
Salary
and fees
£
Taxable
benefits
£
Annual
bonus
£
Pension
contribut
ions
£
Equity-
Based
Awards
(10)
Total
£
Salary
and fees
£
Taxable
benefits
£
Annual
bonus
£
Pension
contribut
ions
£
Equity-
Based
Awards
(10) £
Total
£
Executive
James Noble,
CEO (2)
Non-executives
Jonathan
Knowles,
Chairman
Lawrence Alleva
Ali Behbahani
Ian Laing
David Mott
Elliott Sigal
Peter Thompson
150,000(3)
854(4) 200,000(5)
7,500(6)
- 358,354 260,000 (3) 1,117 (4) 200,000(5) 13,000(6) 120,050 594,167
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,678 (7)(8)
-
-
-
-
- 15,743 (7)(9)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 186,334 193,012
-
-
-
-
-
-
-
-
-
- 186,334 202,077
-
-
-
(1) The majority of remuneration was set and paid in pounds sterling (£).
(2) Mr Noble served as a Director of the Company effective from 3 December 2014, when the Company was incorporated, and his
employment as our CEO was transferred from Adaptimmune Limited, our subsidiary company, to the Company effective from the
completion of our IPO on 6 May 2015. During the period from 1 July 2014 to 5 May 2015, the remuneration and benefits were paid
by Adaptimmune Limited of which Mr Noble is also a Director. Effective from 6 May 2015 to 30 June 2015, the remuneration and
benefits were paid by the Company.
(3) The base salary levels of our CEO and all other employees of the Group are reviewed and, to the extent deemed necessary, adjusted to
be effective from 1 January in each year. The salary amount paid to Mr Noble for the six months ended 31 December 2015, shown in
the table, represents a pro-rata amount in respect of his annual salary of £300,000 (effective from 1 January 2015) for the period from
1 July 2015 to 31 December 2015. The salary amount shown for the year ended 30 June 2015 is for reference only and represents the
aggregate of a pro-rata amount in respect of Mr Noble’s annual salary of £220,000 (effective from 1 January 2014) for the period from
1 July 2014 to 31 December 2014 and a pro-rata amount in respect of his annual salary of £300,000 (effective from 1 January 2015)
for the period from 1 January 2015 to 30 June 2015.
(4) Taxable benefits comprise medical and life insurance. Generally, Mr Noble participates in the same benefits as we offer to all our
employees in the United Kingdom where Mr Noble resides.
(5) The annual bonus amount shown for the six months ended 31 December 2015 represents the total bonus for 2015 that related to
performance in the 12 months ended 31 December 2015. The annual bonus amount shown for the year ended 30 June 2015 represents
the total bonus that related to performance in the 12 months ended 31 December 2014.
(6) Pension contributions represent contributions into a money purchase plan at the rate of 5% of base salary. 5% is the maximum employer
matching contribution to each employee’s participation in the basic defined contribution pension scheme.
(7) For the purposes of this table, the fees paid in US dollars to Mr Alleva and Dr Sigal have been translated into pounds sterling based on
the US dollar/pound sterling exchange rate in effect on 30 June 2015 ($1.5727 to £1).
(8) Amount represents fees of $10,503 paid to Mr Alleva for services from 5 March 2015 through 5 May 2015. Effective from 6 May
2015, Mr Alleva is no longer paid fees for his services.
__________________________________________________________________________________________________
25
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (CONTINUED)
For the period ended 31 December 2015
(9) Amount represents fees of $24,759 paid to Dr Sigal for services as a Director of Adaptimmune Limited from 23 September 2014
through 11 February 2015 and for services as a Director of Adaptimmune Therapeutics plc from 12 February 2015 through 5 May
2015. Effective from 6 May 2015, Dr Sigal is no longer paid fees for his services.
(10) The valuation of equity-based awards is the amount is based on the market value of underlying shares given at the time that performance
conditions were met, less the applicable exercise price. In the year ended 30 June 2015 there were no performance obligations linked
to the equity-based awards other than service obligations and therefore, for the purposes of this valuation, all performance conditions
are considered to be met at the award date. No equity-based awards were made to Directors during the six months ended 31 December
2015.
Annual Bonus
The annual bonus for the 12 months ended 31 December 2015 shown in the table above for Mr Noble, our CEO, was based
on the achievement of corporate objectives that included financial goals and fundraising objectives. The Board has
considered whether it would be in the best interests of the Company and its shareholders to disclose the precise targets agreed
for the performance measures in 2015. As the specific corporate objectives for a single year are based on the Group’s long-
term strategies, the Board has concluded that disclosing such targets would necessarily involve divulging competitively
sensitive information that we believe would be detrimental to our commercial performance going forward and, therefore,
we are providing the categories of objectives, rather than the precise targets. The Board will disclose these targets when this
information is no longer commercially sensitive, although this is unlikely to be in the foreseeable future.
Statement of Directors’ Shareholdings and Share Interests
The table below shows, for each Director, the total number of shares owned, the total number of share options held and the
number of share options vested as at 31 December 2015. No Director exercised any share options during the six months
ended 31 December 2015. The table only reflects shares held individually by each Director, or a family investment vehicle,
and does not include shares held by any investment fund with which the Director is affiliated.
Name of Director
Shares owned
Total share
options
Vested share
options (1)
Options exercised during six
months ended 31 December 2015
Executive Director
James Noble
Non-Executive Directors
Lawrence Alleva
Ali Behbahani
Jonathan Knowles
Ian Laing
David Mott
Elliott Sigal
Peter Thompson
11,172,600 (2)
5,273,100
1,899,500
70,584 (3)
-
7,138,184 (4)
29,042,800
-
307,038 (5)
-
550,226
155,682
175,806
159,875
163,229
544,077
155,682
30,745
155,682
175,806
159,875
163,229
24,596
155,682
-
-
-
-
-
-
-
-
(1) All share options that were outstanding as at 31 December 2015 use time-based vesting and are not subject to performance targets
other than continued service until the date of vesting.
(2) Includes 1,200,000 Ordinary shares represented by 200,000 ADSs that Mr Noble purchased in October 2015.
(3) Consists of 70,584 Ordinary shares represented by 11,764 ADSs that Mr Alleva purchased during the IPO.
(4) Includes 70,584 Ordinary shares represented by 11,764 ADSs that Dr Knowles purchased during the IPO.
(5) Includes 254,100 Ordinary shares held by Sigal Family Investments LLC, as well as 52,938 Ordinary shares represented by 8,823
ADSs that Dr Sigal purchased during the IPO.
Policy on Shareholding Requirements
We do not currently have a policy requiring our Directors to hold a certain number or value of our shares. However, we
encourage our Executive Director and senior executive officers to have a shareholding in the Company.
__________________________________________________________________________________________________
26
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (CONTINUED)
For the period ended 31 December 2015
Directors’ Equity-based Awards Held at 31 December 2015
The table below presents the interests of the Directors in options to acquire our Ordinary shares with a nominal value of £0.001
per share as at 31 December 2015. No options were granted to Directors during the six months ended 31 December 2015.
None of our Directors exercised any options during the six months ended 31 December 2015.
Options
held
Grant
date
Start date
for vesting
Exercise
price
First date of exercise of
some or all options (2)
Date of
expiry
Name of Director
Executive Director
James Noble (1)
Total
Non-Executive Directors
Lawrence Alleva
Total
1,335,000
438,100
3,500,000
5,273,100
519,481
30,745
550,226
20/03/15
20/03/15
20/03/15
31/03/14
14/04/14
19/12/14
£0.1120
£0.1120
£0.3557
31/03/15
14/04/15
19/12/15
16/03/15
11/05/15
16/03/16
11/05/15
£0.5000
£1.82
Ali Behbahani
155,682
11/05/15
11/05/15
£1.82
Jonathan Knowles
175,806
11/05/15
11/05/15
£1.82
Ian Laing
159,875
11/05/15
11/05/15
£1.82
David Mott
163,229
11/05/15
11/05/15
£1.82
Elliott Sigal
Total
519,481
24,596
544,077
16/03/15
11/05/15
16/03/16
11/05/15
£0.5000
£1.82
31/03/24
14/04/24
19/12/24
16/03/25
11/05/25
11/05/25
11/05/25
11/05/25
11/05/25
16/03/25
11/05/25
16/03/16
11/05/15
11/05/15
11/05/15
11/05/15
11/05/15
16/03/16
11/05/15
Peter Thompson
155,682
11/05/15
11/05/15
£1.82
11/05/15
11/05/25
(1) All options granted to James Noble on 20 March 2015 were granted as replacement options in exchange for options formerly held
over Ordinary shares of Adaptimmune Limited. These replacement options vest and become exercisable as follows: 25% on the
first anniversary of the grant date of the original options and 75% in monthly instalments over the following three years.
(2) 519,481 options granted to Lawrence Alleva and 519,481 options granted to Dr Elliott Sigal vest and become exercisable as follows:
25% on the first anniversary of the grant date and 75% in monthly instalments over the following three years. All other options
granted to non-executive Directors vested and became exercisable on 11 May 2015.
