UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
for the transition period from to
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Date of event requiring this shell company report
Commission file number: 001-38547
Autolus Therapeutics plc
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
England and Wales
(Jurisdiction of incorporation)
Forest House
58 Wood Lane
London W12 7RZ United Kingdom
(Address of principal executive offices)
Christian Itin
Chief Executive Officer
Autolus Therapeutics plc
58 Wood Lane
London W12 7RZ United Kingdom
+44 20 3829 6230
Email: ir@autolus.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered, pursuant to Section 12(b) of the Act
Title of each class
American Depository Shares, each representing one ordinary
share, nominal value $0.000042 per share
Trading
Symbol
AUTL
Name of each exchange on which registered
The Nasdaq Stock Market LLC
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of business covered by the
annual report.
Ordinary shares, nominal value $0.000042 per share: 52,346,231 as of December 31, 2020
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No x
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934. Yes No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
Indicate by check mark whether the registrant has submitted every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer x Non-accelerated filer Emerging growth company x
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to
Section 13(a) of the Exchange Act. x
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its
Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP
x
International Financial Reporting Standards as issued
by the International Accounting Standards Board
Other
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected
to follow. Item 17 Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes No x
PART I
ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.
TABLE OF CONTENTS
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
OFFER STATISTICS AND EXPECTED TIMETABLE
KEY INFORMATION
A. Selected financial data
B. Capitalization and indebtedness
C. Reasons for the offer and use of proceeds
D. Risk factors
INFORMATION ON THE COMPANY
A. History and development of the company
B. Business overview
C. Organizational structure
D. Property, plant and equipment
ITEM 4A.
UNRESOLVED STAFF COMMENTS
ITEM 5.
ITEM 6.
ITEM 7.
ITEM 8.
ITEM 9.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
A. Operating results
B. Liquidity and capital resources
C. Research and development, patents and licenses, etc.
D. Trend information
E. Off-balance sheet arrangements
F. Tabular disclosure of contractual obligations
G. Other disclosures
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and senior management
B. Compensation
C. Board practices
D. Employees
E. Share ownership
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major shareholders
B. Related party transactions
C. Interests of experts and counsel
FINANCIAL INFORMATION
A. Consolidated statements and other financial information
B. Significant changes
THE OFFER AND LISTING
A. Offer and listing details
B. Plan of distribution
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ITEM 10.
ITEM 11.
ITEM 12.
PART II
ITEM 13.
ITEM 14.
ITEM 15.
ITEM 16
ITEM 16A
ITEM 16B
ITEM 16C
ITEM 16D
ITEM 16E
ITEM 16F
ITEM 16G
ITEM 16H
PART III
ITEM 17.
ITEM 18.
ITEM 19.
C. Markets
D. Selling shareholders
E. Dilution
F. Expense of the issue
ADDITIONAL INFORMATION
A. Share capital
B. Memorandum and articles of association
C. Material contracts
D. Exchange controls
E. Taxation
F. Dividends and paying agents
G. Statement by experts
H. Documents on display
I. Subsidiary information
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt securities
B. Warrants and rights
C. Other securities
D. American Depositary Shares
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
CONTROLS AND PROCEDURES
[Reserved].
Audit committee financial expert
Code of ethics
Principal accountant fees and services
Exemptions from the listing standards for audit committees
Purchases of equity securities by the issuer and affiliated purchasers
Changes in registrant’s certifying accountant
Corporate governance
Mine safety disclosure
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
EXHIBITS
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GENERAL INFORMATION
All references in this Annual Report on Form 20-F, or Annual Report, to “Autolus,” the “company,” “we,” “us” and “our” refer to Autolus Therapeutics plc
and its consolidated subsidiaries, except where the context otherwise requires.
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
The consolidated financial statement data as of December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019, the three months ended
December 31, 2018, and the year ended September 30, 2018 have been derived from our consolidated financial statements, as presented elsewhere in this
Annual Report, which have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, as issued by the
Financial Accounting Standards Board, or FASB.
All references in this Annual Report to “$” are to U.S. dollars and all references to “£” are to pounds sterling. Solely for the convenience of the reader,
unless otherwise indicated, all pounds sterling amounts as of December 31, 2020 have been translated into U.S. dollars on the last business day of our fiscal
year ended December 31, 2020, using the exchange rate of £1.00 = $1.3663. All pound sterling amounts for the year ended December 31, 2020 have been
translated into U.S. dollars using the average annual exchange rate £1.00 = $1.2862. These translations should not be considered representations that any
such amounts have been, could have been or could be converted into U.S. dollars at that or any other exchange rate as at that or any other date.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities
Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve substantial risks and uncertainties. The
forward-looking statements are contained principally in Part I, Item 4.B “Business Overview,” Part I, Item 3.D. “Risk Factors,” and Part I, Item 5.
“Operating and Financial Review and Prospects,” but are also contained elsewhere in this Annual Report. In some cases, you can identify forward-looking
statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,”
“predict,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the
future. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity,
performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. The forward-
looking statements contained in this Annual Report are based upon information available to us as of the date of this Annual Report and, while we believe
we have a reasonable basis for each forward-looking statement contained this Annual Report, we caution you that these statements are based on a
combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. Forward-looking statements
include statements about:
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the development of our product candidates, including statements regarding the timing of initiation, completion and the outcome of clinical studies or trials and
related preparatory work, the period during which the results of the trials will become available and our research and development programs;
our ability to advance our product candidates into, and successfully complete, clinical trials;
our ability to obtain and maintain regulatory approval of our product candidates in the indications for which we plan to develop them, and any related
restrictions, limitations or warnings in the label of an approved drug or therapy;
the interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel, quarantines or social distancing protocols
imposed or recommended by federal or state governments, employers and others in connection with the ongoing coronavirus 2019, or COVID-19, pandemic;
our ability to license additional intellectual property relating to our product candidates from third parties and to comply with our existing license agreement;
our plans to research, develop, manufacture and commercialize our product candidates;
the timing or likelihood of regulatory filings and approvals for our product candidates, along with regulatory developments in the United States, European
Union, the United Kingdom and other foreign countries;
the size and growth potential of the markets for our product candidates, if approved, and the rate and degree of market acceptance of our product candidates,
including reimbursement that may be received from payors;
our ability to raise additional capital;
our commercialization, marketing and manufacturing capabilities and strategy;
our ability to attract collaborators with development, regulatory and commercialization expertise;
our expectations regarding our ability to obtain and maintain intellectual property protection;
our ability to attract and retain qualified employees and key personnel;
our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
the scalability and commercial viability of our manufacturing methods and processes;
the success of competing therapies that are or may become available;
whether we are classified as a PFIC for current and future periods; and
our estimates regarding future expenses, revenues and needs for additional financing and the accuracy thereof.
You should refer to Item 3.D. "Risk Factors" for a discussion of important factors that may cause our actual results to differ materially from those expressed
or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report
will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant
uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we
will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise, except as required by law. You should, therefore, not rely on these forward-looking
statements as representing our views as of any date subsequent to the date of this Annual Report.
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Item 1. Identity of Directors, Senior Management and Advisers.
Not applicable.
PART I
Item 2. Offer Statistics and Expected Timetable.
Not applicable.
Item 3. Key Information.
A. Selected financial data.
We have elected to voluntarily comply with Item 3.A, as effective February 10, 2021 and are omitting this disclosure in reliance thereon.
B. Capitalization and indebtedness.
Not applicable.
C. Reasons for the offer and use of proceeds.
Not applicable.
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D. Risk factors.
An investment in our ADSs involves a high degree of risk. You should carefully consider the risks described below, and all other information appearing
elsewhere in this Annual Report, including our consolidated financial statements and the related notes hereto, before making an investment decision
regarding our securities. The occurrence of any of the events or developments described below could harm our business, financial condition, results of
operations and growth prospects.
RISK FACTORS SUMMARY
Our business is subject to a number of risks and uncertainties, including those risks discussed at-length in the section below titled “Risk Factors.” These
risks include, among others, the following:
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The ongoing COVID-19 pandemic could materially and adversely affect our business, results of operations and financial condition.
• We have incurred significant losses in every year since our inception. We expect to continue to incur losses over the next several years and may
never achieve or maintain profitability.
• Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
• We will need additional funding to complete the development of our product candidates, which may not be available on acceptable terms, if at all.
• We are early in our development efforts. All of our product candidates are in clinical development or in preclinical development. If we are unable
to advance our product candidates through clinical development, obtain regulatory approval and ultimately commercialize our product candidates,
or experience significant delays in doing so, our business will be materially harmed.
• Our proprietary, next-generation T cell programming technologies, our modular approach for engineering T cells and our manufacturing platform
for our programmed T cell product candidates, represent emerging approaches to cancer treatment that face significant challenges and hurdles.
• Our future success is highly dependent on the regulatory approval of our current clinical-stage programmed T cell product candidates and our
preclinical programs. All of our product candidates will require significant clinical or preclinical testing before we can seek regulatory approval
for and launch a product commercially.
• Adverse side effects or other safety risks associated with our product candidates could delay or preclude approval, cause us to suspend or
discontinue clinical trials, cause us to abandon product candidates, could limit the commercial profile of an approved label, or could result in
significant negative consequences following any potential marketing approval.
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If the clinical trials of any of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA, the EMA or other
comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in
completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
• We may not be able to successfully create our own manufacturing infrastructure for supply of our requirements of programmed T cell product
candidates for use in clinical trials and for commercial sale.
• Our product candidates are biologics and the manufacture of our product candidates is complex and we may encounter difficulties in production,
particularly with respect to process development or scaling-out of our manufacturing capabilities. If we encounter such difficulties, our ability to
provide supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or stopped.
• We operate in a rapidly changing industry and face significant competition, which may result in others discovering, developing or
commercializing products before or more successfully than we do.
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If we are unable to obtain and maintain patent protection for our T cell programming technologies and product candidates, or if the scope of the
patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and biologics similar or
identical to ours, and our ability to successfully commercialize our technology and product candidates may be impaired.
• As an English public limited company, certain capital structure decisions will require shareholder approval, which may limit our flexibility to
manage our capital structure.
Risks Related to Our Financial Position and Need For Capital
We have incurred significant losses in every year since our inception. We expect to continue to incur losses over the next several years and may never
achieve or maintain profitability.
We are a clinical-stage biopharmaceutical company with a limited operating history and we have incurred significant net losses since our inception
in 2014. We have incurred losses of $142.1 million and $123.8 million for the years ended December 31, 2020 and 2019, $20.6 million for three months
ended December 31, 2018, and $44.8 million for the year ended September 30, 2018, respectively. As of December 31, 2020, we had an accumulated
deficit of $379.2 million. We have funded our operations to date primarily with proceeds from the sale of our equity securities.
We have no products approved for commercial sale, and while we have generated a small amount of revenue from licensing, we are devoting
substantially all of our financial resources and efforts to research and development of our programmed T cell product candidates as well as to building out
our manufacturing infrastructure, T cell programming technologies and management team. Investment in biopharmaceutical product development is highly
speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate
adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable.
We expect that it will take at least several years until any of our product candidates receive marketing approval and are commercialized, and we
may never be successful in obtaining marketing approval and commercializing product candidates. We expect to continue to incur significant expenses and
increasing operating losses for the foreseeable future. These net losses will adversely impact our shareholders’ equity and net assets and may fluctuate
significantly from quarter to quarter and year to year. We anticipate that our expenses will increase substantially as we:
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continue our ongoing and planned research and development of our current programmed T cell product candidates for the treatment of
hematological cancers and solid tumors;
initiate preclinical studies and clinical trials for any additional product candidates that we may pursue in the future, including our planned
development of additional T cell therapies for the treatment of hematological cancers and solid tumors;
seek to discover and develop additional product candidates and further expand our clinical product pipeline;
seek regulatory approvals for any product candidates that successfully complete clinical trials;
continue to scale up internal and external manufacturing capacity with the aim of securing sufficient quantities to meet our capacity requirements
for clinical trials and potential commercialization;
establish sales, marketing and distribution infrastructure to commercialize any product candidate for which we may obtain regulatory approval;
• make required milestone and royalty payments to UCL Business Ltd., or UCLB, the technology-transfer company of University College London,
or UCL, or other third parties, under license agreements pursuant to which we were granted some of our intellectual property rights;
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develop, maintain, expand and protect our intellectual property portfolio;
acquire or in-license other product candidates and technologies;
hire additional clinical, quality control and manufacturing personnel;
add clinical, operational, financial and management information systems and personnel, including personnel to support our product development
and planned future commercialization efforts;
expand our operations in the United States, Europe and other geographies; and
incur additional legal, accounting and other expenses associated with operating as a public company.
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To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. This
will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our product candidates,
obtaining regulatory approval, manufacturing, marketing and selling any products for which we may obtain regulatory approval, as well as discovering and
developing additional product candidates. We may never succeed in these activities and, even if we do, may never generate revenues that are significant
enough to achieve profitability.
Because of the numerous risks and uncertainties associated with the development, manufacturing, delivery and commercialization of complex
autologous cell therapies, we are unable to accurately predict the timing or amount of expenses or when, or if, we will be able to achieve profitability. If we
are required by regulatory authorities to perform studies in addition to those currently expected, or if there are any delays in the initiation and completion of
our clinical trials or the development of any of our product candidates, our expenses could increase and profitability could be further delayed.
Even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and
remain profitable would depress the value of our ADSs and could impair our ability to raise capital, expand our business, maintain our research and
development efforts or continue our operations. A decline in the value of our ADSs could also cause you to lose all or part of your investment.
Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
We are a clinical-stage biopharmaceutical company with a limited operating history. As an organization, we have not demonstrated an ability to
successfully complete late-stage clinical trials, obtain regulatory approvals, manufacture our product candidates at commercial scale or arrange for a third
party to do so on our behalf, conduct sales and marketing activities necessary for successful commercialization, or obtain reimbursement in the countries of
sale. We may encounter unforeseen expenses, difficulties, complications, and delays in achieving our business objectives. Our limited history as an
operating company makes any assessment of our future success or viability subject to significant uncertainty. If we do not address these risks successfully
or are unable to transition at some point from a company with a research and development focus to a company capable of supporting commercial activities,
then our business will suffer.
We will need additional funding to complete the development of our product candidates, which may not be available on acceptable terms, if at all.
We will require substantial additional funding to meet our financial needs and to pursue our business objectives. If we are unable to raise capital
when needed, we could be forced to delay, reduce or altogether cease our product development programs or commercialization efforts.
Since our inception, we have devoted substantially all of our resources to fund the operating expenses and capital expenditure requirements
associated with the research and development of our product candidates. These programs are described in greater detail under the heading “Our Pipeline” in
the section titled “Business Overview” of this Annual Report. Our current funding will not be sufficient for us to fund any of our programmed T cell
product candidates through regulatory approval, and we will need to raise additional capital to complete the development and commercialization of our
programmed T cell product candidates, and in connection with our continuing operations and other planned activities. Our future capital requirements will
depend on many factors, including:
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the progress, results and costs of laboratory testing, manufacturing, and preclinical and clinical development of our current and future product
candidates;
the timing and amounts of any milestone or royalty payments we may be required to make under current or future license agreements;
the costs of leasing, building out, equipping, and operating the facilities necessary to research, develop, manufacture and commercialize our
product candidates, as well as to support our continuing operations;
the costs of hiring additional clinical, quality control and manufacturing personnel;
the costs, timing and outcome of regulatory review of our product candidates;
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the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our
product candidates for which we receive marketing approval;
the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and
defending any intellectual property-related claims; and
the costs of operating as a public company.
Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process
that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve product sales. In
addition, our product candidates, if approved, may not achieve commercial success. Our product revenues, if any, will be derived from sales of product
candidates that we do not expect to be commercially available for several years, if at all. Accordingly, we will need to continue to rely on additional
financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may
seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future
operating plans.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and
the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder. Debt financing and preferred
equity financing, if available, could result in fixed payment obligations, and we may be required to accept terms that restrict our ability to incur additional
indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions.
If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we
may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on
terms that may not be favorable to us. In addition, we could also be required to seek funds through arrangements with collaborators or others at an earlier
stage than otherwise would be desirable. If we raise funds through research grants, we may be subject to certain requirements, which may limit our ability
to use the funds or require us to share information from our research and development. If we are unable to raise additional funds through equity or debt
financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant
rights to a third party to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Raising additional capital
through any of these or other means could adversely affect our business and the holdings or rights of our shareholders and may cause the market price of
our ADSs to decline.
Risks Related to the Development of Our Product Candidates
We are early in our development efforts. All of our product candidates are in clinical development or in preclinical development. If we are unable to
advance our product candidates through clinical development, obtain regulatory approval and ultimately commercialize our product candidates, or
experience significant delays in doing so, our business will be materially harmed.