All of the share options awarded to Directors that were outstanding as at 31 December 2015 use time-based vesting and are
not subject to performance targets other than continued service until the date of vesting.
The closing market price of our ADSs on 31 December 2015 was $12.06. One ADS represents six Ordinary shares.
Payments Made to Past Directors
During the six months ended 31 December 2015, we made no payments to former Directors of the Company.
Payments for Loss of Office
During the six months ended 31 December 2015, we made no payments with respect to a Director’s loss of office.
__________________________________________________________________________________________________
27
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (CONTINUED)
For the period ended 31 December 2015
Illustration of Total Shareholder Return
The information provided in this part of the Directors’ Remuneration Report is not subject to audit.
The following graph compares the cumulative total shareholder return on our ADSs, each representing six Ordinary shares,
with that of the Nasdaq Biotech Index for the period that our shares were publically traded. We selected the Nasdaq Biotech
Index because our ADSs trade on The NASDAQ Global Select Market and we believe this indicates our relative performance
against a group consisting of more similarly situated companies.
Chief Executive Officer Total Remuneration History
The table below sets out total remuneration details for the Chief Executive Officer.
Period
Six months ended 31 December 2015:
Year ended 30 June 2015:
Single total
figure of
remuneration £
358,354
594,167
Annual bonus
payout against
maximum (1)
65%
100%
Long term incentive
vesting rates against
maximum opportunity (2)
100%
100%
(1) The bonus payout percentage amount for the six months ended 31 December 2015 relates to the total annual bonus payment for
performance in the 12 months ended 31 December 2015. The bonus payout percentage for the year ended 30 June 2015 relates to the
total annual bonus payment for performance in the 12 months ended 31 December 2014.
(2) The amount shown represents the percentage of the options that actually vested during the period expressed as a percentage of the
maximum number of options that could have vested during the period. There were no performance obligations linked to these equity-
based awards, other than service obligations, and therefore, all options that could have vested during the period have actually vested.
__________________________________________________________________________________________________
28
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (CONTINUED)
For the period ended 31 December 2015
Chief Executive Officer’s Remuneration Compared to Other Employees
The Chief Executive Officer’s average fixed salary of £150,000 for the six months ended 31 December 2015 was 3.8 times
the value of the average fixed salary of the Group’s employees for such period. His average fixed salary of £260,000 for the
year ended 30 June 2015 was 4.5 times the value of the average fixed salary of the Group’s employees for the year ended
30 June 2015.
The following table shows the percentage change in remuneration of the Chief Executive Officer and the average increase
per employee between the 12 months ended 30 June 2015 and the 12 months ended 31 December 2015. The figures for the
six months ended 31 December 2015 have been annualised so that it is possible to make a comparison between the 12 months
ended 31 December 2015 and the 12 months ended 30 June 2015.
Percentage increase in remuneration in 12 months ended 31 December 2015
compared with remuneration in 12 months ended 30 June 2015
Base salary
Annual bonus
Taxable benefits
CEO
15%
0% (2)
53% (3)
Average increase per employee (1)
5%
61%
489%
(1) The significant percentage increases for annual bonus and taxable benefits were driven by substantial growth in employee numbers in
2015. Employee numbers grew to an average of 173 full-time equivalent (“FTE”) employees for the 12 months ended 31 December
2015 (compared to an average of 79 FTE employees for the 12 months ended 30 June 2015). The average increase per employee is
calculated on the basis of the average number of 173 FTE employees for the 12 months ended 31 December 2015.
(2) The annual bonus paid to the CEO in relation to each 12 month period was £200,000.
(3) Represents an increase to £1,708 for the 12 months ended 31 December 2015 from £1,117 for the 12 months ended 30 June 2015.
Relative Importance of Spend on Pay
The following table sets forth the total amounts spent by the Company and its direct and indirect subsidiaries on remuneration
for the six months ended 31 December 2015 and for the year ended 30 June 2015, and the dividends declared and paid by
the Company in each period.
Period:
Total spend on remuneration (1):
Dividends declared and paid:
Six months ended 31 December 2015
£9,949,000
-
Year ended 30 June 2015
£8,362,000
-
(1) The total spend includes the value of equity-based awards as recognised in the financial statements in accordance with International
Financial Reporting Standard 2 “Share-Based Payments”.
The Remuneration Committee
The Remuneration Committee is comprised of Mr David Mott (Chairman), Mr Ian Laing and Dr Peter Thompson. All
members have served since 12 February 2015, when the Committee was established as a committee of the Board of
Adaptimmune Therapeutics plc, and previously served as members of the Remuneration Committee of Adaptimmune
Limited. All members have continued to serve until the date of this Report on Remuneration. The charter of the Committee
is set forth on our website at http://www.adaptimmune.com
Advice Provided to the Remuneration Committee
The Committee retained Radford, an Aon Hewitt company, to provide independent advice and consultation with respect to
remuneration arrangements for the Chief Executive Officer (being our sole Executive Director) and senior management.
Radford is a global remuneration consultant with a well established reputation for design and implementation of
remuneration programmes, including the design and implementation of equity-based award programmes. The amounts paid
to Radford in the period ended 31 December 2015 total £24,000.
__________________________________________________________________________________________________
29
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (CONTINUED)
For the period ended 31 December 2015
In addition to Radford, the Committee solicited and received input from the Chief Executive Officer concerning the
remuneration of senior executives other than himself. The Chief Executive Officer provided recommendations with respect
to annual cash bonuses to be paid to these persons for service in the year ending 31 December 2015 and base salary awards
effective from 1 January 2016 and with respect to equity-based awards to be made to these persons in 2016. Finally, the
Chief Executive Officer also provided input to the Committee regarding the implementation of equity-based remuneration
as an element of all other employees’ remuneration.
Statement of Voting Results
Voting at our shareholder meetings is generally conducted by show of hands by shareholders who are in attendance at the
meeting. At the Annual General Meeting held on 17 December 2015, all of the resolutions set out in the Notice of the Annual
General Meeting sent to shareholders were duly proposed and passed by unanimous approval, including the resolution
proposing the approval of the Directors’ Remuneration Report for the period ended 30 June 2015 and the resolution
proposing the approval of the Directors’ Remuneration Policy to apply effective from the end of that Annual General
Meeting. No votes were withheld.
Details of the proxy votes received in relation to the resolution proposing the approval of the Directors’ Remuneration Report
for the period ended 30 June 2015 and in relation to the resolution proposing the approval of the Director’s Remuneration
Policy were as follows:
Resolution
Votes For
% of Total
Votes
Against
% of Total
Votes
Withheld
% of Total
To approve the Directors’
Remuneration Report
To approve the Directors’
Remuneration Policy
330,425,362
99.14%
2,866,152
0.86%
1,693,900
0.50%
320,910,968
95.80%
14,074,446
4.20%
0
0%
Statement of Implementation of Remuneration Policy in the Period ended 31 December 2015
There have been no changes to the Directors’ Remuneration Policy as approved at the Annual General Meeting of
shareholders held on 17 December 2015. In 2016, the Company intends to continue to adhere to the policy as approved.
Application of the Remuneration Policy to Executive Director Remuneration for the year ending 31 December 2016
The following table provides an illustration of the potential remuneration for the year ending 31 December 2016 for the
Chief Executive Officer, as the sole Executive Director, computed in accordance with the last approved Remuneration Policy
and by applying the following assumptions:
Minimum
In line with
expectations
Maximum
The base salary for the Executive Director is assumed to be the base salary of £315,000 pa effective
from 1 January 2016.
The value of benefits receivable for the year ending 31 December 2016 is assumed to be 5% of base
salary for pension and the same rate of contribution for private health insurance as for 2015.
No bonus is assumed for the Executive Director.
The same components for base salary and benefits as reflected for the minimum above.
The expected level of bonus is taken to be 50% of base salary, being the on-target level of bonus
payment for the 12 months ending 31 December 2016.
The same components for base salary and benefits as reflected for the minimum above.
The maximum level of bonus is taken to be 100% of current base salary.
Annual bonus
For the 12 months ending 31 December 2016, the CEO is eligible for a bonus award of up to 50% of his base salary of
£315,000 pa for the year from 1 January 2016 (that is, up to £157,500), subject to the achievement of corporate objectives.
In 2016, the corporate objectives include financial goals and progress with pipeline development programmes and clinical
trials, key regulatory steps (IND grants, regulatory approvals), business development activities and recruitment objectives.
It is anticipated that the Board will meet in early January 2017 to assess the performance of the CEO for the year ended 31
December 2016 against the corporate objectives.
__________________________________________________________________________________________________
30
ADAPTIMMUNE THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (CONTINUED)
For the period ended 31 December 2015
The Board has considered whether it would be in the best interests of the Company and its shareholders to disclose the
precise targets agreed for the performance measures in 2016. As the specific corporate objectives for a single year are based
on the Group’s long-term strategies, the Board has concluded that disclosing such targets would necessarily involve
divulging competitively sensitive information that we believe would be detrimental to our commercial performance going
forward and, therefore, we are providing the categories of objectives, rather than the precise targets. The Board will disclose
these targets when this information is no longer commercially sensitive, although this is unlikely to be in the foreseeable
future.