We have established clinical proof-of-concept for only one of our product candidates. There is no assurance that our current or any other future
clinical trials of our product candidates will be successful or will generate positive clinical data and we may not receive marketing approval from the U.S.
Food and Drug Administration, or FDA, or other regulatory agencies, including the European Medicines Agency, or EMA, for any of our product
candidates. In order to commence a clinical trial in the United States, we must submit an Investigational New Drug application, or IND, to the FDA and
have the IND application go into effect. Trials in the United States must be conducted pursuant to an active IND. An investigator may not administer an
investigational new drug to human subjects until the IND application goes into effect. Similar requirements apply to our conduct of trials in the United
Kingdom and European Union. We have active clinical trial applications in effect for two of our current clinical-stage product candidates, AUTO1 and
AUTO3. There can be no assurance that the FDA, EMA or other regulatory agencies will permit any future clinical trial application to go into effect in a
timely manner or at all.
Biopharmaceutical development is a long, expensive and uncertain process, and delay or failure can occur at any stage of any of our clinical trials.
Failure to obtain regulatory approval for our product candidates will prevent us from commercializing and marketing our product candidates. The success
in the development of our programmed T cell product candidates will depend on many factors, including:
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completing preclinical studies and receiving regulatory approvals or clearance for conducting clinical trials for our preclinical-stage programs;
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obtaining positive results in our clinical trials demonstrating efficacy, safety, and durability of effect of our product candidates;
receiving approvals for commercialization of our product candidates from regulatory authorities;
• manufacturing our product candidates at an acceptable cost; and
• maintaining and growing an organization of scientists, medical professionals and business people who can develop and commercialize our
products and technology.
Many of these factors are beyond our control, including the time needed to adequately complete clinical testing and the regulatory submission
process. It is possible that none of our product candidates will ever obtain regulatory approval, even if we expend substantial time and resources seeking
such approval. If we do not achieve one or more of these factors in a timely manner or at all, or any other factors impacting the successful development of
biopharmaceutical products, we could experience significant delays or an inability to successfully develop our product candidates, which would materially
harm our business.
Our proprietary, next-generation T cell programming technologies, our modular approach for engineering T cells and our manufacturing platform for
our programmed T cell product candidates, represent emerging approaches to cancer treatment that face significant challenges and hurdles.
We have concentrated our research and development efforts on our T cell technology platform using our expertise in tumor biology and cell
programming, and our future success is highly dependent on the successful development and manufacture of our programmed T cell product candidates.
We do not currently have any approved or commercialized products. One of our most advanced product candidates employs a dual-targeting mechanism.
By targeting two separate antigens on the cancer cell surface, we believe this product candidate has the potential to improve durability of treatment
response and reduce the frequency of cancer relapse as compared to other currently available single-targeting T cell therapies. Our product candidate for the
treatment of T-cell lymphoma employs a novel approach to killing malignant T cells that aims to preserve approximately half of the normal, healthy T cells.
Some of our product candidates include a “safety switch” that is designed to allow for the elimination of the engineered T cells if a patient experiences
severe adverse side effects from the treatment. However, this “safety switch” technology has not been used to date in our clinical studies, and we do not
know whether it would have the intended effect if used. Additionally, as with other targeted therapies, off-tumor or off-target activity could delay
development or require us to re-engineer or abandon a particular product candidate. Because programmed T cell therapies represent a relatively new field
of cellular immunotherapy and cancer treatment generally, developing and commercializing our product candidates subjects us to a number of risks and
challenges, including:
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obtaining regulatory approval for our product candidates, as the FDA, the EMA and other regulatory authorities have limited experience with
programmed T cell therapies for cancer;
sourcing clinical and, if approved, commercial supplies of the materials used to manufacture our product candidates;
developing programming modules with the desired properties, while avoiding adverse reactions;
creating viral vectors capable of delivering multiple programming modules;
developing a reliable and consistent vector and cell manufacturing process;
establishing manufacturing capacity suitable for the manufacture of our product candidates in line with expanding enrollment in our clinical
studies and our projected commercial requirements;
achieving cost efficiencies in the scale-up of our manufacturing capacity;
developing protocols for the safe administration of our product candidates;
educating medical personnel regarding our programmed T cell therapies and the potential side effect profile of each of our product candidates,
such as potential adverse side effects related to cytokine release syndrome;
establishing integrated solutions in collaboration with specialty treatment centers in order to reduce the burdens and complex logistics commonly
associated with the administration of T cell therapies;
establishing sales and marketing capabilities to successfully launch and commercialize our product candidates if and when we obtain any required
regulatory approvals, and risks associated with gaining market acceptance of a novel therapy if we receive approval; and
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obtaining coverage and adequate reimbursement from third-party payors for our novel and personalized therapies in connection with
commercialization of any approved product candidates.
We may not be able to successfully develop our programmed T cell product candidates or our T cell programming technologies in a manner that
will yield products that are safe and effective, scalable or profitable.
Additionally, because our technology involves the genetic modification of patient cells ex vivo, we are subject to additional regulatory challenges
and risks, including regulatory requirements governing genetically modified organisms that have changed frequently and will likely continue to change in
the future, and that may limit or delay our ability to import our product candidates into certain countries for use in clinical trials or for commercial sale even
if we receive applicable marketing approvals.
Moreover, public perception and awareness of T cell therapy safety issues may adversely influence the willingness of subjects to participate in
clinical trials of our product candidates, or if approved, of physicians to prescribe our products. Physicians, hospitals and third-party payors often are slow
to adopt new products, technologies and treatment practices that require additional upfront costs and training. Treatment centers may not be willing or able
to devote the personnel and establish other infrastructure required for the administration of programmed T cell therapies. Physicians may not be willing to
undergo training to adopt this novel and personalized therapy, may decide the therapy is too complex to adopt without appropriate training and may choose
not to administer the therapy. Based on these and other factors, hospitals and payors may decide that the benefits of this new therapy do not or will not
outweigh its costs.
Our future success is highly dependent on the regulatory approval of our current clinical-stage programmed T cell product candidates and our
preclinical programs. All of our product candidates will require significant clinical or preclinical testing before we can seek regulatory approval for
and launch a product commercially.
We do not have any products that have gained regulatory approval. Our business is substantially dependent on our ability to obtain regulatory approval
for, and, if approved, to successfully commercialize our programmed T cell product candidates. We cannot commercialize product candidates in the United
States without first obtaining regulatory approval for the product from the FDA; similarly, we cannot commercialize product candidates in countries outside
of the United States without obtaining regulatory approval from comparable regulatory authorities in relevant jurisdictions, such as the EMA in Europe.
Before obtaining regulatory approvals for the commercial sale of any product candidate for a particular indication, we must demonstrate with substantial
evidence gathered in preclinical and clinical studies, that the product candidate is safe and effective for that indication and that the manufacturing facilities,
processes and controls are adequate with respect to such product candidate. To date, we have had only limited interaction with both the FDA and the EMA
regarding our product candidates. Prior to seeking approval for any of our product candidates, we will need to confer with the FDA, the EMA and other
regulatory authorities regarding the design of our clinical trials and the type and amount of clinical data necessary to seek and gain approval for our product
candidates.
The time required to obtain approval by the FDA, the EMA and other regulatory authorities is unpredictable but typically takes many years
following the commencement of preclinical studies and clinical trials and depends upon numerous factors, including the substantial discretion of the
regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the
course of a product candidate’s clinical development and may vary among jurisdictions. It is possible that none of our existing product candidates or any
future product candidates will ever obtain regulatory approval.
Our product candidates could fail to receive regulatory approval from the FDA, the EMA or other regulatory authorities for many reasons,
including:
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disagreement with the design, protocol or conduct of our clinical trials;
failure to demonstrate that a product candidate is safe and effective for its proposed indication;
failure of clinical trials to meet the level of statistical significance required for approval;
failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;
disagreement with our interpretation of data from preclinical studies or clinical trials;
insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of a Biologics License
Application, or BLA, or other submission or to obtain regulatory approval;
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failure to obtain approval of the manufacturing processes or our facilities;
changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval; or
lack of adequate funding to complete a clinical trial in a manner that is satisfactory to the applicable regulatory authority.
The FDA, the EMA or a comparable regulatory authority may require more information, including additional preclinical or clinical data to support
approval, including data that would require us to perform additional clinical trials or modify our manufacturing processes, which may delay or prevent
approval and our commercialization plans, or we may decide to abandon the development program. If we change our manufacturing processes, we may be
required to conduct additional clinical trials or other studies, which also could delay or prevent approval of our product candidates. If we were to obtain
approval, regulatory authorities may approve any of our product candidates for fewer indications than we request (including failing to approve the most
commercially promising indications), may limit indications, may grant approval contingent on the performance of costly post-marketing clinical trials or
other post-marketing commitments, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the
successful commercialization of that product candidate.
Depending on results we observe in our clinical trials, our development strategy may include the pursuit of expedited approvals from the FDA or the
EMA, such as through the accelerated approval pathway, and we may seek to achieve breakthrough therapy designation or regenerative medicine advanced
therapy, or RMAT, designation from the FDA or the PRIority MEdicines, or PRIME, designation from the EMA. Our product candidates may not qualify
for such designations, and the clinical data obtained from trials of our product candidates may not be sufficient to qualify for any expedited approval
program.
Even if a product candidate were to successfully obtain approval from the FDA, the EMA or other comparable regulatory authorities in other
jurisdictions, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or
contraindications, or may be subject to burdensome post-approval study or risk management requirements. If we are unable to obtain regulatory approval
for one of our product candidates in one or more jurisdictions, or any approval contains significant limitations, we may not be able to obtain sufficient
funding to continue the development of that product or generate revenues attributable to that product candidate. Also, any regulatory approval of our
current or future product candidates, once obtained, may be withdrawn. See the risk factor titled “—Even if we complete the necessary preclinical studies
and clinical trials, the regulatory approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the
commercialization of some or all of our product candidates. As a result, we cannot predict when or if, and in which territories, we will obtain marketing
approval to commercialize a product candidate.”
We may not be successful in our efforts to build a pipeline of product candidates.
A key element of our strategy is to use our expertise in tumor biology and cell programming and our proprietary and modular T cell programming
technologies to develop what we believe are safer and more effective T cell therapies. Our initial focus is on the development of a pipeline of product
candidates for the treatment of hematological cancers and the progression of these product candidates through clinical development. We also intend to
develop follow-on, or next-generation, product candidates with additional elements of programming built into the programmed T cell product candidate to
offer enhanced characteristics as compared to the earlier product generation, such as pharmacological control or insensitivity to checkpoint inhibition.
However, we may not be able to develop product candidates that are safe and effective, or which compare favorably with our existing product candidates.
Even if we are successful in continuing to build our pipeline and developing next-generation product candidates or expanding into solid tumor indications,
the potential product candidates that we identify may not be suitable for clinical development, including as a result of lack of safety, lack of tolerability,
lack of anti-tumor activity, or other characteristics that indicate that they are unlikely to be products that will receive marketing approval, achieve market
acceptance or obtain reimbursements from third-party payors. If we do not successfully develop and commercialize product candidates or collaborate with
others to do so, we will not be able to obtain product revenue in future periods, which could significantly harm our financial position and adversely affect
the trading price of our ADSs.
Our preclinical programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory
approvals or to commercialize these programs on a timely basis or at all, which would have an adverse effect on our business.
Many of our product candidates are in the preclinical development stage. The risk of failure of preclinical programs is high. Before we can
commence clinical trials for a product candidate, we must complete extensive preclinical testing and studies to obtain regulatory clearance to initiate human
clinical trials, including based on IND applications in effect in the United States and clinical trial applications, or CTAs, in Europe. We cannot be certain of
the timely completion or outcome of our preclinical testing
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and studies and cannot predict if the FDA, the EMA or other regulatory authorities will accept our proposed clinical programs or if the outcome of our
preclinical testing and studies will ultimately support the further development of our programs. As a result, we cannot be sure that we will be able to submit
INDs or similar applications for our preclinical programs on the timelines we expect, if at all, and we cannot be sure that submission of INDs or similar
applications will result in the FDA, the EMA or other regulatory authorities allowing clinical trials to begin.
Clinical trials are difficult to design and implement, involve uncertain outcomes and may not be successful.
Human clinical trials are difficult to design and implement, in part because they are subject to rigorous regulatory requirements. The design of a
clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent until
the clinical trial is well advanced. As an organization, we have limited experience designing clinical trials and may be unable to design and execute a
clinical trial to support regulatory approval. There is a high failure rate for biologic products proceeding through clinical trials, which may be higher for our
product candidates because they are based on new technology and engineered on a patient-by-patient basis. Many companies in the pharmaceutical and
biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and
earlier-stage clinical trials. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent
regulatory approval. In addition, we may experience regulatory delays or rejections as a result of many factors, including changes in regulatory policy
during the period of our product candidate development. Any such delays could negatively impact our business, financial condition, results of operations
and prospects.
Success in preclinical studies or clinical trials may not be indicative of results in future clinical trials.
Results from preclinical studies are not necessarily predictive of future clinical trial results, and interim results of a clinical trial are not necessarily
indicative of final results. For example, we have treated only a small number of patients in all of our ongoing clinical trials. For that reason, we do not
know whether these candidates will be effective for the intended indications or safe in humans. Our product candidates may fail to show the desired safety
and efficacy in clinical development despite positive results in preclinical studies or having successfully advanced through initial clinical trials. This failure
to establish sufficient efficacy and safety could cause us to abandon clinical development of our product candidates.
We depend on enrollment of patients in our clinical trials for our product candidates. If we encounter difficulties enrolling patients in our clinical
trials, our clinical development activities could be delayed or otherwise adversely affected.
Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. We may experience difficulties
in patient enrollment in our clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with their protocols depends,
among other things, on our ability to enroll a sufficient number of patients who remain in the study until its conclusion. The enrollment of patients depends
on many factors, including:
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the patient eligibility criteria defined in the protocol;
the number of patients with the disease or condition being studied;
the perceived risks and benefits of the product candidate in the trial;
clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies,
including any new drugs that may be approved for the indications we are investigating or drugs that may be used off-label for these indications;
the size and nature of the patient population required for analysis of the trial’s primary endpoints;
the proximity of patients to study sites;
the design of the clinical trial;
our ability to recruit clinical trial investigators with the appropriate competencies and experience;
competing clinical trials for similar therapies or other new therapeutics not involving T cell-based immunotherapy;
our ability to obtain and maintain patient consents;
disruptions to health care systems caused by the coronavirus pandemic; and
the risk that patients enrolled in clinical trials will drop out of the clinical trials before completion of their treatment.
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In particular, some of our clinical trials will look to enroll patients with characteristics which are found in a very small population. For example, our
clinical trial for AUTO4 seeks to enroll patients with peripheral T-cell lymphoma, a rare and heterogeneous form of non-Hodgkin lymphoma, or NHL.
Other companies are conducting clinical trials with their redirected T cell therapies in multiple myeloma, pediatric relapsed or refractory acute B
lymphocytic leukemia, or pediatric ALL, and relapsed or refractory diffuse large B-cell lymphoma, or DLBCL, and seek to enroll patients in their studies
that may otherwise be eligible for our clinical trials, which could lead to slow recruitment and delays in our clinical programs. In addition, since the number
of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use,
which could further reduce the number of patients who are available for our clinical trials in these clinical trial sites. Moreover, because our product
candidates represent a departure from more commonly used methods for cancer treatment, potential study participants and their doctors may be inclined to
use conventional therapies, such as chemotherapy and antibody therapy, rather than participate in our clinical trials.
Delays in patient enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent
completion of these clinical trials and adversely affect our ability to advance the development of our product candidates. In addition, many of the factors
that may lead to a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product
candidates.
The market opportunities for certain of our product candidates may be limited to those patients who are ineligible for or have failed prior treatments
and may be small, and our projections regarding the size of the addressable market may be incorrect.
Cancer therapies are sometimes characterized as first line, second line or third line, and the FDA often approves new therapies initially only for
third line use. When blood cancers are detected, they are treated with the first line of therapy with the intention of curing the cancer. This generally consists
of chemotherapy, radiation, antibody drugs, tumor-targeted small molecules, or a combination of these. In addition, sometimes a bone marrow
transplantation can be added to the first line therapy after the combination chemotherapy is given. If the patient’s cancer relapses, then they are given a
second line or third line therapy, which can consist of more chemotherapy, radiation, antibody drugs, tumor-targeted small molecules, or a combination of
these, or a bone marrow transplant. Generally, the higher the line of therapy, the lower the chance of a cure. With third or higher line, the goal of the
therapy in the treatment of lymphoma and myeloma is to control the growth of the tumor and extend the life of the patient, as a cure is unlikely to happen.
Patients are generally referred to clinical trials in these situations.
We are initially developing AUTO1 as second line therapy for patients with ALL who are considered at high risk for relapse and as third line
therapy for other patients with ALL, AUTO3 as a third line therapy for DLBCL and AUTO4 as a second line therapy for TRBC1-positive T-cell lymphoma
patients. If AUTO4 is approved as a second line therapy, we may initiate a trial to position it as a consolidation therapy after first line chemotherapy in T-
cell lymphoma. There is no guarantee that any of our product candidates, even if approved, would be approved for an earlier line of therapy. In addition, we
may have to conduct additional large randomized clinical trials prior to gaining approval for the earlier line of therapy.
Our projections of both the number of people who have the cancers we are targeting, as well as the size of the patient population subset of people
with these cancers in a position to receive first, second, third and fourth line therapy and who have the potential to benefit from treatment with our product
candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including scientific literature, surveys of
clinics, patient foundations, or market research and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of
these cancers. The number of patients may turn out to be fewer than expected. Additionally, the potentially addressable patient population for our product
candidates may be limited or may not be amenable to treatment with our product candidates. For instance, in our clinical trial for AUTO4, we are initially
targeting a small patient population that suffers from peripheral T-cell lymphoma, a rare and heterogeneous form of NHL. Even if we obtain significant
market share for our product candidates, because the potential target populations are small, we may never achieve significant revenues without obtaining
regulatory approval for additional indications or as part of earlier lines of therapy.
Adverse side effects or other safety risks associated with our product candidates could delay or preclude approval, cause us to suspend or discontinue
clinical trials, cause us to abandon product candidates, limit the commercial profile of an approved label, or result in significant negative consequences
following any potential marketing approval.
In clinical trials conducted by other companies involving CAR T cells, the most prominent acute toxicities included symptoms thought to be
associated with cytokine release syndrome, or CRS, such as fever, low blood pressure and kidney dysfunction. Some patients also experienced toxicity of
the central nervous system, or neurotoxicity, such as confusion, tremor, cranial nerve dysfunction, seizures and speech impairment. Adverse events with the
worst grades and attributed to CAR T cells were severe and life threatening in some patients. The life threatening events were related to kidney dysfunction
and neurotoxicity. Severe and life threatening toxicities occurred mostly in the first two weeks after cell infusion and generally resolved within three weeks,
but several patients died in clinical trials involving CAR T cells developed by other companies and academic institutions.
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For example, as of the most recent data cut-off date of November 12, 2020, 20 patients in the ALLCAR19 clinical trial have received AUTO1. Of those 20
patients, three patients (15%) experienced Grade 3 neurotoxicity that resolved swiftly with steroids. We also observed Grade 3 or higher neutropenias in 7
of 20 patients reporting such neutropenias prior to treatment with AUTO1 and 8 of 17 patients reporting Grade 3 or higher neutropenias 28 days after
treatment with AUTO1, with most resolving by month two or three post-dosing. Of the 20 patients, seven patients died while enrolled in the ALLCAR19
clinical trial, of which two deaths were determined to be due to progression of the leukemia, one death occurred post progression following infective
complication post-transplant and the four remaining deaths were determined to be due to infectious complications (a common complication of advanced
ALL). There can be no assurance that patients in ongoing or future trials of AUTO1, AUTO3, AUTO4 or any of our other product candidates will not
experience more severe CRS, unacceptable levels of neurotoxicity or other serious adverse events.
Our clinical trials include cancer patients who are very sick and whose health is deteriorating, and we expect that additional clinical trials of our
other product candidates will include similar patients with deteriorating health. It is possible that some of these patients may experience similar adverse
side effects as were observed in clinical trials conducted by other companies and academic institutions involving CAR T cells, and that additional patients
may die during our clinical trials for various reasons, including as a result of receiving our product candidates, because the patient’s disease is too
advanced, or because the patient experiences medical problems that may not be related to our product candidate. Even if the deaths are not related to our
product candidate, the deaths could affect perceptions regarding the safety of our product candidate.
Patient deaths and severe side effects caused by our product candidates, or by products or product candidates of other companies that are thought to
have similarities with our therapeutic candidates, could result in the delay, suspension, clinical hold or termination of clinical trials by us, the FDA, the
EMA or other regulatory authorities for a number of reasons. If we elect or are required to delay, suspend or terminate any clinical trial of any product
candidates that we develop, the commercial prospects of such product candidates will be harmed and our ability to generate product revenues from any of
these product candidates would be delayed or eliminated. Serious adverse events observed in clinical trials could hinder or prevent market acceptance of
the product candidate at issue. Any of these occurrences may harm our business, prospects, financial condition and results of operations significantly.
If the clinical trials of any of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA, the EMA or other
comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or
ultimately be unable to complete, the development and commercialization of our product candidates.
We may not commercialize, market, promote or sell any product candidate without obtaining marketing approval from the FDA, the EMA or other
comparable regulatory authority, and we may never receive such approvals. It is impossible to predict accurately when or if any of our product candidates
will prove effective or safe in humans and will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the
commercial sale of any of our product candidates, we must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that
our product candidates are both safe and effective for use in each target indication. Clinical testing is expensive, difficult to design and implement, can take
many years to complete and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing.
We may experience numerous unforeseen events prior to, during, or as a result of, clinical trials that could delay or prevent our ability to receive
marketing approval or commercialize any of our product candidates, including:
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the FDA, the EMA or other comparable regulatory authority may disagree as to the number, design or implementation of our clinical trials, or may
not interpret the results from clinical trials as we do;
regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a
prospective trial site;
• we may not reach agreement on acceptable terms with prospective clinical trial sites, the terms of which can be subject to extensive negotiation
and may vary significantly among different clinical trial sites;
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clinical trials of our product candidates may produce negative or inconclusive results;
• we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;
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the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may
be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or we may fail to recruit suitable
patients to participate in a trial;
our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;
regulators may issue a clinical hold, or regulators or institutional review boards may require that we or our investigators suspend or terminate
clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to
unacceptable health risks;
the cost of clinical trials of our product candidates may be greater than we anticipate;
the FDA, the EMA or other comparable regulatory authorities may fail to approve our manufacturing processes or facilities;
the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient
or inadequate;
our product candidates may have undesirable side effects or other unexpected characteristics, particularly given their novel, first-in-
human application, such as cytokine-induced toxicity and T cell aplasia, causing us or our investigators, regulators or institutional review boards
to suspend or terminate the clinical trials; and
the approval policies or regulations of the FDA, the EMA or other comparable regulatory authorities may significantly change in a manner
rendering our clinical data insufficient for approval.
To the extent that the results of the trials are not satisfactory for the FDA, the EMA or regulatory authorities in other countries or jurisdiction to
approve our BLA, Marketing Approval Application, or MAA, or other comparable application, the commercialization of our product candidates may be
significantly delayed, or we may be required to expend significant additional resources, which may not be available to us, to conduct additional trials in
support of potential approval of our product candidates.
We may not be able to successfully create our own manufacturing infrastructure for supply of our requirements of programmed T cell product
candidates for use in clinical trials and for commercial sale.
Our manufacturing and commercialization strategy is based on establishing a fully integrated vein-to-vein product delivery cycle. Over time, we
expect to establish regional manufacturing hubs to service major markets to meet projected needs for commercial sale quantities. However, we do not
currently own any facility that may be used as our clinical-scale manufacturing and processing facility and we currently use facilities and equipment at the
Cell and Gene Therapy Catapult, as well as third party vendors, for vector and cell manufacturing.
We are establishing our viral vector and cell manufacturing capacity by taking occupancy of manufacturing suites at the Cell and Gene Therapy
Catapult manufacturing center in Stevenage, United Kingdom, as well as several smaller facilities in the Stevenage, United Kingdom area. The Cell and
Gene Therapy Catapult manufacturing center provides shared infrastructure to collaborators working in segregated manufacturing suites. We have little to
no control over the actions of other collaborators and their actions could inadvertently damage or delay our ability to manufacture our product candidates.
In addition, we rely on external vendors to manufacture viral vector for certain of our product candidates. Our long-term plan is to establish additional
manufacturing sites in the United States and in Europe as needed. The implementation of this plan is subject to many risks. For example, the establishment
of a cell-therapy manufacturing facility is a complex endeavor requiring knowledgeable individuals. Creating an internal manufacturing infrastructure will
rely upon finding personnel with an appropriate background and training to staff and operate the facility. Should we be unable to find these individuals, we
may need to rely on external contractors or train additional personnel to fill the needed roles. There are a small number of individuals with experience in
cell therapy and the competition for these individuals is high.
We expect that the establishment of our own commercial cell manufacturing facilities will provide us with enhanced control of product supply for
both clinical trials and the commercial market, enable the more rapid implementation of process changes, and allow for better long-term cost margins.
However, we have no experience as a company in designing and operating a commercial manufacturing facility and may never be successful in developing
our own manufacturing facility or capability. We may establish additional manufacturing sites as we expand our commercial footprint to multiple
geographies, which may lead to regulatory delays or prove costly. Even if we are successful, our manufacturing operations could be affected by cost-
overruns, unexpected delays, equipment failures, labor shortages, natural disasters, power failures and numerous other factors, or we may not
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be successful in establishing sufficient capacity to produce our product candidates in sufficient quantities to meet the requirements for the potential launch
or to meet potential future demand, all of which could prevent us from realizing the intended benefits of our manufacturing strategy and have a material
adverse effect on our business.
We may not be successful in achieving cost of goods at commercial scale that provide for an attractive margin.
We believe that our current, fully enclosed manufacturing processes are fit for commercial scale and we anticipate they will enable commercial
supply at an economical cost. However, we have not yet established manufacturing capacity at commercial scale and may underestimate the cost and time
required to do so, or overestimate cost reductions from economies of scale that can be realized with our manufacturing processes. We may ultimately be
unable to manage the cost of goods for our product candidates to levels that will allow for a margin in line with our expectations and return on investment if
and when those product candidates are commercialized.
Our product candidates are biologics and the manufacture of our product candidates is complex and we may encounter difficulties in production,
particularly with respect to process development or scaling-out of our manufacturing capabilities. If we encounter such difficulties, our ability to
provide supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or stopped.
We have developed a process for manufacturing programmed T cells in a fully enclosed system designed to minimize the risk of contamination, and
we have improved the viral transduction process to help eliminate processing inconsistencies. We believe that our current processes are suitable for
commercialization. While we have established a process which we believe is scalable for commercial production, each manufacturing process must be
validated through the performance of process validation runs to guarantee that the facility, personnel, equipment, and process work as designed. We have
not yet manufactured or processed our product candidates on a commercial scale and may not be able to do so for any of our product candidates.
We, like other manufacturers of biologic products, may encounter difficulties in production, particularly in scaling up or out, validating the
production process, and assuring high reliability of the manufacturing process. These problems include delays or break-downs in logistics and shipping,
difficulties with production costs and yields, quality control, and product testing, operator error, lack of availability of qualified personnel, as well as failure
to comply with strictly enforced federal, state and foreign regulations.
Furthermore, if microbial, viral or other contaminations are discovered in our supply of product candidates or in the manufacturing facilities, such
manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. We cannot assure you that any
of these or other issues relating to the manufacture of our product candidates will not occur in the future. Any delay or interruption in the supply of clinical
trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trial programs and, depending upon the
period of delay, require us to begin new clinical trials at additional expense or terminate clinical trials completely.
The manufacture and delivery of programmed T cell therapies to patients involves complex, integrated processes, including harvesting T cells from
patients, programming the T cells ex vivo, multiplying the T cells to obtain the desired dose, and ultimately infusing the T cells back into a patient’s body.
As a result of the complexities, the cost to manufacture biologics in general, and our programmed T cell product candidates in particular, is generally higher
than traditional small molecule chemical compounds, and the manufacturing process is less reliable and is more difficult and costly to reproduce. In
addition, our manufacturing process will be susceptible to product loss or failure due to logistical issues associated with the collection of white blood cells
from the patient, shipping such patient material to the manufacturing site, storing and processing such patient material, shipping the patient material with
the programmed T cells back to the patient, and infusing the patient with the final product. Other manufacturing issues include the differences in patient
starting materials, inconsistency in cell growth, variability in product characteristics, interruptions in the manufacturing process, equipment or reagent
failure, improper installation or operation of equipment, and vendor or operator error. Even minor deviations from normal manufacturing processes could
result in reduced production yields, product defects, and other supply disruptions. For example, in clinical trials of AUTO1 conducted by UCL using a
manufacturing process that differs from our semi-automated manufacturing process, UCL experienced product failures for three patients enrolled in the
CARPALL trial and produced only a partial dose for one patient in the ALLCAR19 trial. If we lose, destroy or otherwise impair the patient materials at any
point in the vein-to-vein supply chain, the manufacturing process for that patient will need to be restarted and the resulting delay may adversely affect that
patient’s outcome due to the risk of disease progression. In addition, because our product candidates are manufactured for each particular patient, we will
be required to maintain a chain of identity with respect to materials as they move from the patient to the manufacturing facility, through the manufacturing
process, and back to the patient. Maintaining such a chain of identity is difficult and complex, and failure to do so could result in adverse patient outcomes,
loss of product, or regulatory action including withdrawal of our products from the market. Further, as product candidates are developed through preclinical
to late stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing
methods, are altered along the way in an effort to optimize processes and results.
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Such changes carry the risk that they will not achieve these intended objectives, and any of these changes could cause our product candidates to perform
differently and affect the results of planned clinical trials or other future clinical trials.
Our manufacturing facilities also require commissioning and validation activities to demonstrate that they operate as designed, and are subject to
government inspections by the FDA, the EMA and other comparable regulatory authorities. If we are unable to reliably produce products to specifications
acceptable to the regulatory authorities, we may not obtain or maintain the approvals we need to manufacture our products. Further, our facilities may fail
to pass government inspections prior to or after the commercial launch of our product candidates, which would cause significant delays and additional costs
required to remediate any deficiencies identified by the regulatory authorities. Any of these challenges could delay completion of clinical trials, require
bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidate, impair
commercialization efforts, increase our cost of goods, and have an adverse effect on our business, financial condition, results of operations and growth
prospects.
Prior treatments can alter the cancer and negatively impact chances for achieving clinical activity with our programmed T cells.
Patients with hematological cancers receive highly toxic lympho-depleting chemotherapy as their initial treatments. These therapies can impact the
viability of the T cells collected from the patient and can contribute to highly variable responses to programmed T cell therapies. Patients could also have
received prior therapies that target the same target antigen on the cancer cells as our intended programmed T cell product candidate and thereby lead to a
selection of cancer cells with low or no expression of the target. As a result, our programmed T cell product candidates may not recognize the cancer cell
and may fail to achieve clinical activity. Both of our most advanced product candidates, AUTO1 and AUTO3, may face this challenge. For example, ALL
patients could have received blinatumomab or Kymriah, or a CD19 ADC, or a CD22 targeting CAR T, or CD22 ADC, like inotuzomab, or similar products
or product candidates prior to receiving AUTO1; and DLBCL patients could have received Yescarta, Kymriah, JCAR-17, inotuzomab, CD22-targeting
CAR or blinatumomab, or similar products or product candidates prior to receiving AUTO3. If any of our product candidates do not achieve a sufficient
level of clinical activity, we may discontinue the development of that product candidate, which could have an adverse effect on the value of our ADSs.
We may expend our resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that
may be more profitable or have a greater likelihood of success.
Because we have limited financial and management resources, we focus on research programs and product candidates that we identify for specific
indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have
greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market
opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any
commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may
relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been
more advantageous for us to retain sole development and commercialization rights to such product candidate.
We plan to seek, but may fail to obtain “breakthrough therapy” designation or “regenerative medicine advanced therapy” (RMAT) designation from
the FDA and “PRIME” designation from the EMA, and may pursue accelerated approval for some or all of our programmed T cell product
candidates, which may prolong the regulatory approval process for our product candidates.
In 2012, the FDA established a breakthrough therapy designation which is intended to expedite the development and review of product candidates
that treat serious or life-threatening diseases when “preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over
existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.” The
designation of a product candidate as a breakthrough therapy provides potential benefits that include more frequent meetings with FDA to discuss the
development plan for the product candidate and ensure collection of appropriate data needed to support approval; more frequent written correspondence
from the FDA about such things as the design of the proposed clinical trials and use of biomarkers; guidance on an efficient drug development program,
beginning as early as Phase 1; organizational commitment involving senior managers; and eligibility for rolling review and priority review. The frequency
of communication from the FDA is intended to allow for questions and issues to be resolved quickly, which often leads to earlier drug approval and access
by patients.