PART II - DIRECTORS’ REMUNERATION POLICY
The Directors’ Remuneration Policy has been excluded from this Directors’ Remuneration Report, as the last approved policy
will continue to apply. That remuneration policy was approved at the Annual General Meeting held on 17 December 2015
and remains effective for a maximum of three years, until 16 December 2018, or until a revised policy is approved by
shareholders. The last approved remuneration policy can be found in the Annual Report and Financial Statements of the
Company for the year ended 30 June 2015, which are available in the Investors section of our website:
http://www.adaptimmune.com
Approval
This report was approved by the Board of Directors on 16 March 2016 and signed on its behalf by:
David M Mott
Director
16 March 2016
__________________________________________________________________________________________________
31
ADAPTIMMUNE THERAPEUTICS PLC
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE DIRECTORS’
REPORT, THE STRATEGIC REPORT AND THE FINANCIAL STATEMENTS
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each financial year. Under
that law they have elected to prepare the group financial statements in accordance with IFRSs as adopted by the EU and
applicable law, and have elected to prepare the parent company financial statements in accordance with UK Accounting
Standards and applicable law (UK Generally Accepted Accounting Practice) including FRS 101 Reduced Disclosure
Framework.
Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing
each of the group and parent company financial statements, the directors are required to:
•
•
•
•
•
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRSs as adopted by the EU;
for the parent company financial statements, state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the
parent company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent
company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent company and
enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility
for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors’ Report
and Directors’ Remuneration Report that comply with that law and those regulations.
__________________________________________________________________________________________________
32
ADAPTIMMUNE THERAPEUTICS PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ADAPTIMMUNE THERAPEUTICS PLC
For the period ended 31 December 2015
We have audited the financial statements of Adaptimmune Therapeutics plc for the period ended 31 December 2015 set out on pages 34
to 64. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the EU. The financial reporting framework that has been applied in
the preparation of the parent company financial statements is applicable law and UK Accounting Standards (UK Generally Accepted
Accounting Practice) including FRS 101 Reduced Disclosure Framework.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 32, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion
on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31
December 2015 and of the group’s loss for the six months then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
the parent company financial statements have been properly prepared in accordance UK Generally Accepted Accounting
Practice;
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
•
•
the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act
2006; and
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the financial statements.
•
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
•
Charles le Strange Meakin (Senior Statutory Auditor)
For and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Arlington Business Park
Theale, Reading RG7 4SD
United Kingdom
17 March 2016
__________________________________________________________________________________________________
33
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED INCOME STATEMENT
For the
Revenue
Research & development expenses
Administrative expenses
Other income
Operating loss
Finance income
Finance expense
Loss before tax
Taxation credit
Loss for the period
For the
Basic and diluted loss per share
Weighted average number of shares used to calculate basic loss per
share
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
For the
Loss for the period
Other comprehensive income
Items that are or may be reclassified subsequently to profit
or loss:
Foreign exchange translation differences (net of tax of £nil
and £nil)
Other comprehensive (loss)/income for the period, net
of income tax
Note
six months ended
31 December
2015
£000
year ended
30 June
2015
£000
2
3
3
6
7
8
9
5,499
(16,467)
(7,300)
908
(17,360)
8,766
-
(8,594)
1,235
6,818
(14,749)
(7,201)
462
(14,670)
322
(720)
(15,068)
1,339
(7,359)
(13,729)
six months ended
31 December
2015
£
year ended
30 June
2015
£
(0.02)
(0.04)
number
424,711,900
number
325,012,111
six months ended
31 December
2015
£000
year ended
30 June
2015
£000
(7,359)
(13,729)
(5)
(5)
11
11
Total comprehensive loss for the period
(7,364)
(13,718)
All of the above figures relate to continuing operations.
The notes on pages 40 to 64 form part of these Financial Statements
__________________________________________________________________________________________________
34
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Company Number 09338148
Note
31 December
2015
£000
As of
Assets
Non-current assets
Property, plant & equipment
Intangibles
Other non-current assets
Restricted cash
Total non-current assets
Current assets
Other current assets
Trade and other receivables
Tax receivable
Short-term deposits
Cash and cash equivalents
Total current assets
Total assets
Equity & liabilities
Equity
Share capital
Share premium
Other reserve
Foreign exchange reserve
Retained earnings
Total Equity
Non-Current liabilities
Trade and other payables
Total non-current liabilities
Current liabilities
Trade and other payables
Tax payable
Total current liabilities
Total equity & liabilities
10
11
13
14
13
15
16
17
20
18
19
30 June
2015
£000
3,429
113
-
-
3,542
65
4,249
2,524
35,164
145,666
187,668
8,921
1,868
3,195
3,040
17,024
201
8,933
2,914
36,843
131,038
179,929
196,953
191,210
425
114,091
80,445
116
(34,907)
425
114,091
80,445
121
(29,989)
160,170
165,093
17,793
9,100
17,793
18,810
-
9,100
16,992
25
18,810
17,017
196,953
191,210
The notes on pages 40 to 64 form part of these Financial Statements
The financial statements on pages 34 to 64 were approved by the Board of Directors on 16 March 2016 and are signed on its
behalf by:
James J Noble
Director
16 March 2016
__________________________________________________________________________________________________
35
ADAPTIMMUNE THERAPEUTICS PLC
COMPANY STATEMENT OF FINANCIAL POSITION
Company Number 09338148
As of
Assets
Non-current assets
Investments in subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity & liabilities
Equity
Share capital
Share premium
Other reserve
Retained earnings
Total Equity
Current liabilities
Trade and other payables
Total equity & liabilities
30 June
2015
£000
58,898
58,898
113,356
-
113,356
Note
31 December
2015
£000
60,946
60,946
113,191
96
113,287
12
15
20
174,233
172,254
425
114,091
58,540
467
173,523
425
114,091
58,540
(2,133)
170,923
18
710
1,331
174,233
172,254
The notes on pages 40 to 64 form part of these Financial Statements
The financial statements on pages 34 to 64 were approved by the Board of Directors on 16 March 2016 and are signed on its
behalf by:
James J Noble
Director
16 March 2016
__________________________________________________________________________________________________
36
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capital
£000
Share
Premium
£000
Other
reserve
£000
Exchange
reserve
£000
Retained
earnings
£000
Total
equity
£000
20,066
110
(18,943)
1,415
Balance at 1 July 2014
Total comprehensive loss for the year:
Loss for the year
Other comprehensive income for the year
Transactions with owners, recorded directly
in equity:
Proceeds from the issue of preference
shares*, net of issue costs of £3,031,000
182
-
-
-
-
-
-
-
175
-
60,379
Proceeds from the issue of share capital, net
68
114,091
of issue costs of £9,899,000
Equity-settled share based payment
-
-
transactions
-
-
Balance at 30 June 2015
425
114,091
80,445
Balance at 1 July 2015
425
114,091
80,445
Total comprehensive loss for the period:
Loss for the period
Other comprehensive loss for the period
Transactions with owners, recorded directly
in equity:
Equity-settled share based payment
transactions
-
-
-
-
-
-
-
-
-
-
11
-
-
-
121
121
-
(5)
(13,729)
(13,729)
-
-
-
11
60,554
114,159
2,683
2,683
(29,989)
165,093
(29,989)
165,093
(7,359)
(7,359)
-
(5)
-
2,441
2,441
Balance at 31 December 2015
425
114,091
80,445
116
(34,907)
160,170
*subsequently converted into ordinary shares on IPO.
The notes on pages 40 to 64 form part of these Financial Statements
__________________________________________________________________________________________________
37
ADAPTIMMUNE THERAPEUTICS PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
Share
capital
£000
Share
Premium
£000
Other
reserve
£000
Retained
earnings
£000
Total
equity
£000
Balance at 3 December 2014
Total comprehensive loss for the year:
Loss for the year
Transactions with owners, recorded directly
in equity:
Effects of the reorganisation
Proceeds from the issue of share capital, net
of issue costs of £9,899,000
Equity-settled share based payment
transactions
-
-
357
68
-
-
-
-
-
-
-
(3,119)
(3,119)
-
58,540
114,091
-
-
-
-
-
58,897
114,159
986
986
Balance at 30 June 2015
425
114,091
58,540
(2,133)
170,923
Balance at 1 July 2015
425
114,091
58,540
(2,133)
170,923
Total comprehensive income for the period:
Profit for the period
Transactions with owners, recorded directly
in equity:
Equity-settled share based payment
transactions
-
-
-
-
-
159
159
-
2,441
2,441
Balance at 31 December 2015
425
114,091
58,540
467
173,523
The notes on pages 40 to 64 form part of these Financial Statements
__________________________________________________________________________________________________
38
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the
Cash flows from operating activities
Loss for the period before tax
Adjustments for:
Depreciation
Amortisation
Loss on disposals of property, plant and
equipment
Note
10
11
Equity-settled share based payment expense
23
Unrealized foreign exchange gains
Bank interest income
Increase in other current and other non-
current assets
Increase in trade and other receivables
Increase/(decrease)
in
trade and other
payables
Foreign exchange translation differences on
consolidation
Cash used in operations
Net taxes received/(paid)/
Interest received
six months ended
31 December 2015
£000
(8,594)
771
45
-
2,441
(8,445)
(321)
(3,331)
(4,573)
10,691
(5)
(11,321)
817
213
year ended
30 June 2015
£000
(15,068)
447
19
2
2,683
-
-
(65)
(3,624)
(5,046)
11
(20,641)
(177)
-
Net cash used in operating activities
(10,291)
(20,818)
Cash flows from investing activities
Acquisition of property, plant & equipment
Acquisition of intangibles
Proceeds from disposal of property, plant &
equipment
Investment in short-term deposits
Investment in restricted cash
10
11
14
(6,263)
(1,800)
-
-
(3,040)
(3,117)
(132)
79
(35,164)
-
Net cash used in investing activities
(11,103)
(38,334)
Cash flows from financing activities
Proceeds from the issue of share capital
Net cash from financing activities
Net (decrease)/increase in cash and cash
equivalents
Unrealized foreign exchange gain in cash
and cash equivalents
Cash and cash equivalents at start of period
Cash and cash equivalents at period end
17
-
174,713
-
(21,394)
6,766
145,666
131,038
174,713
115,561
-
30,105
145,666
The notes on pages 40 to 64 form part of these Financial Statements
__________________________________________________________________________________________________
39
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
For the period ended 31 December 2015
1. ACCOUNTING POLICIES
Domicile
Adaptimmune Therapeutics plc is registered in England and Wales. Its registered office is 101 Park Drive, Milton Park,
Abingdon, Oxfordshire OX14 4RY.
The Company and its subsidiaries (the “Group”) are a clinical-stage biopharmaceutical group focused on novel cancer
immunotherapy products based on its T-cell receptor platform. It has developed a comprehensive proprietary platform that
enables it to identify cancer targets, find and genetically engineer T-cells receptors, or TCRs, and produce TCR therapeutic
candidates for administration to patients. The Group engineers TCRs to increase their affinity to cancer specific peptides in
order to destroy cancer cells in patients.
The Group is subject to a number of risks similar to other biopharmaceutical companies in the early stage, including, but not
limited to, the need to obtain adequate additional funding, possible failure of preclinical programs or clinical trials, the need
to obtain marketing approval for its TCR therapeutic candidates, competitors developing new technological innovations, the
need to successfully commercialize and gain market acceptance of the Group’s TCR therapeutic candidates, and protection
of proprietary technology. If the Group does not successfully commercialize any of its TCR therapeutic candidates, it will
be unable to generate product revenue or achieve profitability. As at 31 December 2015, the Group had an accumulated
deficit of approximately £35 million.
Statement of Compliance
The consolidated financial statements have been prepared and approved by the Directors in accordance with International
Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”) and in compliance with IFRSs issued by the IASB.
The separate financial statements of the Company are drawn up in accordance with the Companies Act 2006 and Financial
Reporting Standard 101 (“FRS 101”). On publishing the parent company financial statements here together with the group
financial statements, the Company is taking advantage of the exemption in s408 of the Companies Act 2006 not to present its
individual income statement, cash flow statement and related notes that form a part of these approved financial statements.
Basis of Preparation
The financial statements have been prepared on the historical cost basis except as required by the accounting standards. The
Group has changed the reporting date from 30 June to 31 December and therefore the Consolidated Financial Statements of
Adaptimmune Therapeutics plc and its subsidiaries, Adaptimmune Limited and Adaptimmune LLC and the financial
statements for Adaptimmune Therapeutics plc included herein are for a short period of six months to 31 December 2015. As
such the comparable amounts presented in these consolidated financial statements for the year ended 30 June 30 2015 are not
entirely comparable.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
financial statements.
Corporate Reorganisation
On 1 April 2015, the Group completed a corporate reorganization, whereby Adaptimmune Therapeutics plc completed a
share-for-share exchange after which it became the sole shareholder of Adaptimmune Limited in exchange for issuing
181,370,100 Ordinary and 175,841,800 preferred shares to the shareholders of Adaptimmune Limited.
The reorganisation has been accounted for in accordance with the principles of reverse acquisition accounting. Accordingly,
the historical consolidated financial statements of Adaptimmune Limited and its subsidiary prior to the reorganisation became
those of Adaptimmune Therapeutics plc. For periods prior to the reorganisation, the equity of Adaptimmune Therapeutics
plc represents the historical equity of Adaptimmune Limited. The nominal value of the share capital has been adjusted to
reflect the increase in the number of shares in issue.
__________________________________________________________________________________________________
40
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
1
ACCOUNTING POLICIES (CONTINUED)
All share and per share information presented gives effect to the reorganisation by dividing the loss for the period by the
weighted average number of shares outstanding of Adaptimmune Therapeutics plc as if the one-for-100 share exchange had
been in effect throughout the period.
Initial Public Offering
On 11 May 2015, the Company completed an Initial Public Offering on Nasdaq, issuing 11,250,000 American Depositary
Shares representing 67,500,000 Ordinary shares with nominal value of £67,500 for proceeds before expenses of £124,058,000.
Funding costs of £9,899,000, including underwriter fees were incurred and offset against the share premium account.
Going Concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are
set out in the Strategic Report on pages 10 to 22. The financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described in the primary statements and notes of this set of financial statements. In addition, notes 20
and 21 to the financial statements include the Group’s objectives, policies and processes for managing its capital and its
financial risk management objectives.
After making enquiries and considering the Group’s business activities, together with the factors likely to affect its future
development, performance and position, the Directors have a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in
preparing the annual report and accounts.
Management Estimates and Judgements
The preparation of the financial statements in conformity with IFRSs requires management to make judgements, estimates
and assumptions. These judgements, estimates and assumptions affect the reported amounts of assets and liabilities as well as
income and expenses in the financial statement provided.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of
assets and liabilities that are not readily apparent from other sources. The actual outcome is not expected to differ significantly
from the estimates and assumptions made.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period or the period of revision and future periods
if this revision affects both current and future periods.
Basis of Consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into
consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control is
transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from
the date that control commences until the date that control ceases.
__________________________________________________________________________________________________
41
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
1
ACCOUNTING POLICIES (CONTINUED)
Foreign Currency
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign
exchange rate in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are retranslated to the functional currency at the foreign exchange rate in effect at that date. Foreign
exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that
are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the
transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated
to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.
The assets and liabilities of foreign operations are translated to the Group’s presentational currency, Sterling (GBP), at foreign
exchange rates in effect at the balance sheet date. The revenues and expenses of foreign operations are translated at an average
rate for the year where this rate approximates to the foreign exchange rates in effect at the dates of the transactions. Exchange
differences arising from this translation of foreign operations are reported as an item of Other comprehensive income and
accumulated in the Exchange reserve.
Property, Plant and Equipment
Property, plant and equipment are stated at their purchase cost, together with any incidental expenses of acquisition, and they
are stated in the statement of financial position at cost less accumulated depreciation.
Depreciation is calculated so as to write off the cost of the assets less their estimated residual values, on a straight line basis
over the expected useful economic lives of the assets concerned. Depreciation is not charged on construction in progress until
the asset is completed for its intended use and transferred to the appropriate fixed asset classification.
The periods generally applicable are as follows:
Computer equipment
Laboratory equipment
Office equipment
Leasehold improvements
3 years
5 years
5 years
the expected duration of the lease
Intangibles
Research and development
Expenditure on research activities is recognized in the income statement as incurred. Costs incurred on development projects
are recognized as intangible assets when all of the below criteria exist:
•
•
•
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits can be demonstrated;
the availability of adequate technical, financial and other resources to complete the development and to use or sell
the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Otherwise, it is recognized in the income statement as incurred. Subsequent to initial recognition, development expenditure
is measured at cost less accumulated amortization and any accumulated impairment losses.
The Company currently does not have any development projects which have met the above criteria.
__________________________________________________________________________________________________
42
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
1 ACCOUNTING POLICIES (CONTINUED)
Acquired in-process research and development
Acquired research and development intangible assets, which are still under development, such as initial upfront and
milestone payments for licensed or acquired compounds, are recognized as In-Process Research & Development (IPR&D).
IPR&D assets are stated at their purchase cost, together only with any incidental expenses of acquisition.
IPR&D assets are not amortized, but evaluated for potential impairment on an annual basis or when facts and circumstances
warrant. Any impairment charge is recorded in the consolidated income statement under "Research & Development". Once
a project included in IPR&D has been successfully developed it is transferred to the "Currently marketed product" category.
Software licenses
Acquired computer software licences are capitalised as Intangibles on the basis of the costs incurred to acquire and bring to
use the specific software. These costs are amortised over their estimated useful lives.