RMAT was introduced as a new designation under the 21st Century Cures Act for the development and review of certain regenerative medicine
therapies. To receive RMAT designation, a regenerative medicine product candidate must be intended to treat, modify, reverse, or cure a serious or life-
threatening disease or condition with preliminary clinical evidence indicating that the drug has the potential to address unmet medical need. RMAT
designation does not require evidence to indicate that the drug may offer a substantial improvement over available therapies, as breakthrough designation
requires. In November 2017, the FDA released draft guidance that clarified that gene therapies, including genetically modified cells, that lead to a durable
modification of
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cells or tissues, may meet the definition of a regenerative medicine therapy for RMAT designation. Similar to breakthrough designation, an RMAT product
candidate receives: intensive guidance on an efficient drug development program; intensive involvement of senior managers and experienced staff on a
proactive, collaborative and cross-disciplinary review; and a rolling review. Regenerative medicine therapies that qualify for RMAT designation may also
qualify for other FDA expedited programs, if they meet the criteria for such programs.
Similarly, the EMA has established the PRIME scheme to expedite the development and review of product candidates that show a potential to
address to a significant extent an unmet medical need, based on early clinical data.
We intend to seek breakthrough therapy designation, RMAT designation or PRIME designation for some or all of our programmed T cell product
candidates that may qualify. There is no assurance that we will obtain breakthrough therapy designation or RMAT designation, or that we will obtain access
to PRIME for any of our product candidates. Breakthrough therapy designation and PRIME eligibility do not change the standards for product approval,
and there is no assurance that such designation or eligibility will result in expedited review or approval. Additionally, breakthrough therapy designation and
access to PRIME can each be revoked if the criteria for eligibility cease to be met as clinical data emerges.
We may also seek accelerated approval for certain of our product candidates. Under the FDA’s fast track and accelerated approval programs, the
FDA may approve a drug or biologic for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing
treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than
irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into
account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. For drugs granted accelerated approval,
post-marketing confirmatory trials have been required to describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit.
These confirmatory trials must be completed with due diligence. Moreover, the FDA may withdraw approval of our indication approved under the
accelerated approval pathway if, for example:
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the trial or trials required to verify the predicted clinical benefit of our product candidates fail to verify such benefit or do not demonstrate
sufficient clinical benefit to justify the risks associated with the drug;
other evidence demonstrates that our product candidates are not shown to be safe or effective under the conditions of use;
• we fail to conduct any required post-approval trial of our product candidates with due diligence; or
• we disseminate false or misleading promotional materials relating to the relevant product candidate.
Risks Related to our Business Operations
The effects of health epidemics, including the ongoing global coronavirus COVID-19 pandemic, in regions where we, or the third parties on which we
rely, have business operations could adversely impact our business, including our clinical trials, preclinical studies and supply chains, depending on
the location, duration and severity of disruptions to the systems affecting our business.
Beginning in late 2019, the outbreak of a novel strain of coronavirus, COVID-19, has evolved into a global pandemic and in March 2020, the
World Health Organization characterized COVID-19 as a pandemic. The COVID-19 pandemic, which has continued to spread, and the related adverse
public health developments, including orders to shelter-in-place, travel restrictions, and the imposition of additional requirements on businesses, have
adversely affected workforces, organizations, healthcare communities, economies, and financial markets globally, leading to an economic downturn and
increased market volatility. The U.S. government also has imposed travel restrictions on travel between the United States, United Kingdom and certain
other countries. It has also disrupted the normal operations of businesses across industries, including ours, and caused significant disruption in the
operations of third party manufacturers and contract research organizations, or CROs, upon whom we rely.
In response to the spread of COVID-19 as well as public health directives and orders, we have implemented work-from-home policies to support the
community efforts to reduce the transmission of COVID-19 and protect employees, complying with guidance from government authorities in the countries
within which we operate. We have implemented a number of measures to ensure employee safety and business continuity, including limiting access to our
laboratory and manufacturing facilities to only those individuals required to execute their job responsibilities and restricted the number of staff working
concurrently in any given laboratory. Our company headquarters is located in London, our U.S. headquarters is located in the Baltimore-Washington
metropolitan area, and our CROs and CMOs are located in the United States, the United Kingdom, and European Union.
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We are currently conducting clinical trials in the United States, United Kingdom and Spain. Timely enrollment in our clinical trials is dependent upon
capacity at our clinical trial sites, some of which have been and are currently adversely affected by COVID-19. Due to the uneven geographic impact of the
pandemic, these localized disruptions are difficult to predict. Shutdowns or other restrictions related to COVID-19 or other infectious diseases could impact
personnel at third-party manufacturing facilities, which, in turn, could impact the availability or cost of materials and disrupt our supply chain.
Additionally, many of our clinical trials involve immunocompromised patients who are at higher risk for COVID-19 and who are therefore more likely to
avoid hospitals or other high-risk areas.
The effects of the governmental restrictions and guidelines, and the measures we have implemented to comply with them, may negatively impact
productivity, disrupt our business and delay our clinical programs and timelines (for example, our timelines for AUTO1 and AUTO3). The magnitude of
these potential disruptions will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in
the ordinary course.
As a result of the COVID-19 outbreak, or similar pandemics, we may experience disruptions that could severely impact our business, clinical trials and
preclinical studies, including:
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delays or difficulties in enrolling patients in our clinical trials, including travel restrictions on patients and constraints on the capacity of our
clinical trial sites;
delays or difficulties in clinical site initiation, including difficulties in training clinical site investigators and clinical site staff;
delays or disruptions in non-clinical experiments and investigational new drug application-enabling good laboratory practice standard toxicology
studies due to unforeseen circumstances in supply chain;
delays or disruptions in our ability to manufacture programmed T cell therapies due to supply chain and transportation system disruptions or lack
of manufacturing staff;
increased rates of patients withdrawing from our clinical trials following enrollment as a result of contracting COVID-19, being forced to
quarantine, or being unable to visit clinical trial locations;
diversion or prioritization of healthcare resources away from the conduct of clinical trials and towards the COVID-19 pandemic, including the
diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials, particularly for clinical trials
that require in-patient monitoring following administration of the product candidate;
delays or disruptions in the availability of clinical site staff, who, as healthcare providers, may have heightened exposure to COVID-19, which, in
turn, could adversely impact our clinical trial operations;
interruption of our key clinical trial activities, such as clinical assessments at pre-specified time points during the trial and clinical trial site data
monitoring, due to limitations on travel imposed or recommended by governmental entities, employers and others or interruption of clinical trial
subject visits and study procedures (particularly any procedures that may be deemed non-essential), which may impact the integrity of subject data
and clinical study endpoints;
interruption or delays in the operations of the U.S. Food and Drug Administration, European Medicines Agency and comparable foreign
regulatory agencies or their refusal to accept data from clinical trials in affected geographies, which may impact approval timelines;
delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in
employee resources or forced furlough of government employees;
limitations on employee resources that would otherwise be focused on the conduct of our preclinical studies and clinical trials, including because
of sickness of employees or their families, the desire of employees to avoid contact with large groups of people, an increased reliance on working
from home or mass transit disruptions; and
reduced ability to engage with the medical and investor communities due to the cancellation of conferences scheduled throughout the year.
These and other factors arising from the COVID-19 pandemic could worsen in countries that are already afflicted with COVID-19, could continue to
spread to additional countries, or could return to countries where the pandemic has been partially contained, each of which could continue to adversely
impact our ability to conduct clinical trials and our business generally, and could have a material adverse impact on our operations and financial condition
and results.
In addition, the trading price for our ADSs as well as trading price for the publicly traded securities of other biopharmaceutical companies, as well as the
broader global financial markets, have been highly volatile as a result of the COVID-19 pandemic and the resulting impact on U.K. and U.S. economic
activities. As a result, we may face difficulties raising capital when needed, and any such sales may be on unfavorable terms to us. Further, to the extent we
raise additional capital through the sale of equity or convertible debt securities, the ownership interest of existing shareholders will be diluted.
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The ultimate impact of the COVID-19 pandemic on our business operations is highly uncertain and subject to change and will depend on future
developments which are difficult to predict, including the duration of the pandemic, the ultimate geographic spread of the disease, additional or modified
government actions, new information that will emerge concerning the severity and impact of COVID-19 and other actions taken to contain or address its
impact in the short and long term, among others. We do not yet know the full extent of potential delays or impacts on our business, our commercialization
efforts, our clinical studies, our research programs, healthcare systems or the global economy, and if the ultimate impact of the COVID-19 pandemic and
the resulting uncertain economic and healthcare environment is more severe than we anticipated, we may not be able to execute on our current operating
plan or on our strategy. If the duration of the COVID-19 pandemic and the associated period of business and social restrictions and economic uncertainty is
longer than we anticipated, our cash, cash equivalents, and marketable securities may not be sufficient to fund the activities under our operating plan for the
time period that we anticipated, and we may be required to revise our operating plan further. To the extent the COVID-19 pandemic adversely affects our
business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.
As a company based outside of the United States, our business is subject to economic, political, regulatory and other risks associated with international
operations.
Our business is subject to risks associated with conducting business outside of the United States, as our company is based in the United Kingdom
and conducts operations internationally. Many of our suppliers and clinical trial relationships are located outside the United States. Accordingly, our future
results could be harmed by a variety of factors, including:
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economic weakness, including inflation, or political instability in particular non-U.S. economies and markets;
differing and changing regulatory requirements for product approvals;
differing jurisdictions could present different issues for securing, maintaining or obtaining freedom to operate in such jurisdictions;
potentially reduced protection for intellectual property rights;
difficulties in compliance with different, complex and changing laws, regulations and court systems of multiple jurisdictions and compliance with
a wide variety of foreign laws, treaties and regulations;
changes in non-U.S. regulations and customs, tariffs and trade barriers;
changes in non-U.S. currency exchange rates of the pound sterling, U.S. dollar, euro and currency controls;
changes in a specific country’s or region’s political or economic environment, including the implications of the United Kingdom's withdrawal
from the European Union;
trade protection measures, import or export licensing requirements or other restrictive actions by governments;
differing reimbursement regimes and price controls in certain non-U.S. markets;
negative consequences from changes in tax laws;
compliance with tax, employment, immigration and labor laws for employees living or traveling abroad, including, for example, the variable tax
treatment in different jurisdictions of options granted under our share option schemes or equity incentive plans;
• workforce uncertainty in countries where labor unrest is more common than in the United States;
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litigation or administrative actions resulting from claims against us by current or former employees or consultants individually or as part of class
actions, including claims of wrongful terminations, discrimination, misclassification or other violations of labor law or other alleged conduct;
difficulties associated with staffing and managing international operations, including differing labor relations;
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and
business interruptions resulting from geo-political actions, including war and terrorism, natural disasters--including earthquakes, typhoons, floods
and fires--or health epidemics, such as the coronavirus pandemic.
Exchange rate fluctuations may materially affect our results of operations and financial condition.
Our functional currency and that of our subsidiaries is the pound sterling and our reporting currency is the U.S. dollar. Given that our functional
currency and that of our subsidiaries is the pound sterling, but our reporting currency is the U.S. dollar, fluctuations in currency exchange rates between the
U.S. dollar and the pound sterling could materially and adversely affect our business. There may be instances in which costs and revenue will not be
matched with respect to currency denomination. Currently, we do not have any exchange rate hedging arrangements in place.
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Additionally, although we are based in the United Kingdom, we source research and development, manufacturing, consulting and other services
from the United States and other countries. Further, potential future revenue may be derived from the United States, countries within the euro zone, and
various other countries around the world. As a result, our business and the price of our ADSs may be affected by fluctuations in foreign exchange rates not
only between the pound sterling and the U.S. dollar, but also the euro and other currencies, which may have a significant impact on our results of
operations and cash flows from period to period. As a result, to the extent we continue our expansion on a global basis, we expect that increasing portions
of our revenue, cost of revenue, assets and liabilities will be subject to fluctuations in currency valuations. We may experience economic loss and a
negative impact on earnings or net assets solely as a result of currency exchange rate fluctuations.
We will need to manage the size of our organization, and we may experience difficulties.
As of December 31, 2020, we had 384 employees, 376 of whom are full-time. In January 2021, we announced adjustments to our workforce and
infrastructure footprint, which will involve an overall reduction in headcount of approximately 20%. As our development and commercialization plans and
strategies develop, and as we further develop as a public company, we may need additional managerial, operational, financial and other personnel,
including personnel to support our product development and planned future commercialization efforts. Future growth will impose significant added
responsibilities on members of management, including:
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identifying, recruiting, integrating, maintaining and motivating additional employees;
• managing our internal development efforts effectively, including the clinical, FDA and EMA review processes for our product candidates; and
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improving our operational, financial and management controls, reporting systems and procedures.
There are a small number of individuals with experience in cell therapy and the competition for these individuals is high. Our future financial
performance and our ability to commercialize our product candidates will depend, in part, on our ability to effectively manage any future growth, and our
management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of
time to managing these growth activities.
If we are not able to effectively manage the size of our organization, we may not be able to successfully implement the tasks necessary to further
develop and commercialize our product candidates and, accordingly, may not achieve our research, development and commercialization goals.
In addition to expanding our organization, we are building out our development and manufacturing capabilities, which requires significant capital
expenditures. If these capital expenditures are higher than expected, it may adversely affect our financial condition and capital resources. In addition, if the
availability of manufacturing capacity is delayed, it may limit our ability to rapidly expand the size of our organization in order to meet our corporate goals.
Our future success depends on our ability to retain key members of senior management and to attract, retain and motivate qualified personnel.
Our ability to compete in the highly competitive biopharmaceutical industry depends upon our ability to attract and retain highly qualified
management, research and development, clinical, financial and business development personnel. We are highly dependent on our management, scientific
and medical personnel, including Dr. Christian Itin, our Chief Executive Officer and Dr. Martin Pulé, our scientific founder, Senior Vice President and
Chief Scientific Officer. Each member of our senior management may terminate their employment with us at any time. We do not maintain ‘‘key person’’
insurance for any of our employees.
Recruiting and retaining qualified scientific and clinical personnel and, if we progress the development of any of our product candidates,
commercialization, manufacturing and sales and marketing personnel, will be critical to our success. The loss of the services of members of our senior
management or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our
ability to successfully implement our business strategy. Furthermore, replacing members of our senior management and key employees may be difficult and
may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to
successfully develop, gain regulatory approval of and commercialize our product candidates. Our success also depends on our ability to continue to attract,
retain and motivate highly skilled junior, mid-level and senior managers, as well as junior, mid-level and senior scientific and medical personnel.
Competition to hire from this limited candidate pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable
terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the
hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific
and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may have
commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and
retain high-quality personnel, our ability to pursue our growth strategy will be limited.
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We will require additional funding to continue our planned operations. If we engage in future acquisitions or strategic collaborations, this may
increase our capital requirements, dilute our shareholders, cause us to incur debt or assume contingent liabilities and subject us to other risks.
We will need additional capital in the future to continue our planned operations. To the extent we raise additional capital by issuing equity
securities, our shareholders may experience substantial dilution. We may sell ordinary shares or ADSs, convertible securities or other equity securities in
one or more transactions at prices and in a manner we determine from time to time. If we sell ordinary shares or ADSs, convertible securities or other
equity securities in more than one transaction, investors may be materially diluted by subsequent sales. These sales may also result in material dilution to
our existing shareholders, and new investors could gain rights superior to our existing shareholders. In addition, we have an Open Market Sale
Agreement
, or Sales Agreement, with Jefferies LLC, or Jefferies, to sell up to $100.0 million worth of our ADSs, from time to time, through an “at the
market” equity offering program under which Jefferies will act as sales agent. As of March 1, 2021, $84.1 million worth of ADSs remained available for
sale under the “at the market” equity offering program. If we raise additional capital through our “at the market” equity offering program, or other public or
private equity offerings, the ownership interest of our existing shareholders will be diluted and may cause the market price of our ADSs to decline.
Furthermore, new investors purchasing securities that we may issue and sell in the future could obtain rights superior to the rights of our existing
shareholders.
SM
From time to time, we may also evaluate various acquisitions and strategic collaborations, including licensing or acquiring complementary
products, intellectual property rights, technologies or businesses, as we may deem appropriate to carry out our business plan. Any potential acquisition or
strategic collaboration may entail numerous risks, including:
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increased operating expenses and cash requirements;
the assumption of additional indebtedness or contingent liabilities;
assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new
personnel;
the diversion of our management’s attention from our existing programs and initiatives in pursuing such a strategic partnership, merger or
acquisition;
retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships;
risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or
product candidates and regulatory approvals; and
our inability to generate revenue from acquired technology sufficient to meet our objectives in undertaking the acquisition or even to offset the
associated acquisition and maintenance costs.
Additionally, if we undertake acquisitions, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and
acquire intangible assets that could result in significant future amortization expenses. Moreover, we may not be able to locate suitable acquisition
opportunities and this inability could impair our ability to grow or obtain access to technology or products that may be important to the development of our
business.
Our internal computer systems, or those of our future collaborators or other contractors or consultants, may fail or suffer security breaches, which
could result in a significant disruption of our product development programs and our ability to operate our business effectively.
Our internal computer systems and those of our current and any future collaborators and other contractors or consultants are vulnerable to damage
from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we have not experienced
any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in
a disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other
similar disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval
efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or
damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position
could be harmed and the further development and commercialization of our product candidates could be delayed.
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European data collection is governed by restrictive regulations governing the use, processing, and cross-border transfer of personal information.
The collection, use, disclosure, transfer, or other processing of personal data (including data concerning health and/or genetic data) regarding
individuals in the European Economic Area, or EEA, or otherwise carried out in the context of any establishment in the EEA, is subject to the provisions of
the EU General Data Protection Regulation, or the GDPR, which became effective and enforceable across all then-current member states of the EEA on
May 25, 2018. Further, by operation of the UK GDPR, as defined below, the GDPR continues to apply in substantially equivalent form in the context of
UK establishments and UK-related processing operations. Where we refer to the GDPR in this risk factor, we are also making reference to the UK GDPR
in the context of the UK, unless we make a specific distinction between the UK and EU GDPR or the context requires otherwise.
Both the GDPR and UK GDPR have “extra-territorial” reach in that they apply to processing of personal data carried out in the context of a
controller’s or processor’s establishment in the EEA/UK (as applicable), and also to the processing of personal data by a controller or processor with no
establishment in the EEA/UK (as applicable) where the processing in question concerns the offering of goods or services to, and/or the monitoring of the
behavior of, individuals in the EEA/UK (as applicable).
The GDPR sets out a number of requirements that must be complied with when handling personal data (i.e., data relating to an identified or
identifiable living individual) such as: limiting permitted processing of personal data to only that which is necessary for specified, explicit and legitimate
purposes; requiring the establishment a legal basis for processing personal data; expressly confirming that “pseudonymized” or key‑coded data constitutes
personal data to which the GDPR applies; creating obligations for controllers and processors to appoint data protection officers in certain circumstances;
increasing transparency obligations to data subjects for controllers (including presentation of certain information in a concise, intelligible and easily
accessible form about how their personal data is used and their rights vis-à-vis that data and its use); introducing the obligation to carry out so-called data
protection impact assessments in certain circumstances; establishing limitations on collection and retention of personal data through “data minimization”
and “storage limitation” principles; establishing obligations to implement “privacy by design”; introducing obligations to honor increased rights for data
subjects (such as rights for individuals to be ‘forgotten,’ rights to data portability, rights to object etc. in certain circumstances); formalizing a heightened
and codified standard of data subject consent; establishing obligations to implement certain technical and organizational safeguards to protect the security
and confidentiality of personal data; introducing obligations to agree to certain specific contractual terms and to take certain measures when engaging
third‑party processors and joint controllers; introducing the obligation to provide notice of certain significant personal data breaches to the relevant
supervisory authority(ies) and affected individuals; and mandating the appointment of representatives in the UK and/or EU in certain circumstances. The
processing of “special category personal data”, such as health information, may also impose heightened compliance burdens under the GDPR and is a topic
of active interest among relevant regulators.
The GDPR provides that EEA Member States may make their own further laws and regulations to introduce specific requirements related to the
processing of “special categories of personal data”, including personal data related to health, biometric data used for unique identification purposes and
genetic information; as well as personal data related to criminal offences or convictions – in the UK, the Data Protection Act 2018 complements the UK
GDPR in this regard. This fact may lead to greater divergence on the law that applies to the processing of such data types across the EEA and/or UK,
compliance with which, as and where applicable, may increase our costs and could increase our overall compliance risk. Such country-specific regulations
could also limit our ability to collect, use and share data in the context of our EEA and/or UK operations, and/or could cause our compliance costs to
increase, ultimately having an adverse impact on our business, and harming our business and financial condition.
The GDPR also provides for more robust regulatory enforcement and greater penalties for noncompliance than previous data protection laws,
including fines of up to €20 million or 4% of global annual revenue of any noncompliant company for the preceding financial year, whichever is higher. In
addition to administrative fines, a wide variety of other potential enforcement powers are available to competent supervisory authorities in respect of
potential and suspected violations of the GDPR, including extensive audit and inspection rights, and powers to order temporary or permanent bans on all or
some processing of personal data carried out by noncompliant actors. The GDPR also confers a private right of action on data subjects and consumer
associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the
GDPR.
A particular issue presented by certain European data protection laws, including the GDPR, is that they generally restrict transfers of personal data
from Europe, including the EEA, United Kingdom and Switzerland, to the United States and most other countries unless the parties to the transfer have
implemented specific safeguards to protect the transferred personal data. One of the primary safeguards allowing U.S. companies to import personal data
from Europe had been certification to the EU-U.S. Privacy
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Shield and Swiss U.S. Privacy Shield frameworks administered by the U.S. Department of Commerce. However, the EU U.S. Privacy Shield was
invalidated in July 2020 by the Court of Justice of the European Union, or CJEU, in a case known colloquially as “Schrems II.” Following this decision,
the United Kingdom government has similarly invalidated use of the EU U.S. Privacy Shield as a mechanism for lawful personal data transfers from the
United Kingdom to the United States under the UK GDPR. Also, the Swiss Federal Data Protection and Information Commissioner, or the FDPIC,
announced that the Swiss-U.S. Privacy Shield does not provide adequate safeguards for the purposes of personal data transfers from Switzerland to the
United States. The CJEU’s decision in Schrems II also raised questions about whether one of the primary alternatives to the EU-U.S. Privacy Shield,
namely, the European Commission’s Standard Contractual Clauses, can lawfully be used for personal data transfers from Europe to the United States or
other third countries that are not the subject of an adequacy decision of the European Commission. While the CJEU upheld the adequacy of the Standard
Contractual Clauses in principle in Schrems II, it made clear that reliance on those Clauses alone may not necessarily be sufficient in all circumstances. Use
of the Standard Contractual Clauses must now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination
country, in particular regarding applicable surveillance laws and relevant rights of individuals with respect to the transferred data. In the context of any
given transfer, where the legal regime applicable in the destination country may or does conflict with the intended operation of the Standard Contractual
Clauses and/or applicable European law, the decision in Schrems II and subsequent draft guidance from the European Data Protection Board, or EDPB,
would require the parties to that transfer to implement certain supplementary technical, organizational and/or contractual measures to rely on the Standard
Contractual Clauses as a compliant transfer mechanism. However, the aforementioned draft guidance from the EDPB on such supplementary technical,
organizational and/or contractual measures appears to conclude that no combination of such measures could be sufficient to allow effective reliance on the
Standard Contractual Clauses in the context of transfers of personal data in the clear to recipients in countries where the power granted to public authorities
to access the transferred data goes beyond that which is ‘necessary and proportionate in a democratic society’ – which may, following the CJEU’s
conclusions in Schrems II on relevant powers of United States public authorities and commentary in that draft EDPB guidance, include the United States in
certain circumstances (e.g., where Section 702 of the US Foreign Intelligence Surveillance Act applies). At present, there are few, if any, viable alternatives
to the EU-U.S. Privacy Shield and the Standard Contractual Clauses. As such, if we are unable to implement a valid solution for personal data transfers
from Europe, including, for example, obtaining individuals’ explicit consent to transfer their personal data from Europe to the United States or other
countries, we will face increased exposure to regulatory actions, substantial fines and injunctions against processing personal data from Europe. Inability to
import personal data from Europe, including the EEA, United Kingdom or Switzerland, may also: restrict our activities in Europe; limit our ability to
collaborate with partners as well as other service providers, contractors and other companies subject to European data protection laws; and/or require us to
increase our data processing capabilities in Europe at significant expense or otherwise cause us to change the geographical location or segregation of our
relevant systems and operations – any or all of which could adversely affect our financial results. Additionally, other countries outside of Europe have
enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and
complexity of delivering our services and operating our business. The type of challenges we face in Europe will likely also arise in other jurisdictions that
adopt laws similar in construction to the GDPR or regulatory frameworks of equivalent complexity.
Further, Brexit has created uncertainty regarding data protection regulation in the United Kingdom. Following the United Kingdom’s withdrawal
from the European Union on January 31, 2020, pursuant to the transitional arrangements agreed to between the United Kingdom and European Union, the
GDPR continued to have effect in law in the United Kingdom, and continued to do so until December 31, 2020 as if the United Kingdom remained a
Member State of the European Union for such purposes. Following December 31, 2020, and the expiry of those transitional arrangements, the data
protection obligations of the GDPR continue to apply to United Kingdom-related processing of personal data in substantially unvaried form under the so-
called “UK GDPR” (i.e., the GDPR as it continues to form part of United Kingdom laws by virtue of section 3 of the European Union (Withdrawal) Act
2018, as amended (including by the various Data Protection, Privacy and Electronic Communications (Amendments etc) (EU Exit) Regulations)).
However, going forward, there will be increasing scope for divergence in application, interpretation and enforcement of the data protection law as between
the United Kingdom and EEA. Furthermore, the relationship between the United Kingdom and the EEA in relation to certain aspects of data protection law
remains somewhat uncertain. For example, it is unclear whether transfers of personal data from the EEA to the United Kingdom will be permitted to take
place on the basis of a future adequacy decision of the European Commission, or whether a “transfer mechanism,” such as the Standard Contractual
Clauses, will be required. For the meantime, under the Trade and Cooperation Agreement, it has been agreed that transfers of personal data to the United
Kingdom from European Union Member States will not be treated as “restricted transfers” to a non-EEA country for a period of up to four months from
January 1, 2021, plus a potential further two months extension, or the extended adequacy assessment period. This will also apply to transfers to the United
Kingdom from EEA Member States, assuming those Member States accede to the relevant provision of the Trade and Cooperation Agreement. Although
the current maximum duration of the extended adequacy assessment period is six months it may end sooner, for example, in the event that the European
Commission adopts an adequacy decision in respect of the United Kingdom, or the United Kingdom amends the UK GDPR and/or makes certain changes
regarding data transfers under the UK GDPR / Data Protection Act 2018 without the consent
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of the European Union (unless those amendments or decisions are made simply to keep relevant United Kingdom laws aligned with the European Union’s
data protection regime). If the European Commission does not adopt an ‘adequacy decision’ in respect of the United Kingdom prior to the expiry of the
extended adequacy assessment period, from that point onwards the United Kingdom will be an “inadequate third country” under the GDPR and transfers of
data from the EEA to the United Kingdom will require a “transfer mechanism,” such as the Standard Contractual Clauses.
Additionally, as noted above, the United Kingdom has transposed the GDPR into United Kingdom domestic law by way of the UK GDPR with
effect from January 2021, which could expose us to two parallel regimes, each of which potentially authorizes similar fines and other potentially divergent
enforcement actions for certain violations (each regime separately having the ability to fine up to the higher of €20,000,000/£17,000,000 or 4% of an
undertaking’s total global annual turnover). Also, following the expiry of the post-Brexit transitional arrangements, the United Kingdom Information
Commissioner’s Office is not able to be our “lead supervisory authority” in respect of any “cross border processing” for the purposes of the GDPR. For so
long as we are unable to, and/or do not, designate a lead supervisory authority in an EEA member state, with effect from January 1, 2021, we are not able to
benefit from the GDPR’s “one stop shop” mechanism. Amongst other things, this would mean that, in the event of a violation of the GDPR affecting data
subjects across the United Kingdom and the EEA, we could be investigated by, and ultimately fined by the United Kingdom Information Commissioner’s
Office and the supervisory authority in each and every EEA member state where data subjects have been affected by such violation.
Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
Our operations, and those of our vendors and suppliers, could be subject to earthquakes, power shortages, telecommunications failures, water
shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or man-made disasters or business
interruptions, for which we are predominantly self-insured. The occurrence of any of these business disruptions could seriously harm our operations and
financial condition and increase our costs and expenses. We currently rely on third-party suppliers to produce and process our product candidates on
a patient-by-patient basis. Our ability to obtain clinical supplies of our product candidates could be disrupted if the operations of these suppliers are affected
by a man-made or natural disaster or other business interruption.
Risks Related to Our Dependence on Third Parties
We are dependent on intellectual property obtained or licensed from third parties, and if we were to fail to comply with our obligations under our
existing and any future intellectual property licenses with third parties, we could lose intellectual property rights that are important to our business and
we may not be able to continue developing or commercializing our product candidates, if approved.
We are party to an exclusive intellectual property license agreement with UCL Business Ltd., or UCLB, the technology-transfer company of University
College London, or UCL, which is important to our business and under which we have acquired or licensed patent rights related to 25 patent families and
other intellectual property related to our business. We expect to enter into additional license agreements in the future. Our existing license agreement with
UCLB imposes, and we expect that future license agreements will impose, various due diligence, milestone payment, royalty, insurance and other
obligations on us. Any uncured, material breach under the UCLB license agreement could result in our loss of rights to practice the patent rights (including
those that have been assigned to us) and other intellectual property licensed to us, and could compromise our development and commercialization efforts
for our current or any future product candidates.
Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues. For example,
under our license agreement with UCLB, our exclusive rights under certain of the patents is subject to specified exclusions. Our right to enforce any patents
that may issue from such patent rights similarly excludes enforcing them in such excluded fields, and obligates us to coordinate our enforcement efforts
with a third-party licensee, if any, with rights in that excluded field. If a third party-licensee has the right to enforce those patents in their field, it could put
a patent that may issue from this family at risk of being invalidated or construed narrowly, in which case we would no longer have the benefit of the patents
for our own exclusivity. Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including disputes
regarding:
•
the scope of rights granted under the license agreement and other interpretation-related issues;
• whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing
agreement;
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our rights to third parties;
our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product
candidates, and what activities satisfy those diligence obligations;
the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us;
our right to transfer or assign the license; and
the effects of termination.
If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangement on acceptable
terms, we may be unable to successfully develop and commercialize the affected product candidates. See the section of this Annual Report titled “Business
Overview - Our License Agreement with UCL Business Ltd.” for a more detailed description of our license agreement with UCLB, as well as our rights
and obligations under the agreement.
We rely, and expect to continue to rely, on third parties to conduct the preclinical and clinical trials for our product candidates, and those third parties
may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or failing to comply with applicable regulatory
requirements.
We depend and will continue to depend upon independent investigators and collaborators, such as universities, medical institutions, and strategic
partners to conduct our preclinical and clinical trials. Agreements with such third parties might terminate for a variety of reasons, including a failure to
perform by the third parties. If we need to enter into alternative arrangements, our product development activities would be delayed.
Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our
responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general
investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with regulatory standards, commonly referred to as good
laboratory practices, or GLP, and good clinical practices, or GCP, for conducting, recording and reporting the results of preclinical and clinical trials to
assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Similar
regulatory requirements apply outside the United States, including the International Council for Harmonisation of Technical Requirements for the
Registration of Pharmaceuticals for Human Use, or ICH. We are also required to register certain ongoing clinical trials and post the results of certain
completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within specified timeframes. Failure to do so by us or third parties can
result in FDA refusal to approve applications based on the clinical data, enforcement actions, adverse publicity and civil and criminal sanctions.
Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not
successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our
stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates and will not be able to, or
may be delayed in our efforts to, successfully commercialize our product candidates.
In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and may receive cash
or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of
interest, or the FDA concludes that the financial relationship may have affected the interpretation of the trial, the integrity of the data generated at the
applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection by
the FDA. Any such delay or rejection could prevent us from commercializing our clinical-stage product candidates or any future product candidates.
Cell-based therapies rely on the availability of reagents, specialized equipment, and other specialty materials, which may not be available to us on
acceptable terms or at all. For some of these reagents, equipment, and materials, we rely or may rely on sole source vendors or a limited number of
vendors, which could impair our ability to manufacture and supply our products.