Investment in Subsidiaries
Investments in subsidiary undertakings are stated at cost less any impairment. Where management identify uncertainty over
such investments, the investment is impaired to an estimate of its net realisable value.
Other Current and Non-Current Assets
Clinical materials with alternative use, which are not held for sale are capitalised as either other current assets or other non-
current assets, depending on the timing of their expected consumption.
Non-Derivative Financial Instruments:
Trade and Other Receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any impairment losses.
Trade and Other Payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised
cost using the effective interest method.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and short-term deposits with maturities of three months or less.
Impairment Excluding Inventories and Deferred Tax Assets:
Financial Assets (Including Receivables)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there
is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has
occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash
flows of that asset that can be estimated reliably.
__________________________________________________________________________________________________
43
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
1
ACCOUNTING POLICIES (CONTINUED)
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its
carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest
rate. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent
event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
Non-Financial Assets
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at
each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated. For intangible assets that have indefinite useful lives or that are not yet available for use,
the recoverable amount is estimated each period at the same time.
Revenue
Revenue is recognized to the extent that the Group obtains the right to consideration in exchange for its performance and is
measured at the fair value of the consideration received excluding Value-Added Tax (VAT). If a payment is for multiple
deliverables, then an allocation of the fair value of each deliverable is assessed based on available evidence, judgment is
required to attribute the fair value to the various elements.
Where a deliverable has only been partially completed at the balance sheet date, revenue is calculated by reference to the
value of services performed as a proportion of the total services to be performed for each deliverable or on a straight-line
basis if the pattern of performance cannot be estimated. The amount of revenue recognized is limited to non-refundable
amounts already received or reasonably certain to be received. We consider payments reasonably certain to be received at
the point that satisfactory criteria are agreed with GSK. Where payments are received from customers in advance of services
provided, the amounts are recorded as deferred income and included within current liabilities or non-current liabilities,
depending on when the services are expected to be delivered.
We regularly review and monitor the performance of the GSK Collaboration and License Agreement in terms of the
proportion of total services to be performed for each deliverable and the period of time over which the revenue is deferred
based on facts known at the time. If circumstances arise that may change the original estimates of progress toward completion
of a deliverable, then estimates are revised. These revisions may result in increases or decreases in estimated revenues and
are reflected in income in the period in which the circumstances that give rise to the revision become known to management.
Performance of contract deliverables may vary significantly over time from initial estimates, and, therefore, the amount of
revenue recognized is subject to variations. In previous periods there has been no material difference from our estimates to
the amount of revenue that can be reliably recognized. In the six months ended 31 December 2015, the Group refined its
approach for analysing the components of its deliverables under the GSK Collaboration and License Agreement in respect
of the timing of services being performed. This change did not have a significant impact on revenue recognition.
Operating Leases
Costs in respect of operating leases are charged to the income statement on a straight line basis over the lease term. There
are no assets currently held under finance leases.
Research and Development Expenditure
Research and development expenditure includes direct and indirect costs of these activities, including staff costs and
materials, as well as external contracts. All such expenditure is expensed as incurred unless the capitalisation criteria of
International Accounting Standard 38, ‘Intangible Assets’ have been satisfied.
__________________________________________________________________________________________________
44
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
1
ACCOUNTING POLICIES (CONTINUED)
Pension Costs
The Group operates a defined contribution pension scheme for its executive directors and employees. The contributions to
this scheme are expensed to the Income Statement as they fall due.
Government Grants
Government grants are recognised as Other income over the period necessary to match them with the related costs when there
is reasonable assurance that the Group will comply with any conditions attached to the grant and the grant will be received.
Share-Based Payments
The Group operates equity-settled, share-based compensation plans. Certain employees of the Group are awarded options
over the shares in the parent company. The fair value of the employee services received in exchange for these grants of
options is recognised as an expense, using the Black-Scholes option-pricing model, with a corresponding increase in
reserves. The total amount to be expensed over the vesting year is determined by reference to the fair value of the options
granted and assumptions about the number of options that are expected to vest.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except
to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable or receivable in respect of previous years.
Current tax includes tax credits, which are accrued for the period based on calculations that conform to the U.K. research
and development tax credit regime applicable to small and medium sized companies. R&D expenditure which is not eligible
for reimbursement under the UK R&D tax credits regime, such as R&D expenditure incurred on research projects for which
we receive income, may be reimbursed under the UK RDEC scheme. Receipts under the UK RDEC Scheme are presented
within Other income as they are similar in nature to grant income.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively
enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised.
Dividends
Dividends received from subsidiary undertakings are accounted for when received. Dividends paid are accounted for in the
period when they are paid.
Earnings per Share
Basic and diluted net loss per share is determined by dividing net loss by the weighted average number of shares of Ordinary
shares outstanding during the period. The effect of 31.3 million (Year ended 30 June 2015: 31.5 million) potentially dilutive
share options has been excluded from the diluted loss per share calculation because it would have an antidilutive effect on
the loss per share for the period.
__________________________________________________________________________________________________
45
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
1
ACCOUNTING POLICIES (CONTINUED)
Adopted IFRS Not Yet Applied
The following standards and interpretations have been issued but are not yet effective and therefore have not been applied
in these financial statements.
• Amendments to IAS 16 and IAS 38 ‘Clarification of Acceptable Methods of Depreciation and Amortisation’
(mandatory for year commencing on or after 1 January 2016)
IFRS 15 Revenue from Contracts with Customers (mandatory for year commencing on or after 1 January 2018)
IFRS 9 Financial Instruments (mandatory for year commencing on or after 1 January 2018)
IFRS 16 Leases (mandatory for year commencing on or after 1 January 2019)
•
•
•
The Group does not expect the adoption of this guidance to have a material effect on the financial statements, with the
exception of IFRS 15 and IFRS 16, which the Group is currently evaluating.
__________________________________________________________________________________________________
46
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
2 REVENUE & SEGMENTAL REPORTING
Group
Revenue represents recognised income from collaboration agreements.
During the six months ended 31 December 2015 and the year ended 30 June 2015 revenue was derived from one customer
and the Directors believe that there is only one operating segment.
For the
Revenue
six months ended
31 December
2015
£000
year ended
30 June
2015
£000
5,499
6,818
Under the GSK Collaboration and License Agreement, GSK funds the development of, and has an option to obtain an
exclusive license to, our NY-ESO TCR therapeutic candidate. In addition, GSK has the right to nominate four additional
target peptides, excluding those where Adaptimmune has already initiated development of a TCR therapeutic candidate. The
Group received an upfront payment of £25 million in June 2014 and has achieved various development milestones totalling
£14.0 million, of which £9.5 million related to milestones achieved during the six months ended 31 December 2015. The
Group is entitled to further milestone payments based on the achievement of specified development and commercialization
milestones by either the Group or GSK.
In addition to the development milestone payments, the Group is entitled to royalties from GSK on all GSK sales of TCR
therapeutic products licensed under the agreement, varying between a mid-single-digit percentage and a low-double-digit
percentage of net sales. No royalties have been received during the six months ended 31 December 2015. Sales milestones
also apply once any TCR therapeutic covered by the GSK Collaboration and License Agreement is on the market.
The GSK Collaboration and License Agreement is effective until all payment obligations expire. The agreement can also be
terminated on a collaboration program-by-collaboration program basis by GSK for lack of feasibility or inability to meet
certain agreed requirements. Both parties have rights to terminate the agreement for material breach upon 60 days’ written
notice or immediately upon insolvency of the other party. GSK has additional rights to terminate either the agreement or any
specific license or collaboration program on provision of 60 days’ notice to us. The Group also has rights to terminate any
license where GSK ceases development or withdraws any licensed TCR therapeutic in specified circumstances.
The revenue recognized to date relates to the upfront fee and development milestones payments received, which are being
recognized in revenue over the period in which we are providing services under the GSK Collaboration and License
Agreement. As a result of achieving various deliverables the Group has recognised £ 5.5 million of revenue during the six
month period ending 31 December 2015.
Geographic information
Noncurrent assets (excluding intangibles and financial instruments) based on geographic location:
UK
US
As of
December 31,
2015
(£’000)
8,178
3,938
12,116
As of
June 30,
2015
(£’000)
3,115
314
3,429
All revenues for the six months ended December 31, 2015 and the years ended June 30, 2015, 2014 and 2013 originated in
the UK.