Manufacturing our product candidates will require many reagents, which are substances used in our manufacturing processes to bring about
chemical or biological reactions, and other specialty materials and equipment, some of which are manufactured or supplied by small companies with
limited resources and experience to support commercial biologics production. We currently depend on a limited number of vendors for access to facilities
and supply of certain materials and equipment used in the manufacture of our product candidates. For example, we currently use facilities and equipment at
the Cell and Gene Therapy Catapult, as well as third party vendors, for vector and cell manufacturing. In addition, we purchase equipment and reagents
critical
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for the manufacture of our product candidates from Miltenyi Biotec GmbH and other suppliers on a purchase order basis. Some of our suppliers may not
have the capacity to support commercial products manufactured under cGMP by biopharmaceutical firms or may otherwise be ill-equipped to support our
needs. We also do not have supply contracts with many of these suppliers, and may not be able to obtain supply contracts with them on acceptable terms or
at all. Accordingly, we may not be able to obtain key materials and equipment to support clinical or commercial manufacturing.
For some of these reagents, equipment, and materials, we rely and may in the future rely on sole source vendors or a limited number of vendors. An
inability to continue to source product from any of these suppliers, which could be due to regulatory actions or requirements affecting the supplier, adverse
financial or other strategic developments experienced by a supplier, labor disputes or shortages, unexpected demands, or quality issues, could adversely
affect our ability to satisfy demand for our product candidates, which could adversely and materially affect our product sales and operating results or our
ability to conduct clinical trials, either of which could significantly harm our business.
As we continue to develop and scale our manufacturing process, we may need to obtain rights to and supplies of certain materials and equipment to
be used as part of that process. We may not be able to obtain rights to such materials on commercially reasonable terms, or at all, and if we are unable to
alter our process in a commercially viable manner to avoid the use of such materials or find a suitable substitute, it would have a material adverse effect on
our business.
Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters
Even if we complete the necessary preclinical studies and clinical trials, the regulatory approval process is expensive, time-consuming and uncertain
and may prevent us from obtaining approvals for the commercialization of some or all of our product candidates. As a result, we cannot predict when
or if, and in which territories, we will obtain marketing approval to commercialize a product candidate.
Our product candidates and the activities associated with their development and commercialization, including their design, research, testing,
manufacture, safety, efficacy, quality control, recordkeeping, labeling, packaging, storage, approval, advertising, promotion, sale, distribution, import,
export, and reporting of safety and other post-market information, are subject to comprehensive regulation by the FDA, the EMA and other comparable
regulatory authorities in other jurisdictions. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product
candidate. We have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction. We have only limited
experience in filing and supporting the applications necessary to gain marketing approvals and may rely on third-party contract research organizations, or
CROs, to assist us in this process. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting
information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval
also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory
authorities. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects,
toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use. If any of our product candidates
receives marketing approval, the accompanying label may limit its approved use, which could limit sales of the product.
The process of obtaining marketing approvals, both in the United States and abroad, is expensive and may take many years, if approval is obtained
at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Securing
marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each
therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information
about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. The FDA, the EMA or other
regulatory authorities may determine that our product candidates are not safe and effective, only moderately effective or have undesirable or unintended
side effects, toxicities or other characteristics that preclude our obtaining marketing approval or prevent or limit commercial use.
In addition, we are developing a proprietary diagnostic test for use with our AUTO4 and AUTO5 product candidates. This test will require separate
regulatory approval in addition to the regulatory approval of AUTO4 and AUTO5, respectively. Failure to obtain marketing approval for the diagnostic test
could prevent us from commercializing either AUTO4 or AUTO5 unless another similar diagnostic test for distinguishing TRBC1-positive and TRBC2-
positive T-cell lymphomas is commercially available.
In addition, changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or
regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application.
Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is
insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical
and clinical testing could delay, limit or prevent
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marketing approval of a product candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval
commitments that render the approved product not commercially viable.
If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product
candidates may be harmed and our ability to generate revenues will be impaired.
In order to market and sell our products in the European Union and any other jurisdictions, we must obtain separate marketing approvals and
comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time
required to obtain approval may differ substantially from that required to obtain approval from the FDA. The regulatory approval process outside the
United States generally includes all of the risks associated with obtaining approval from the FDA. In addition, in many countries outside the United States,
it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We may not obtain approvals from
regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other
countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other
countries or jurisdictions or by the FDA. However, failure to obtain approval in one jurisdiction may impact our ability to obtain approval elsewhere. We
may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market.
Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining
regulatory approval of our product candidates in other jurisdictions.
Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or
maintain regulatory approval in any other jurisdiction, but a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect
on the regulatory approval process in others. For example, even if the FDA grants marketing approval of a product candidate, comparable regulatory
authorities in other jurisdictions must also approve the manufacturing, marketing and promotion of the product candidate in those countries. Approval
procedures vary among jurisdictions and can involve requirements and administrative review periods different from those in the United States, including
additional preclinical studies or clinical trials as clinical studies conducted in one jurisdiction may not be accepted by regulatory authorities in other
jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in
that jurisdiction. In some cases, the price that we intend to charge for our products is also subject to approval.
Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs
for us and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the regulatory requirements in international
markets and/or to receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our
product candidates will be harmed.
The withdrawal of the United Kingdom from the European Union, commonly referred to as “Brexit,” may adversely impact our ability to obtain
regulatory approvals of our product candidates in the European Union, result in restrictions or imposition of taxes and duties for importing our
product candidates into the European Union, and may require us to incur additional expenses in order to develop, manufacture and commercialize our
product candidates in the European Union.
Following the result of a referendum in 2016, the United Kingdom left the European Union on January 31, 2020, commonly referred to as Brexit.
Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the European Union, the United Kingdom was subject to a
transition period until December 31, 2020, or the Transition Period, during which European Union rules continued to apply. The Trade and Cooperation
Agreement, which outlines the future trading relationship between the United Kingdom and the European Union, was agreed in December 2020.
Since a significant proportion of the regulatory framework in the United Kingdom applicable to our business and our product candidates is derived
from EU directives and regulations, Brexit has had, and may continue to have, a material impact upon the regulatory regime with respect to the
development, manufacture, importation, approval and commercialization of our product candidates in the United Kingdom or the European Union. For
example, Great Britain is no longer covered by the centralized procedures for obtaining European Union-wide marketing authorization from the EMA and a
separate marketing authorization will be required to market our product candidates in Great Britain. It is currently unclear whether the Medicines and
Healthcare products Regulatory Agency, or MHRA, in the United Kingdom is sufficiently prepared to handle the increased volume of marketing
authorization applications that it is likely to receive. Any delay in obtaining, or an inability to obtain, any marketing approvals, would delay or prevent us
from commercializing our product candidates in the United Kingdom.
While the Trade and Cooperation Agreement provides for the tariff-free trade of medicinal products between the United Kingdom and the European
Union there may be additional non-tariff costs to such trade which did not exist prior to the end of the
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Transition Period. Further, should the United Kingdom diverge from the European Union from a regulatory perspective in relation to medicinal products,
tariffs could be put into place in the future. We could therefore, both now and in the future, face significant additional expenses (when compared to the
position prior to the end of the Transition Period) to operate our business, which could significantly and materially harm or delay our ability to generate
revenues or achieve profitability of our business. Any further changes in international trade, tariff and import/export regulations as a result of Brexit or
otherwise may impose unexpected duty costs or other non-tariff barriers on us. These developments, or the perception that any of them could occur, may
significantly reduce global trade and, in particular, trade between the impacted nations and the United Kingdom. It is also possible that Brexit may
negatively affect our ability to attract and retain employees, particularly those from the European Union.
In the short term there is a risk of disrupted import and export processes due to a lack of administrative processing capacity by the respective
United Kingdom and European Union customs agencies that may delay time-sensitive shipments and may negatively impact our product supply chain.
Even if we obtain marketing approvals for our product candidates, the terms of approvals and ongoing regulation of our products may limit how we
manufacture and market our products and compliance with such requirements may involve substantial resources, which could materially impair our
ability to generate revenue.
Even if marketing approval of a product candidate is granted, an approved product and its manufacturer and marketer are subject to ongoing review
and extensive regulatory requirements for manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising,
promotion, sampling, and recordkeeping, including the potential requirements to implement a risk evaluation and mitigation strategy, or REMS, program or
to conduct costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product. We must also comply with
requirements concerning advertising and promotion for any of our product candidates for which we obtain marketing approval. Promotional
communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in
the product’s approved labeling. Thus, we will not be able to promote any products we develop for indications or uses for which they are not approved. In
addition, manufacturers of approved products and those manufacturers’ facilities are required to comply with extensive regulatory requirements of the
FDA, the EMA and other regulatory authorities, including ensuring that quality control and manufacturing procedures conform to cGMP and other
comparable regulations and standards, which include requirements relating to quality control and quality assurance as well as the corresponding
maintenance of records and documentation and reporting requirements. We or our suppliers could be subject to periodic unannounced inspections by the
FDA, the EMA, or other regulatory authorities to monitor and ensure compliance with cGMP.
Accordingly, assuming we receive marketing approval for one or more of our product candidates, we and suppliers will continue to expend time,
money and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance and quality control. If we are not able to
comply with post-approval regulatory requirements, we could have the marketing approvals for our products withdrawn by regulatory authorities and our
ability to market any future products could be limited, which could adversely affect our ability to achieve or sustain profitability.
Thus, the cost of compliance with post-approval regulations may have a negative effect on our operating results and financial condition.
Any product candidate for which we obtain marketing approval could be subject to post-marketing restrictions or recall or withdrawal from the market,
and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product
candidates, when and if any of them are approved.
The FDA and other federal and state agencies, including the U.S. Department of Justice, or DOJ, closely regulate compliance with all requirements
governing prescription drug products, including requirements pertaining to marketing and promotion of products in accordance with the provisions of the
approved labeling and manufacturing of products in accordance with cGMP requirements. The FDA and DOJ impose stringent restrictions on
manufacturers’ communications regarding off-label use and if we do not market our products for their approved indications, or if other of our marketing
claims are deemed false or misleading, we may be subject to enforcement action. Physicians, on the other hand, may prescribe products for off-label uses.
The FDA and other regulatory agencies do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment.
However, companies may only share truthful and not misleading information that is otherwise consistent with a product’s FDA approved labeling.
Violations of such requirements may lead to investigations alleging violations of the Food, Drug and Cosmetic Act, or FDCA, and other statutes, including
the U.S. federal False Claims Act and other federal and state healthcare fraud and abuse laws as well as state consumer protection laws.
Our failure to comply with all regulatory requirements, and later discovery of previously unknown adverse events or other problems with our
products, manufacturers or manufacturing processes, may yield various results, including:
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litigation involving patients taking our products;
restrictions on such products, manufacturers or manufacturing processes;
restrictions on the labeling or marketing of a product;
restrictions on product distribution or use;
requirements to conduct post-marketing studies or clinical trials;
• warning or untitled letters;
• withdrawal of the products from the market;
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refusal to approve pending applications or supplements to approved applications that we submit;
recall of products;
fines, restitution or disgorgement of profits or revenues;
suspension or withdrawal of marketing approvals;
suspension of any ongoing clinical trials;
damage to relationships with any potential collaborators;
unfavorable press coverage and damage to our reputation;
refusal to permit the import or export of our products;
product seizure; or
injunctions or the imposition of civil or criminal penalties.
Non-compliance by us or any future collaborator with regulatory requirements regarding safety monitoring or pharmacovigilance, and with
requirements related to the development of products for the pediatric population, can also result in significant financial penalties. Similarly, failure to
comply with regulatory requirements regarding the protection of personal information can also lead to significant penalties and sanctions.
Non-compliance with EU requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of
products for the pediatric population, also can result in significant financial penalties. Similarly, failure to comply with the European Union’s requirements
regarding the protection of personal information can also lead to significant penalties and sanctions.
If any of these events occurs, our ability to sell such product may be impaired, and we may incur substantial additional expense to comply with
regulatory requirements, which could adversely affect our business, financial condition and results of operations.
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Our employees, independent contractors, principal investigators, consultants, commercial partners and vendors may engage in misconduct or other
improper activities, including non-compliance with regulatory standards and requirements.
We are exposed to the risk of employee fraud or other misconduct or failure to comply with applicable regulatory requirements. Misconduct by
employees and independent contractors, such as principal investigators, consultants, commercial partners, and vendors, could include failures to comply
with regulations of the FDA, the EMA and other comparable regulatory authorities, to provide accurate information to such regulators, to comply with
manufacturing standards we have established, to comply with healthcare fraud and abuse laws, to report financial information or data accurately or to
disclose unauthorized activities to us. In particular, sales, marketing and other business arrangements in the healthcare industry are subject to extensive
laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or
prohibit a wide range of business activities, including, but not limited to, research, manufacturing, distribution, pricing, discounting, marketing and
promotion, sales commission, customer incentive programs and other business arrangements. Employee and independent contractor misconduct could also
involve the improper use of individually identifiable information, including, without limitation, information obtained in the course of clinical trials, which
could result in regulatory sanctions and serious harm to our reputation.
In addition, federal procurement laws impose substantial penalties for misconduct in connection with government contracts and require certain
contractors to maintain a code of business ethics and conduct.
It is not always possible to identify and deter employee and independent contractor misconduct, and any precautions we take to detect and prevent
improper activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other
actions or lawsuits stemming from a failure to be in compliance with such laws. If any such actions are instituted against us, those actions could have a
significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, disgorgement of
profits, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, National Health Service in the United
Kingdom, or other government supported healthcare in other jurisdictions, contractual damages, reputational harm, diminished profits and future earnings,
additional reporting or oversight obligations if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-
compliance with the law and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate.
Our business operations and current and future relationships with healthcare professionals, principal investigators, consultants, customers and third-
party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims,
physician payment transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to
substantial penalties.
Healthcare providers, physicians and third-party payors in the United States and elsewhere will play a primary role in the recommendation and
prescription of any product candidates for which we obtain marketing approval. Our current and future arrangements with healthcare professionals,
principal investigators, consultants, customers and third-party payors may expose us to broadly applicable fraud and abuse and other healthcare laws,
including, without limitation, the U.S. federal Anti-Kickback Statute and the U.S. federal False Claims Act, that may constrain the business or financial
arrangements and relationships through which we sell, market and distribute any product candidates for which we obtain marketing approval. In addition,
we may be subject to physician payment transparency laws and patient privacy and security regulation by the U.S. federal government and by the states and
foreign jurisdictions in which we conduct our business. The applicable federal, state and foreign healthcare laws that may affect our ability to operate
include the following:
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the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering,
receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an
individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole
or in part, under federal and state healthcare programs such as Medicare and Medicaid. The term ‘‘remuneration’’ has been broadly interpreted to
include anything of value. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and
prescribers, purchasers and formulary managers on the other hand. Although there are a number of statutory exceptions and regulatory safe
harbors protecting certain common activities from prosecution or other regulatory sanctions, the exceptions and safe harbors are drawn narrowly,
and practices that involve remuneration that are alleged to be intended to induce prescribing, purchases or recommendations may be subject to
scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception
or regulatory safe harbor does not make the conduct per se illegal under the U.S. federal Anti-Kickback Statute. Instead, the legality of the
arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances. Several courts have
interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement
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involving remuneration is to induce referrals of federal healthcare covered business, the U.S. federal Anti-Kickback Statute has been violated;
• U.S. federal civil and criminal false claims laws, including the U.S. federal False Claims Act, which can be enforced though civil whistleblower or
qui tam actions, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or
causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent
or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. Pharmaceutical and other
healthcare companies have been prosecuted under these laws for, among other things, allegedly inflating drug prices they report to pricing
services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product
to customers with the expectation that the customers would bill federal programs for the product. In addition, certain marketing practices,
including off-label promotion, may also violate false claims laws. Further, pharmaceutical manufacturers can be held liable under the U.S. federal
False Claims Act even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or
fraudulent claims;
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the U.S. federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit
knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or
fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare
benefit program, regardless of whether the payor is public or private, knowingly and willfully embezzling or stealing from a healthcare benefit
program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up
by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare
benefits, items or services relating to healthcare matters;
• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective
implementing regulations, which impose obligations on “covered entities,” including certain healthcare providers, health plans, and healthcare
clearinghouses, as well as their respective “business associates” that create, receive, maintain or transmit individually identifiable health
information for or on behalf of a covered entity, and their covered subcontractors, with respect to safeguarding the privacy, security and
transmission of individually identifiable health information. Additionally, HITECH also created four new tiers of civil monetary penalties,
amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to
file civil actions for damages or injunctions in U.S. federal courts to enforce HIPAA and seek attorneys’ fees and costs associated with pursuing
federal civil actions;
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the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices;
the U.S. federal Physician Payments Sunshine Act, created under Section 6002 of Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Reconciliation Act, or collectively, the ACA, and its implementing regulations, created annual reporting requirements
for certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the
Children’s Health Insurance Program (with certain exceptions), to annually report to the Centers for Medicare and Medicaid Services, or CMS,
information related to certain payments and “transfers of value” provided to physicians (defined to include doctors, dentists, optometrists,
podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family
members. Beginning in 2022, applicable manufacturers also will be required to report information regarding payments and “transfers of value”
provided during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist
assistants, and certified nurse-midwives;
analogous state laws and regulations and foreign laws, such as state anti-kickback and false claims laws, which may apply to sales or marketing
arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers;
state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and
the relevant compliance guidance promulgated by the federal government or to adopt compliance programs as prescribed by state laws and
regulations, or that otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to
report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state
and local laws that require the registration of pharmaceutical sales representatives; and state and foreign laws governing the privacy and security
of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA,
thus complicating compliance efforts; and
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similar healthcare laws and regulations in the European Union and other jurisdictions, including reporting requirements detailing interactions with
and payments to healthcare providers and laws governing the privacy and security of certain
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protected information, such as GDPR, which imposes obligations and restrictions on the collection and use of personal data relating to individuals
located in the European Union (including health data).
Further, the ACA, among other things, amended the intent requirement of the U.S. federal Anti-Kickback Statute and certain criminal statutes
governing healthcare fraud. A person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have
committed a violation. In addition, the ACA provided that the government may assert that a claim including items or services resulting from a violation of
the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the U.S. federal False Claims Act.
Because of the breadth of these laws and the narrowness of their exceptions and safe harbors, it is possible that our business activities can be
subject to challenge under one or more of such laws. The scope and enforcement of each of these laws is uncertain and subject to rapid change in the
current environment of healthcare reform. Federal and state enforcement bodies have continued their scrutiny of interactions between healthcare companies
and healthcare providers, which has led to a number of significant investigations, prosecutions, convictions and settlements in the healthcare industry.
Efforts to ensure that our internal operations and future business arrangements with third parties will comply with applicable healthcare laws and
regulations will involve substantial costs. If our operations are found to be in violation of any of these laws or any other governmental regulations that may
apply to us, we may be subject to significant civil, criminal and administrative penalties, including, without limitation, damages, monetary fines,
imprisonment, disgorgement of profits, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual
damages, reputational harm, diminished profits and future earnings, additional reporting or oversight obligations if we become subject to a corporate
integrity agreement or other agreement to resolve allegations of non-compliance with the law and curtailment or restructuring of our operations, any of
which could adversely affect our ability to operate our business and pursue our strategy. If any of the physicians or other healthcare providers or entities
with whom we expect to do business, including future collaborators, are found not to be in compliance with applicable laws, they may be subject to
criminal, civil or administrative sanctions, including exclusions from participation in government healthcare programs, which could also affect our
business.
Our product candidates are subject to government price controls in certain jurisdictions that may affect our revenue.
There has been heightened governmental scrutiny in the United Kingdom, United States, European Union and other jurisdictions of pharmaceutical
pricing practices in light of the rising cost of prescription drugs and biologics. In the United States, such scrutiny has resulted in several recent
Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing,
review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.
At the federal level, the Trump administration used several means to propose or implement drug pricing reform, including through federal budget
proposals, executive orders and policy initiatives. For example, on July 24, 2020 and September 13, 2020, the Trump administration announced several
executive orders related to prescription drug pricing that seek to implement several of the administration’s proposals. As a result, the FDA released a final
rule on September 24, 2020, effective November 30, 2020, providing guidance for states to build and submit importation plans for drugs from Canada.
Further, on November 20, 2020, the Department of Health and Human Services finalized a regulation removing safe harbor protection for price reductions
from pharmaceutical manufacturers to plan sponsors under Medicare Part D, either directly or through pharmacy benefit managers, unless the price
reduction is required by law. The implementation of the rule has been delayed by the Biden administration from January 1, 2022 to January 1, 2023 in
response to ongoing litigation. The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for
certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed pending
review by the Biden administration until March 22, 2021. On November 20, 2020, CMS issued an interim final rule implementing the Trump
administration’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest
price paid in other economically advanced countries, effective January 1, 2021. On December 28, 2020, the U.S. District Court in Northern California
issued a nationwide preliminary injunction against implementation of the interim final rule. It is unclear whether the Biden administration will work to
reverse these measures or pursue similar policy initiatives.
At the state level, legislatures have increasingly enacted legislation and implemented regulations designed to control pharmaceutical and biological
product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and
transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Outside of the United States, particularly in the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In
these countries, pricing negotiations with governmental authorities can take considerable time after the
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receipt of marketing approval for a product. To obtain coverage and reimbursement or pricing approval in some countries, we may be required to conduct a
clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. If reimbursement of our products is unavailable or
limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be harmed.
Recently enacted and future legislation in the United States and other countries may affect the prices we may obtain for our product candidates and
increase the difficulty and cost for us to commercialize our product candidates.
In the United States and many other countries, rising healthcare costs have been a concern for governments, patients and the health insurance
sector, which has resulted in a number of changes to laws and regulations, and may result in further legislative and regulatory action regarding the
healthcare and health insurance systems that could affect our ability to profitably sell any product candidates for which we obtain marketing approval. For a
detailed discussion of healthcare reform initiatives of importance to the pharmaceutical industry, see the section titled “Business—Government Regulation
and Product Approval—Healthcare Reform Efforts.”
For example, the ACA was enacted in the United States in March 2010 with the stated goals of containing healthcare costs, improving quality and
expanding access to healthcare, and includes measures to change healthcare delivery, increase the number of individuals with insurance, ensure access to
certain basic healthcare services, and contain the rising cost of care. There have been executive, judicial and Congressional challenges to certain aspects of
the ACA. While Congress has not passed repeal legislation, several bills affecting the implementation of certain taxes under the ACA have been signed into
law. H.R. 1: An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, or the Tax Cuts
and Jobs Act of 2017, includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on
certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”.
Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the ACA-mandated “Cadillac” tax on high-cost
employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminated the health insurer tax. Further, the Bipartisan
Budget Act of 2018, among other things, amended the ACA, effective January 1, 2019, to increase from 50% to 70% the point-of-sale discount that is owed
by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as
the “donut hole”. On December 14, 2018, a Texas U.S. District Court Judge ruled that the ACA is unconstitutional in its entirety because the “individual
mandate” was repealed by Congress as part of the Tax Act. Additionally, on December 18, 2019, the U.S. Court of Appeals for the 5 Circuit upheld the
District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining
provisions of the ACA are invalid as well. The U.S. Supreme Court is currently reviewing the case, although it is unknown when a decision will be made.
Further, although the U.S. Supreme Court has not yet ruled on the constitutionality of the ACA, on January 28, 2021, President Biden issued an executive
order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the
ACA marketplace. The executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit
access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and
policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how the Supreme
Court ruling, other such litigation, and the healthcare reform measures of the Biden administration will impact the ACA and our business.
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In addition, other federal health reform measures have been proposed and adopted in the United States. For example, as a result of the Budget
Control Act of 2011, providers are subject to Medicare payment reductions of 2% per fiscal year through 2030 with the exception of a temporary
suspension from May 1, 2020 through March 31, 2021 unless additional Congressional action is taken. Further, the American Taxpayer Relief Act of 2012
reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments from providers
from three to five years. The Medicare Access and CHIP Reauthorization Act of 2015 also introduced a quality payment program, or Quality Payment
Program, under which certain individual Medicare providers will be subject to certain incentives or penalties based on new program quality standards. The
Quality Payment Program provides clinicians with two ways to participate, including through the Advanced Alternative Payment Models, or APMs, and
the Merit-based Incentive Payment System, or MIPS. In November 2019, CMS issued a final rule finalizing the changes to the Quality Payment Program.
At this time, it is unclear how the introduction of the Quality Payment Program will impact overall physician reimbursement under the Medicare program.
Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. It is also
possible that additional governmental action is taken in response to the COVID-19 pandemic.
The combination of healthcare cost containment measures, increased health insurance costs, reduction of the number of people with health
insurance coverage, as well as future legislation and regulations focused on reducing healthcare costs by
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reducing the cost of or reimbursement and access to pharmaceutical products, may limit or delay our ability to generate revenue, attain profitability, or
commercialize our products.
We are subject to the U.K. Bribery Act 2010, or the Bribery Act, the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, and other
anti-corruption laws, as well as export control laws, import and customs laws, trade and economic sanctions laws and other laws governing our
operations.
Our operations are subject to anti-corruption laws, including the Bribery Act, the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C.
§201, the U.S. Travel Act, and other anti-corruption laws that apply in countries where we do business. The Bribery Act, the FCPA and these other laws
generally prohibit us and our employees and intermediaries from authorizing, promising, offering, or providing, directly or indirectly, improper or
prohibited payments, or anything else of value, to government officials or other persons to obtain or retain business or gain some other business advantage.
Under the Bribery Act, we may also be liable for failing to prevent a person associated with us from committing a bribery offense. We and those
acting on our behalf operate in a number of jurisdictions that pose a high risk of potential Bribery Act or FCPA violations, and we participate in
collaborations and relationships with third parties whose corrupt or illegal activities could potentially subject us to liability under the Bribery Act, FCPA or
local anticorruption laws, even if we do not explicitly authorize or have actual knowledge of such activities. In addition, we cannot predict the nature, scope
or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be
administered or interpreted.
Compliance with the Bribery Act, the FCPA and these other laws is expensive and difficult, particularly in countries in which corruption is a
recognized problem. In addition, anti-corruption laws present particular challenges in the pharmaceutical industry, because, in many countries, hospitals are
operated by the government, and doctors and other hospital employees are considered foreign officials. Certain payments to hospitals in connection with
clinical trials and other work have been deemed to be improper payments to government officials and have led to enforcement actions.
We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of
the United States and the United Kingdom, and authorities in the European Union, including applicable export control regulations, economic sanctions and
embargoes on certain countries and persons, anti-money laundering laws, import and customs requirements and currency exchange regulations, collectively
referred to as the Trade Control laws.
There is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the
Bribery Act, the FCPA or other legal requirements, including Trade Control laws. If we are not in compliance with the Bribery Act, the FCPA and other
anti-corruption laws or Trade Control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and
legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity. Likewise, any investigation of
any potential violations of the Bribery Act, the FCPA, other anti-corruption laws or Trade Control laws by United States, United Kingdom or other
authorities could also have an adverse impact on our reputation, our business, results of operations and financial condition. Further, the failure to comply
with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government
contracting.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could
harm our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the
handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous materials, including
chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these
materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from
our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur
significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.
Although we maintain insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of
hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental
liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological or hazardous materials.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These
current or future laws and regulations may impair our research, development or production efforts. Our failure to comply with these laws and regulations
also may result in substantial fines, penalties or other sanctions.
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Risks Related to the Commercialization of Our Product Candidates
If we are unable to establish sales, marketing and distribution capabilities for our product candidates, or enter into sales, marketing and distribution
agreements with third parties, we may not be successful in commercializing our product candidates, if and when they are approved.
We currently plan to work to build our global commercialization capabilities internally over time such that we are able to commercialize any
product candidate for which we may obtain regulatory approval. However, we currently have no sales, marketing or distribution capabilities and have no
experience in marketing or distributing pharmaceutical products. To achieve commercial success for any product candidate for which we may obtain
marketing approval, we will need to establish a sales and marketing organization and establish logistics and distribution processes to commercialize and
deliver our product candidates to patients and healthcare providers. The development of sales, marketing and distribution capabilities will require
substantial resources, will be time-consuming and could delay any product launch.
If we are unable or decide not to establish internal sales, marketing and distribution capabilities, we would have to pursue collaborative
arrangements regarding the sales and marketing of our products. However, we may not be successful in entering into arrangements with third parties to sell,
market and distribute our product candidates or may be unable to do so on terms that are favorable to us, or if we are able to do so, that they would be
effective and successful in commercializing our products. Our product revenues and our profitability, if any, would likely to be lower than if we were to
sell, market and distribute any product candidates that we develop ourselves. In addition, we would have limited control over such third parties, and any of
them may fail to devote the necessary resources and attention to sell and market our product candidates effectively.
If we do not establish sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not
be successful in commercializing our product candidates in the United States or elsewhere.
We operate in a rapidly changing industry and face significant competition, which may result in others discovering, developing or commercializing
products before or more successfully than we do.
The development and commercialization of new biopharmaceutical products is highly competitive and subject to rapid and significant
technological advancements. We face competition from major multi-national pharmaceutical companies, biotechnology companies and specialty
pharmaceutical companies with respect to our current and future product candidates that we may develop and commercialize in the future. There are a
number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of product
candidates for the treatment of cancer. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative
arrangements with large, established companies. Potential competitors also include academic institutions, government agencies and other public and private
research organizations. Due to their promising clinical therapeutic effect in clinical exploratory trials, engineered T cell therapies, redirected T cell
therapies in general and antibody-drug conjugates are being pursued by multiple biotechnology and pharmaceutical companies, including Novartis AG, or
Novartis, Gilead Sciences, Inc., or Gilead, Bristol-Myers Squibb, or BMS, Janssen Biotech Inc., bluebird bio, Inc., or bluebird bio, Roche Holding AG,
Seattle Genetics, and Amgen Inc. Our competitors may succeed in developing, acquiring or licensing technologies and products that are more effective,
more effectively marketed and sold or less costly than any product candidates that we may develop, which could render our product candidates non-
competitive and obsolete.
We are developing AUTO1, our CD19-targeting programmed T cell product candidate for the treatment of adult ALL, and AUTO3, our dual-
targeting CD19/CD22 programmed T cell product candidate for the treatment of relapsed or refractory DLBCL. Novartis and Gilead have received
marketing approval for their anti-CD19 CAR T cell therapy, and BMS submitted their Biologics License Application in December 2019 to the FDA for
approval of another anti-CD19 CAR T cell therapy. AUTO1 is expected to compete directly with these companies and therapies. In addition, some
companies, such as Cellectis, Inc., Les Laboratoires Servier SAS and Allogene Therapeutics Inc., are pursuing allogeneic T cell products that could
compete with our programmed T cell product candidates.
Novartis and Gilead may be successful in establishing a strong market position for their CD19-targeted CAR T cell products, and we may not be
able to compete effectively against these therapies once they have been established. In addition, our competitors with development-stage programs may
obtain marketing approval from the FDA, the EMA or other comparable regulatory authorities for their product candidates more rapidly than we do, and
they could establish a strong market position before we are able to enter the market.
Many of our competitors, either alone or with their strategic collaborators, have substantially greater financial, technical and human resources than
we do. Accordingly, our competitors may be more successful than we are in obtaining approval for treatments and achieving widespread market
acceptance, which may render our treatments obsolete or non-competitive. Mergers
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and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of our
competitors. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical
study sites and patient registration for clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or
early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective,
have fewer or less severe side effects, are more convenient or are less expensive or better reimbursed than any products that we may commercialize. Our
competitors also may obtain FDA, EMA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could
result in our competitors establishing a strong market position for either the product or a specific indication before we are able to enter the market.
Even if any of our product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients,
third-party payors and others in the medical community necessary for commercial success.
Even if we obtain approvals from the FDA, the EMA or other comparable regulatory agencies and are able to initiate commercialization of our
clinical-stage product candidates or any other product candidates we develop, the product candidate may not achieve market acceptance among physicians,
patients, hospitals, including pharmacy directors, and third-party payors and, ultimately, may not be commercially successful. The degree of market
acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:
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the clinical indications for which our product candidates are approved;
physicians, hospitals, cancer treatment centers, and patients considering our product candidates as a safe and effective treatment;
hospitals and cancer treatment centers establishing the infrastructure required for the administration of redirected T cell therapies;
the potential and perceived advantages of our product candidates over alternative treatments;
the prevalence and severity of any side effects;
product labeling or product insert requirements of the FDA, the EMA or other regulatory authorities;
limitations or warnings contained in the labeling approved by the FDA or the EMA;
the timing of market introduction of our product candidates as well as competitive products;
the cost of treatment in relation to alternative treatments;
the amount of upfront costs or training required for physicians to administer our product candidates;
the availability of coverage, adequate reimbursement, and pricing by third-party payors and government authorities;
the willingness of patients to pay out-of-pocket in the absence of comprehensive coverage and adequate reimbursement by third-party payors and
government authorities;
relative convenience and ease of administration, including as compared to alternative treatments and competitive therapies; and
the effectiveness of our sales and marketing efforts and distribution support.
Our efforts to educate physicians, patients, third-party payors and others in the medical community on the benefits of our products, if approved,
may require significant resources and may never be successful. Such efforts may require more resources than are typically required due to the complexity
and uniqueness of our product candidates. Because we expect sales of our product candidates, if approved, to generate substantially all of our product
revenue for the foreseeable future, the failure of our product candidates to find market acceptance would harm our business and could require us to seek
additional financing.