__________________________________________________________________________________________________
47
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
EXPENSES AND AUDITOR’S REMUNERATION
3
Group
For the
Operating loss is stated after charging/(crediting):
Operating lease charges:
Plant & machinery
Other than Plant & Machinery
Foreign exchange losses/ (gains)
Depreciation of owned property, plant and equipment (note 10)
Amortisation of intangibles (note 11)
Employee benefits (note 4)
Subcontracted research and development
Materials consumed in research and development
Other expenses
Total expenses
Research and development expenses
General and administrative expenses
Total expenses
Other expenses include amounts receivable by the Group’s auditor and its associates in
respect of:
Audit of the annual financial statements
Audited-related fees
Tax fees
All other fees
STAFF NUMBERS AND COSTS
4
Group
six months ended
31 December
2015
£000
year ended
30 June
2015
£000
7
543
82
771
45
9,949
5,607
1,785
4,978
23,767
16,467
7,300
23,767
95
10
-
2
-
387
(66)
447
19
8,362
5,649
1,839
5,313
21,950
14,749
7,201
21,950
85
173
-
9
The average number of persons employed by the Group (including Directors) during the period, analysed by category, was
as follows:
For the
Research & Development
Management & Administration
six months ended
31 December
2015
Number
year ended
30 June
2015
Number
137
36
173
63
16
79
__________________________________________________________________________________________________
48
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
4
STAFF NUMBERS AND COSTS (CONTINUED)
The aggregate staff costs of these persons were as follows:
For the
Wages and salaries
Social security costs
Share based payment – fair value of employee services (note 23)
Pension costs – defined contribution (note 22)
DIRECTORS’ REMUNERATION
5
Group
For the
six months ended
31 December
2015
£000
year ended
30 June
2015
£000
6,780
648
2,441
80
9,949
4,988
539
2,683
152
8,362
six months ended
31 December
2015
£000
year ended
30 June
2015
£000
Directors’ emoluments
393
558
Directors' emoluments include employer social security contributions of £34,000 (For the year ended June 30, 2015:
£62,000).
Total Directors’ pension contributions for the period were £7,500 (Year ended 30 June 2015: £13,000).
No retirement benefits are accruing to Directors (Year ended 30 June 2015: none) under the Group’s pension schemes.
No Directors (Year ended 30 June 2015: none) exercised share options in the parent company during the period.
For the period ended
six months ended
31 December
2015
£000
Highest paid Director
Aggregate emoluments and benefits
(excluding gains on exercise of share options and value of shares received under long term incentive schemes)
393
year ended
30 June
2015
£000
536
The highest paid Director’s pension contributions for the six months ended 31 December 2015 were £7,500 (Year ended
30 June 2015: £13,000). The highest paid Director exercised no share options in the period (Year ended 30 June 2015: nil)
__________________________________________________________________________________________________
49
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
6 OTHER INCOME
Group
For the
Income from government grants
UK Research and Development Expenditure Credit
Income from related parties (see also note 25)
FINANCE INCOME
7
Group
Recognised in the income statement:
For the
Net unrealized foreign exchange gains
Bank interest on cash and deposits
FINANCE EXPENSE
8
Group
Recognised in the income statement:
For the
Foreign exchange losses on financial assets
six months ended
31 December
2015
£000
year ended
30 June
2015
£000
590
308
10
908
429
-
33
462
six months ended
31 December
2015
£000
year ended
30 June
2015
£000
8,445
321
8,766
-
322
322
six months ended
31 December
2015
£000
-
-
year ended
30 June
2015
£000
720
720
__________________________________________________________________________________________________
50
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
TAXATION CREDIT
9
Group
Recognised in the income statement:
For the
Current tax income
UK R&D tax credit
US corporation tax
Adjustments in respect of prior periods
Total tax credit in the income statement
Reconciliation of Effective Tax Rate
six months ended
31 December
2015
£000
year ended
30 June
2015
£000
1,227
(33)
41
1,235
1,308
(158)
189
1,339
The total tax credit is lower (2014: lower) than the standard rate of corporation tax in the UK. The differences are explained below:
For the
Loss before tax
Tax at the UK corporation tax rate of 20.75% (2014: 22.5%)
Non-deductible expenses
Deferred taxes not recognised
Additional allowance in respect of enhanced R&D relief
Surrender of tax losses for R&D tax credit refund
Tax rate changes
Adjustments in respect of prior periods
six months ended
31 December
2015
£000
year ended
30 June
2015
£000
8,594
1,719
(441)
(594)
1,005
(489)
(7)
42
1,235
15,068
3,127
(437)
(2,192)
1,033
(475)
94
189
1,339
After accounting for tax credits receivable there are accumulated tax losses for carry forward in the UK amounting to
£28,840,000 (As of 30, June 2015: £23,166,000). These tax losses do not expire. No deferred tax asset is recognised in
respect of accumulated tax losses on the basis that suitable future trading profits are not sufficiently certain.
Reductions in the UK corporation tax rate from 20% to 19% from 1 April 2017 and then a further reduction to 18% from 1
April 2020 were substantively enacted in the UK legislation on 26 October 2015.
__________________________________________________________________________________________________
51
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
PROPERTY, PLANT & EQUIPMENT
10
Group
Computer
Equipment
£000
Office
Equipment
£000
Laboratory
Equipment
£000
Leasehold
Improvements
£000
Cost
At 30 June 2015
Additions to 30 June 2015
Disposals to 30 June 2015
At 30 June 2015
Additions to 31 December 2015
At 31 December 2015
Depreciation
At 1 July 2014
Charge for period to 30 June 2014
Disposals to 30 June 2015
At 30 June 2014
Charge for period to 31 December
2015
At 31 December 2015
Carrying value
At 1 July 2014
At 30 June 2015
At 31 December 2015
52
365
(4)
413
384
797
15
51
(4)
62
90
152
37
351
645
28
94
-
122
52
174
4
11
-
15
18
33
24
107
141
942
1,434
(120)
2,256
5,176
7,432
163
349
(39)
473
549
1,022
779
1,783
6,410
-
1,224
-
1,224
651
1,875
-
36
-
36
114
150
-
1,188
1,715
Leasehold improvement includes £0.8 million (June 30, 2015: £0.8 million) of assets under construction.
Total
£000
1,022
3,117
(124)
4,015
6,263
10,278
182
447
(43)
586
771
1,357
840
3,429
8,921
__________________________________________________________________________________________________
52
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
INTANGIBLES
11
Group
Cost
At 1 July 2014
Additions to 30 June 2015
At 30 June 2015
Additions to 31 December 2015
At 31 December 2015
Amortization
At 1 July 2014
Charge for period to 30 June 2015
At 30 June 2015
Charge for period to 31 December 2015
At 31 December 2015
Carrying value
At 1 July 2014
At 30 June 2015
At 31 December 2015
In-process
R&D
£000
Computer
Software
£000
-
-
-
1,662
1,662
-
-
-
-
-
-
-
1,662
-
132
132
138
270
-
19
19
45
64
-
113
206
Total
£000
-
132
132
1,800
1,932
-
19
19
45
64
-
113
1,868
On 25 November 2015 the Group entered into a Research Collaboration and License Agreement relating to gene editing and
HLA-engineering technology with Universal Cells, Inc. (“Universal Cells”). The Group paid an upfront license fee of £1.7
million ($2.5 million) to Universal Cells for in-process R&D and will make further payments of up to $44 million if certain
development and product milestones are achieved. Universal Cells would also receive a profit-share payment for the first
product, and royalties on sales of other products utilizing its technology.
INVESTMENTS IN SUBSIDIARIES
12
Company
Cost and carrying value
At 1 July 2014
Capital contributions in respect of share-based payment transactions
At 31 December 2015
£000
58,898
2,048
60,946
__________________________________________________________________________________________________
53
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
12
INVESTMENTS IN SUBSIDIARIES (CONTINUED)
The Company has the following interest in subsidiary undertakings from 23 February 2015:
Name of Company
Adaptimmune Limited
Adaptimmune LLC
Country of
Incorporation
England and
Wales
United States of
America
Holding
Ordinary and
preferred shares
of £0.001
Ordinary Shares
of $1
Proportion
Held
100%
Nature of Business
Biotechnology Research &
Development
100%
Biotechnology Research &
Development
OTHER CURRENT AND NON-CURRENT ASSETS
13
Group
Other current and non-current assets are clinical materials with alternative use, not held for sale, which are classified as
current or non-current based on whether they are expected to be consumed within twelve months.
14
RESTRICTED CASH
As of 31 December 2015, the Group had restricted cash of £3,040,000 relating to security deposits for letters of credit
relating to leased properties.
TRADE & OTHER RECEIVABLES
15
Group
As of
Trade receivables
Prepayments and accrued income
Other receivables
Company
As of
Prepayments and accrued income
Amounts owed from group undertakings
31 December
2015
£000
3,002
3,916
2,015
8,933
31 December
2015
£000
121
113,070
113,191
30 June
2015
£000
2
3,310
937
4,249
30 June
2015
£000
286
113,070
113,356
Amounts owed by group undertakings are unsecured, have no fixed date of repayment, and accrue interest at a rate of 2.38%
per annum.
__________________________________________________________________________________________________
54
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
SHORT TERM DEPOSITS
16
Group
As of
Deposits held in pounds sterling
Deposits held in US dollars
CASH AND CASH EQUIVALENTS
17
Group
As of
Cash and cash equivalents held in pounds sterling
Cash and cash equivalents held in US dollars
31 December
2015
£000
7,500
29,343
36,843
31 December
2015
£000
20,471
110,567
131,038
30 June
2015
£000
7,500
27,664
35,164
30 June
2015
£000
28,749
116,917
145,666
The Group’s policy for determining cash and cash equivalents is to include all cash balances, overdrafts and short-term
deposits with maturities of three months or less.
When the Group assesses its liquidity position it includes cash and cash equivalents as well as short-term investments.
NON CURRENT TRADE AND OTHER PAYABLES
18
Group
As of
Deferred income
CURRENT TRADE AND OTHER PAYABLES
19
Group
As of
Trade payables
Other taxation and social security
Deferred income
Accruals
31 December
2015
£000
30 June
2015
£000
17,973
9,100
31 December
2015
£000
5,317
749
8,423
4,321
18,810
30 June
2015
£000
1,259
158
13,295
2,280
16,992
__________________________________________________________________________________________________
55
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
19
CURRENT TRADE AND OTHER PAYABLES (CONTINUED)
Company
As of
Trade payables
Accruals
Amounts owed to group undertakings
31 December
2015
£000
37
203
470
710
30 June
2015
£000
2
8
1,321
1,331
Amounts owed to group undertakings are unsecured, have no fixed date of repayment, and are interest free.
CAPITAL AND RESERVES
20
Group and Company
Share capital
As of
Allotted, called up and fully paid
424,711,900 (As of 30 June 2015:424,711,900) Ordinary shares of 0.1p each
Ordinary shares
31 December
2015
£000
30 June
2015
£000
425
425
Each holder of ordinary shares is entitled to one vote on a show of hands, and one vote per share on a poll, at general meetings
of the Company. On the winding up of the Company, the assets available for distribution to holders, remaining after payment
of all other debts and liabilities of the Company, shall be paid to the shareholders in proportion to the number of shares held
by each of them.
The Directors have the authority to allot new shares or to grant rights to subscribe for or to convert any security into shares in
the Company up to a maximum aggregate nominal amount of £150,000. This authority runs for five years and will expire on
17 December 2020.
Preferred shares issued
On 23 September 2014 the Group completed a Series A Funding round whereby, the Group issued 1,758,418 Series A
Preferred Shares for net consideration of £60,554,000, after the deduction of fees of £3,031,000. These Series A Preferred
Shares were convertible into ordinary shares at an initial rate of 1:1 prior to an IPO and converted into ordinary shares at
that rate immediately prior to the admission to trading of the ADSs on NASDAQ. These shares were treated as equity under
the provisions of IAS 32, ‘Financial Instruments: Presentation’.
__________________________________________________________________________________________________
56
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
20
CAPITAL AND RESERVES (CONTINUED)
Corporate Reorganisation
On 1 April 2015, the Group completed a corporate reorganisation. Pursuant to the first stage of this reorganisation, on 23
February 2015, all shareholders of Adaptimmune Limited exchanged each of the Series A preferred shares and Ordinary
shares held by them for newly issued Series A preferred shares and Ordinary shares of Adaptimmune Therapeutics Limited
on a one-for-100 basis, resulting in Adaptimmune Limited becoming a wholly-owned subsidiary of Adaptimmune
Therapeutics Limited. On 20 March 2015, all holders of options over Ordinary shares of Adaptimmune Limited exchanged
each of their options for equivalent options over Ordinary shares of Adaptimmune Therapeutics Limited. On 1 April 2015,
pursuant to the final step in the corporate reorganisation, Adaptimmune Therapeutics Limited re-registered as a public limited
company with the name Adaptimmune Therapeutics plc.
All Adaptimmune Limited share options granted to Directors and employees under share option plans that were in existence
immediately prior to the reorganisation were exchangeable for share options in Adaptimmune Therapeutics plc on a one-for-
100 basis with no change in any of the terms or conditions.
Adaptimmune Therapeutics plc’s Board of Directors, management and corporate governance arrangements, and consolidated
assets and liabilities immediately following the reorganisation were the same as Adaptimmune Limited immediately before
the reorganisation.
The reorganisation has been accounted for in accordance with the principles of reverse acquisition accounting. Accordingly,
the historical consolidated financial statements of Adaptimmune Limited and subsidiary prior to the reorganisation became
those of Adaptimmune Therapeutics plc. For periods prior to the reorganisation, the equity of Adaptimmune Therapeutics
plc represents the historical equity of Adaptimmune Limited. The nominal value of the share capital has been adjusted to
reflect the increase in the number of shares in issue.
All share and per share information presented gives effect to the reorganisation by dividing the loss for the period by the
weighted average number of shares outstanding of Adaptimmune Therapeutics plc as if the one-for-100 share exchange had
been in effect throughout the period.
Initial Public Offering
On 6 May 2015, immediately prior to the admission to trading of our ADSs on NASDAQ all subsisting preferred shares in
the capital of the Company automatically converted to ordinary shares on a 1:1 basis.
On 11 May 2015, the Company held the closing and settlement for its Initial Public Offering on NASDAQ, issuing 11,250,000
ADSs representing 67,500,000 ordinary shares with nominal value of £67,500 for proceeds before expenses of £124,058,000.
Funding costs of £9,899,000, including underwriter fees of £8,684,000 and other offering expenses of £1,215,000, were
incurred and offset against the share premium account.
Dividends
No dividends were paid or declared in the six months ended December 31, 2015 or the years ended June 30, 2015, 2014 and
2013.
Capital Management Policy
The Group manages the operating cash outflow through its budgeting process, and looks to raise sufficient funds from revenue
and equity to cover these outflows.
Nature and purpose of reserves
Exchange reserve
The exchange reserve comprises all foreign currency differences arising from the translation of the financial statements of
foreign operations.
__________________________________________________________________________________________________
57
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
20
CAPITAL AND RESERVES (CONTINUED)
Other reserve
The other reserve has arisen as a result of the Company reorganization described above.
FINANCIAL INSTRUMENTS
21
Group
Disclosure of fair values of financial assets and liabilities
As of
Financial assets not measured at fair value:
Loans and receivables
Trade receivables
Research & development tax credit
Other receivables
Short-term deposits
Cash and cash equivalents
31 December 2015
30 June 2015
Carrying
amount
£000
Fair value
£000
Carrying
amount
£000
Fair value
£000
3,002
2,859
2,015
36,843
131,038
175,757
3,002
2,859
2,015
36,843
131,038
175,757
2
2,524
937
35,164
145,666
184,293
2
2,524
937
35,164
145,666
184,293
As of
31 December 2015
30 June 2015
Financial liabilities not measured at fair value:
Trade payables
Other taxation and social security
Accruals
Carrying
amount
£000
5,317
749
4,321
10,387
Fair value
£000
5,317
749
4,321
10,387
Carrying
amount
£000
1,259
158
2,280
3,697
Fair value
£000
1,259
158
2,280
3,697
Detailed below are the assumptions applied in determining the fair value of the financial instruments held by the Group.
Cash and Cash Equivalents, Trade and Other Payables and Trade and Other Receivables
For cash and cash equivalents, short-term investments, trade and other payables and trade and other receivables with a
remaining life of less than one year, the nominal amount is deemed to reflect fair value.
Liquidity Risk
The Group’s treasury policy gives guidance on how much investment should be held with differing counterparties. The cash
utilisation is monitored to provide a lead time for raising further funding.
__________________________________________________________________________________________________
58
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
21
FINANCIAL INSTRUMENTS (CONTINUED)
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
effect of netting agreements:
As of
Financial liabilities at amortised cost
Trade payables
Other taxation and social security
Accruals
As of
Financial liabilities at amortised cost
Trade payables
Other taxation and social security
Accruals
Foreign Exchange Risk
Carrying
amount
£000
5,317
749
4,321
10,387
Carrying
amount
£000
1,259
158
2,280
3,697
31 December 2015
Contractual
cash flows
£000
5,317
749
4,321
10,387
30 June 2015
Contractual
cash flows
£000
1,259
158
2,280
3,697
1 year or
less
£000
5,317
749
4,321
10,387
1 year or
less
£000
1,259
158
2,280
3,697
The Group makes purchases in foreign currencies. The Group’s treasury policy gives guidance on the management of its
foreign exchange risk on the basis that the cash balance is held in appropriate currencies to meet obligations as they fall due.
Financial assets and liabilities in foreign currencies are as follows:
As of
Short-term deposits
Cash and cash equivalents
Trade payables
31 December
2015
Carrying
amount
£000
29,343
110,567
(4,321)
135,804
30 June
2015
Carrying
amount
£000
27,664
116,917
(347)
114,234
A 1% increase in exchange rates would reduce the carrying value of net financial assets and liabilities in foreign currencies at
31 December 2015 by £1,345,000 (At 30 June 2015: £1,428,000).
Credit risk
Trade receivables at December 31, 2015 of £3 million relate to one customer as a result of the Group entering into the GSK
Collaboration and License Agreement in 2014. The Group has been transacting with GSK for 18 months, during which time
no impairment losses have been recognized. There are no amounts which are past due at 31 December 2015.
__________________________________________________________________________________________________
59
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
21 FINANCIAL INSTRUMENTS (CONTINUED)
The Group held cash and cash equivalents of £131,038,000 and short-term deposits of £36,843,000 at 31 December 2015.
The cash and cash equivalents and short-term deposits are held with multiple banks and the Group monitors the credit rating
of those banks.
Market Risk
Market risk is the risk that changes in market prices, such as in interest rates, commodity prices and foreign exchange rates
will affect the Group’s income or the value of its holdings of financial instruments. The Group has both interest bearing assets
and interest bearing liabilities. Interest bearing assets include cash balances and overdrafts, which earn interest at variable
rates.
Financial assets and liabilities subject to variable interest rates are as follows:
As of
31 December
2015
Carrying
amount
£000
30 June
2015
Carrying
amount
£000
Cash and cash equivalents
125,502
140,296
An increase in Bank of England base rates by 0.5 percentage points would increase the net annual interest income applicable
to the cash and cash equivalents as of 31 December 2015 by £628,000 (30 June 2015: £701,000).
The Group is exposed to commodity price risk as a result of its operations. However, given the size of the Group’s operations,
the costs of managing exposure to commodity price risk exceed any potential benefits. The Directors will revisit the
appropriateness of this policy should the Group’s operations change in size or nature. The Group has no exposure to equity
securities price risk as it holds no listed or other equity investments.
EMPLOYEE BENEFITS
22
Group
The Group operates a defined contribution pension scheme for its executive directors and employees. The assets of the scheme
are held separately from those of the company in an independently administered fund. The unpaid contributions outstanding
as of 31 December 2015 were £50,000 (30 June 2015: £69,000). The pension cost charge for the six months to 31 December
2015 was £80,000 (for the year ended 30 June 2015: £152,000).
__________________________________________________________________________________________________
60
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
SHARE BASED PAYMENTS
23
Group
As of 31 December 2015 certain of the Group’s employees and Directors were members of a share option plan operated by
the ultimate parent company. All of these arrangements are settled in equity at a predetermined price and generally vest over
a period of four years, with 25% of each award vesting after the first complete year. All share options have a life of ten years
before expiry. The number and weighted average exercise prices of share options (including grant in the year) are as follows:
For the
six months ended
31 December 2015
year ended
30 June 2015
Outstanding at start of year
Granted
Forfeited
Exercised
Outstanding at the end of the period
Exercisable at the end of the period
Number
31,473,477
-
(270,000)
-
31,203,477
7,785,415
Weighted
average
exercise price
0.41
-
0.37
-
0.41
0.38
Number
10,057,700
21,779,577
(383,800)
-
31,453,477
5,199,615
Weighted
average
exercise
price
£0.11
£0.54
£0.35
-
£0.41
£0.39
There were no options granted in the six months ended 31 December 2015. The weighted average fair value of options
granted in the year ended 30 June 2015 was £0.42.
For options outstanding at the end of the period, the range of exercise prices and weighted average remaining contractual
life are as follows:
As of 31 December 2015
As of 30 June 2015
Exercise price
Number of
shares
Weighted average remaining
life:
Expected
Contractual
£0.05
£0.11
£0.14
£0.36
£0.50
£1.82
300,000
8,404,300
1,249,600
10,355,000
9,008,962
1,885,615
0.0 yrs
2.7 yrs
3.3 yrs
4.0 yrs
4.2 yrs
4.4 yrs
3.5 yrs
7.7 yrs
8.3 yrs
9.0 yrs
9.2 yrs
9.4 yrs
Exercise
price
£0.05
£0.11
£0.14
£0.36
£0.50
£1.82
Number of
shares
300,000
8,404,300
1,249,600
10,595,000
9,018,962
1,885,615
Weighted average
remaining life:
Expected
Contractual
0.0 yrs
3.2 yrs
3.8 yrs
4.5 yrs
4.7 yrs
4.9 yrs
4.0 yrs
8.2 yrs
8.8 yrs
9.5 yrs
9.7 yrs
9.9 yrs
The total charge for the year relating to share based payment plans was £2,441,000 (year ended 30 June 2015: £2,683,000),
all of which related to equity-settled share based payment transactions.
__________________________________________________________________________________________________
61
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
23 SHARE BASED PAYMENTS (CONTINUED)
Options were valued using the Black-Scholes option-pricing model. No performance conditions were included in the fair
value calculations. The fair value per option granted and the assumptions used in the calculation are as follows:
Share price at grant date
Exercise price
Number of employees
Shares granted in period
Vesting year (years)
Expected volatility
Option life (years)
Expected life (years)
Risk free rate
Expected dividend yield
Fair value per option
May
2015
March
2015
December
2014
March/April
2014
£1.82
£1.82
11
1,885,615
1-4 years
60%
£0.86
£0.50
32
9,183,962
1-4 years
60%
10 years
10 years
5 years
1.39%
0%
£0.94
5 years
1.04%
0%
£0.55
£0.39
£0.36
78
10,710,000
1-4 years
60%
10 years
5 years
1.54%
0%
£0.21
£0.14
£0.11
28
5,627,700
1-4 years
60%
10 years
5 years
1.73%
0%
£0.08
The expected volatility is based upon a benchmarking study of similar companies with public securities. The expected life
of the option is based on management judgement. The risk free rate is based on the Bank of England’s estimates of gilt yield
curve as at the respective grant dates.
CAPITAL COMMITMENTS AND CONTINGENCIES
24
Group
As of
Future capital expenditure contracted but not provided
for
31 December
2015
£000
30 June
2015
£000
13,930
1,633
At 31 December 2015, future capital expenditure contracted but not provided for predominately relates to leasehold
improvements arising on the fit out of laboratory and office space in Oxfordshire, UK and Philadelphia, USA.
Other commitments
On 25 November 2015 the Company entered into a Research Collaboration and License Agreement with Universal Cells.
The Company paid an upfront license fee of £1.7 million ($2.5 million) to Universal Cells for in-process R&D and will
make further payments of up to $44 million if certain development and product milestones are achieved. Universal Cells
would also receive a profit-share payment for the first product, and royalties on sales of other products utilizing its
technology.
__________________________________________________________________________________________________
62
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
24
CAPITAL COMMITMENTS AND CONTINGENCIES (CONTINUED)
Commitments under non-cancellable operating leases
The total of future minimum lease payments payable under the entity’s non-cancellable operating leases for each of the
following periods is as follows:
As of
31 December 2015
30 June 2015
Within one year
Within two to five years
Over five years
Land and
buildings
£000
1,078
11,594
19,249
31,921
Other
£000
-
-
-
-
Land and
buildings
£000
914
2,772
85
3,771
Other
£000
-
-
-
-
The annual charge in the income statement for operating leases was £550,000 for the six months ended 31 December 2015
(Year ended 30 June 2015: £387,000).
The leases refer to laboratory and office property in Oxfordshire, UK and Philadelphia, USA.
RELATED PARTIES
25
Group
During the period, the Group entered into transactions in the ordinary course of business with other related parties. Transactions
entered into and trading balances outstanding as of 31 December 2015 are as follows:
Related Party
Immunocore Limited
New Enterprise Associates
OrbiMed Advisors LLC
Invoiced to
related
party*
Purchases
from
related party
£000
29
-
-
£000
1,039
21
21
Amounts
owed
from related
party
£000
2
-
-
Amounts
owed
to related
party
£000
191
-
-
Transactions entered into and trading balances outstanding as of 30 June 2015 are as follows:
Related Party
Immunocore Limited
New Enterprise Associates
OrbiMed Advisors LLC
*includes pass-through costs
Invoiced to
related
party*
Purchases
from
related party
£000
86
-
-
£000
1,617
11
6
Amounts
owed
from related
party
£000
Amounts
owed
to related
party
£000
2
-
-
90
2
-
Immunocore Limited, New Enterprise Associates and OrbiMed Advisors LLC are related parties because they are the
beneficial owner of more than 5% of any class of our voting securities.
During the period, Immunocore Limited has invoiced the Group in respect of the transitional services agreement, property
rent and joint patent costs. The Group has invoiced Immunocore Limited in respect of the transitional services agreement.
__________________________________________________________________________________________________
63
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the period ended 31 December 2015
______________________________________________________________________
25
RELATED PARTIES (CONTINUED)
During the period, New Enterprise Associates has invoiced the Group for travel expenses of directors David Mott, Ali
Behbahani and Elliot Sigal.
During the period, OrbiMed Advisors, LLC has invoiced the Group for travel expenses of director Peter Thompson.
Remuneration of Key Management Personnel
The remuneration of the Directors and Executive Officers, who are the key management personnel of the Group, is set out
below in aggregate for each of the categories specified in IAS 24, ‘Related Party Disclosures’.
For the
Short-term employee benefits
Share-based payments
six months ended
31 December
2015
£000
year ended
30 June
2015
£000
1,321
1,759
3,080
1,311
2,107
3,418
__________________________________________________________________________________________________
64
ADAPTIMMUNE THERAPEUTICS PLC
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
For the period ended 31 December 2015
This page intentionally left blank
__________________________________________________________________________________________________
65