In addition, although we are not utilizing embryonic stem cells or replication competent vectors, adverse publicity due to the ethical and social
controversies surrounding the therapeutic use of such technologies, and reported side effects from any clinical trials using these technologies or the failure
of such trials to demonstrate that these therapies are safe and effective, may limit market acceptance our product candidates. If our product candidates are
approved but fail to achieve market acceptance among physicians, patients, hospitals, cancer treatment centers or others in the medical community, we will
not be able to generate significant revenue.
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Even if our products achieve market acceptance, we may not be able to maintain that market acceptance over time if new products or technologies
are introduced that are more favorably received than our products, are more cost effective or render our products obsolete.
Coverage and adequate reimbursement may not be available for our current or any future product candidates, which could make it difficult for us to
sell profitably, if approved.
Market acceptance and sales of any product candidates that we commercialize, if approved, will depend in part on the extent to which
reimbursement for these products and related treatments will be available from third-party payors, including government health administration authorities,
managed care organizations and private health insurers. Third-party payors decide which therapies they will pay for and establish reimbursement levels.
Third-party payors in the United States often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement
policies. However, decisions regarding the extent of coverage and amount of reimbursement to be provided for any product candidates that we develop will
be made on a payor-by-payor basis. One payor’s determination to provide coverage for a drug does not assure that other payors will also provide coverage
for the drug. Additionally, a third-party payor’s decision to provide coverage for a therapy does not imply that an adequate reimbursement rate will be
approved. Third-party payors are increasingly challenging the price, examining the medical necessity and reviewing the cost-effectiveness of medical
products, therapies and services, in addition to questioning their safety and efficacy. We may incur significant costs to conduct expensive pharmaco-
economic studies in order to demonstrate the medical necessity and cost-effectiveness of our product candidates, in addition to the costs required to obtain
FDA approvals. Our product candidates may not be considered medically necessary or cost-effective.
Each payor determines whether or not it will provide coverage for a therapy, what amount it will pay the manufacturer for the therapy, and on what
tier of its list of covered drugs, or formulary, it will be placed. The position on a payor’s formulary, generally determines the co-payment that a patient will
need to make to obtain the therapy and can strongly influence the adoption of such therapy by patients and physicians. Patients who are prescribed
treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated
healthcare costs. Patients are unlikely to use our products, and providers are unlikely to prescribe our products, unless coverage is provided and
reimbursement is adequate to cover a significant portion of the cost of our products and their administration. Therefore, coverage and adequate
reimbursement is critical to new medical product acceptance.
A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Third-party payors have attempted to control costs by limiting
coverage and the amount of reimbursement for particular medications. We cannot be sure that coverage and reimbursement will be available for any drug
that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Even if favorable coverage and reimbursement status is
attained for one or more product candidates for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be
implemented in the future. Inadequate coverage and reimbursement may impact the demand for, or the price of, any drug for which we obtain marketing
approval. If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully
commercialize our current and any future product candidates that we develop.
Additionally, we are developing a proprietary diagnostic test for use with certain of our product candidates. We will be required to obtain coverage
and reimbursement for this test separate and apart from the coverage and reimbursement we seek for our product candidates, if approved. There is
significant uncertainty regarding our ability to obtain coverage and adequate reimbursement for this proprietary diagnostic test for reasons similar to those
applicable to our product candidates.
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.
We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face an even
greater risk if we commercially sell any products that we may develop. If we cannot successfully defend ourselves against claims that our product
candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
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reduced resources of our management to pursue our business strategy;
decreased demand for any product candidates or products that we may develop;
injury to our reputation and significant negative media attention;
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initiation of investigations by regulators;
product recalls, withdrawals or labeling, marketing or promotional restrictions;
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significant costs to defend the resulting litigation;
substantial monetary awards paid to clinical trial participants or patients;
loss of revenue; and
the inability to commercialize any products that we may develop.
We currently hold £1.0 million in product liability insurance coverage in the aggregate, with a per incident limit of £1.0 million, which may not be
adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage as we expand our clinical trials or if we commence
commercialization of our product candidates. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a
reasonable cost or in an amount adequate to satisfy any liability that may arise.
Risks Related to Our Intellectual Property
If we are unable to obtain and maintain patent protection for our T cell programming technologies and product candidates, or if the scope of the patent
protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and biologics similar or identical to ours,
and our ability to successfully commercialize our technology and product candidates may be impaired.
Our success depends, in large part, on our ability to obtain and maintain patent protection in the United States, the European Union, the United
Kingdom and other countries with respect to our product candidates. We seek to protect our proprietary position by filing patent applications related to our
technology and product candidates in the major pharmaceutical markets, including the United States, major countries in Europe and Japan. If we do not
adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage that we may
have, which could harm our business and ability to achieve profitability.
To protect our proprietary positions, we file patent applications in the United States and other countries related to our novel technologies and
product candidates that are important to our business. The patent application and prosecution process is expensive and time-consuming. We may not be
able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We may also fail to identify patentable
aspects of our research and development before it is too late to obtain patent protection. It is possible that defects of form in the preparation or filing of our
patents or patent applications may exist, or may arise in the future, such as with respect to proper priority claims, inventorship, claim scope or patent term
adjustments. If any current or future licensors or licensees are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement
of any patent rights, such patent rights could be compromised and we might not be able to prevent third parties from making, using and selling competing
products. If there are material defects in the form or preparation of our patents or patent applications, such patents or applications may be invalid and
unenforceable. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Any of these outcomes could impair
our ability to prevent competition from third parties.
Prosecution of our owned and in-licensed patent portfolio is at an early stage. We currently have nine patents which have been issued from our
pending applications in the United States, and eleven patents which have been issued from our pending applications in Europe. Much of our patent
portfolio consists of pending priority applications that are not examined and pending applications under the Patent Cooperation Treaty, or PCT. Neither
priority applications nor PCT applications can themselves give rise to issued patents. Rather, protection for the inventions disclosed in these applications
must be further pursued by applicable deadlines via applications that are subject to examination. As applicable deadlines for the priority and PCT
applications become due, we will need to decide whether and in which countries or jurisdictions to pursue patent protection for the various inventions
claimed in these applications, and we will only have the opportunity to pursue and obtain patents in those jurisdictions where we pursue protection.
It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent
protection. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our current and future product
candidates in the United States or in other foreign countries. Our patent applications cannot be enforced against third parties practicing the technology
claimed in such applications unless, and until, a patent issues from such applications, and then only to the extent the issued claims cover the technology.
If the patent applications we hold or have in-licensed with respect to our development programs and product candidates fail to issue, if their breadth
or strength of protection is threatened, or if they fail to provide meaningful exclusivity for our current and
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future product candidates, it could threaten our ability to commercialize our product candidates. Any such outcome could have a negative effect on our
business.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain. Changes in either the patent laws or
interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.
In addition, the protections offered by laws of different countries vary. No consistent policy regarding the breadth of claims allowed in biotechnology and
pharmaceutical patents has emerged to date in the United States or in many foreign jurisdictions. In addition, the determination of patent rights with respect
to pharmaceutical compounds and technologies commonly involves complex legal and factual questions, which has in recent years been the subject of
much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights, whether owned or in-licensed, are highly
uncertain. Furthermore, recent changes in patent laws in the United States, may affect the scope, strength and enforceability of our patent rights or the
nature of proceedings that may be brought by or against us related to our patent rights. Additionally, the U.S. Supreme Court has ruled on several patent
cases in recent years either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain
situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty
with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the U.S. federal courts, and the USPTO, the laws and
regulations governing patents could change in unpredictable ways that could weaken our ability to obtain patents or to enforce any patents that we might
obtain in the future.
We may not be aware of all third-party intellectual property rights potentially relating to our current and future our product candidates. Publications
of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are
typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we or our licensors were the first to
make the inventions claimed in our patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such
inventions. Similarly, should we own or in-license any patents or patent applications in the future, we may not be certain that we or the applicable licensor
were the first to file for patent protection for the inventions claimed in such patents or patent applications. As a result, the issuance, scope, validity and
commercial value of our patent rights cannot be predicted with any certainty. Moreover, we may be subject to a third-party pre-issuance submission of prior
art to the U.S. Patent and Trademark Office, or USPTO, or become involved in opposition, derivation, reexamination, inter partes review or interference
proceedings, in the United States or elsewhere, challenging our patent rights or the patent rights of others. An adverse determination in any such
submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or
product candidates and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without
infringing third-party patent rights, which could significantly harm our business and results of operations.
Our pending and future patent applications, whether owned or in-licensed, may not result in patents being issued that protect our technology or
product candidates, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Even if our patent
applications issue as patents, they may not issue in a form that will provide us with any meaningful protection against competing products or processes
sufficient to achieve our business objectives, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our
competitors may be able to circumvent our owned or licensed patents, should they issue, by developing similar or alternative technologies or products in
a non-infringing manner. Our competitors may seek approval to market their own products similar to or otherwise competitive with our products. In these
circumstances, we may need to defend and/or assert our patents, including by filing lawsuits alleging patent infringement. In any of these types of
proceedings, a court or other agency with jurisdiction may find our patents invalid and/or unenforceable.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be
challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in
patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or
commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. In addition,
given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might
expire before or shortly after such candidates are commercialized.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain
and could significantly harm our business.
Our commercial success depends, in part, on our ability to develop, manufacture, market and sell our product candidates and use our proprietary
and modular T cell programming technology without infringing the intellectual property and other proprietary rights of third parties. Numerous third-party
U.S. and non-U.S. issued patents exist in the area of biotechnology,
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including in the area of programmed T cell therapies and including patents held by our competitors. If any third-party patents cover our product candidates
or technologies, we may not be free to manufacture or commercialize our product candidates as planned.
There is a substantial amount of intellectual property litigation in the biotechnology and pharmaceutical industries, and we may become party to, or
threatened with, litigation or other adversarial proceedings regarding intellectual property rights with respect to our technology or product candidates,
including interference proceedings before the USPTO. Intellectual property disputes arise in a number of areas including with respect to patents, use of
other proprietary rights and the contractual terms of license arrangements. Third parties may assert claims against us based on existing or future intellectual
property rights and claims may also come from competitors against whom our own patent portfolio may have no deterrent effect. The outcome of
intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance. Other parties may allege that our product
candidates or the use of our technologies infringes patent claims or other intellectual property rights held by them or that we are employing their proprietary
technology without authorization. As we continue to develop and, if approved, commercialize our current and future product candidates, competitors may
claim that our technology infringes their intellectual property rights as part of business strategies designed to impede our successful commercialization.
There are and may in the future be additional third-party patents or patent applications with claims to, for example, materials, compositions, formulations,
methods of manufacture or methods for treatment related to the use or manufacture of any one or more of our product candidates. For example, we are
aware of third-party U.S. patents that claim technology related to AUTO1. These U.S. patents will expire between 2023 and 2025, and there are no
counterpart patents in Europe or the rest of the world that extend beyond the earliest expected regulatory approval date of AUTO1. If regulatory approval is
received for AUTO1, unless we are able to obtain a license or licenses to the third-party U.S. patent or patents on commercially reasonable terms or any
applicable patent or patents are invalidated, held to be unenforceable, or deemed uninfringed by our activities, we currently intend to launch AUTO1
outside the United States first, and delay the commercial launch of AUTO1 in the United States until the expiration of any applicable third-party patent or
patents covering AUTO1. As a result, the future commercial opportunity of AUTO1 in the United States could be adversely impacted. Moreover, we may
fail to identify relevant third party patents or patent applications, or we may incorrectly conclude that the claims of an issued patent are invalid or are not
infringed by our activities. Because patent applications can take many years to issue, third parties may have currently pending patent applications which
may later result in issued patents that any of our product candidates may infringe, or which such third parties claim are infringed by our technologies.
If we are found to infringe a third party’s intellectual property rights, we could be forced, including by court order, to cease developing,
manufacturing or commercializing the infringing product candidate or product. Alternatively, we may be required or may choose to obtain a license from
such third party in order to use the infringing technology and continue developing, manufacturing or marketing the infringing product candidate. However,
we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-
exclusive, thereby giving our competitors access to the same technologies licensed to us. In addition, we could be found liable for monetary damages,
including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from
commercializing our product candidates or force us to cease some of our business operations. Claims that we have misappropriated the confidential
information or trade secrets of third parties could have a similar negative effect on our business. Even if successful, the defense of any claim of
infringement or misappropriation is time-consuming, expensive and diverts the attention of our management from our ongoing business operations.
We may need to license intellectual property from third parties, and such licenses may not be available or may not be available on commercially
reasonable terms.
A third party may hold intellectual property rights, including patent rights, that are important or necessary to the development or manufacture of our
product candidates. It may be necessary for us to use the patented or proprietary technology of third parties to commercialize our product candidates, in
which case we would be required to obtain a license from these third parties. Such a license may not be available on commercially reasonable terms, or at
all, and we could be forced to accept unfavorable contractual terms. If we are unable to obtain such licenses on commercially reasonable terms, our
business could be harmed.
We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful.
Competitors may infringe our patents, if issued, trademarks, copyrights or other intellectual property. To counter infringement or unauthorized use,
we may be required to file infringement claims, which can be expensive and time-consuming and divert the time and attention of our management and
scientific personnel. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we
infringe their patents, trademarks, copyrights or other intellectual property. In addition, in a patent infringement proceeding, there is a risk that a court will
decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention
at issue. There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not
have the right to stop the other party from using the invention at issue on the grounds that our
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patents do not cover the invention. An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents
against those parties or other competitors and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive
products. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that
the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to
cease use of such trademarks.
In any infringement litigation, any award of monetary damages we receive may not be commercially valuable. Furthermore, because of the
substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could
be compromised by disclosure during litigation. In addition, there could be public announcements of the results of hearings, motions or other interim
proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the
price of our ADSs. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement
claims, which typically last for years before they are concluded. Some of our competitors may be able to sustain the costs of such litigation or proceedings
more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Even if we
ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could
outweigh any benefit we receive as a result of the proceedings. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing,
misappropriating or successfully challenging our intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation
or other proceedings could have a negative impact on our ability to compete in the marketplace.
We may be subject to claims by third parties asserting that we or our employees have misappropriated their intellectual property, or claiming ownership
of what we regard as our own intellectual property.
Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, and our founder and Chief
Scientific Officer, Dr. Martin Pulé, is currently employed both by us and UCL. Although we try to ensure that our employees do not use the proprietary
information or know-how of third parties in their work for us, we may be subject to claims that these employees or we have inadvertently or otherwise used
intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. We may also in the future be
subject to claims that we have caused an employee to breach the terms of his or her non-competition or non-solicitation agreement. Litigation may be
necessary to defend against these potential claims.
In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to
execute agreements assigning such intellectual property to us, such employees and contractors may breach the agreement and claim the developed
intellectual property as their own.
As of December 31, 2020, our patent portfolio is comprised of 96 patent families, of which 25 patent families originated from UCLB, the technology-
transfer company of UCL, 3 patent families are in-licensed from Noile-Immune Biotech, Inc., and 68 patent families we own and have originated from our
own research. Of the 25 patent families that were originally in-licensed from UCL, 24 have now been assigned to Autolus under a Deed of Assignment
dated 15 October 2020. Because we have acquired or licensed certain of our patents from UCLB and Noile-Immune Biotech, Inc, we must rely on their
prior practices with regard to the assignment of such intellectual property. Our and their assignment agreements may not be self-executing or may be
breached, and we may be forced to bring claims against third parties or defend claims they may bring against us, to determine the ownership of what we
regard as our intellectual property.
If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or
personnel. A court could prohibit us from using technologies or features that are essential to our products if such technologies or features are found to
incorporate or be derived from the trade secrets or other proprietary information of the former employers. Even if we are successful in prosecuting or
defending against such claims, litigation could result in substantial costs and could be a distraction to management. In addition, any litigation or threat
thereof may adversely affect our ability to hire employees or contract with independent service providers. Moreover, a loss of key personnel or their work
product could hamper or prevent our ability to commercialize our products.
We may be subject to claims challenging the inventorship or ownership of our owned or in-licensed patent rights and other intellectual property.
We generally enter into confidentiality and intellectual property assignment agreements with our employees, consultants, outside scientific
collaborators, sponsored researchers and other advisors. However, these agreements may not be honored and may not effectively assign intellectual
property rights to us. For example, disputes may arise from conflicting obligations of consultants or others who are involved in developing our technology
and product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. The owners of
intellectual property in-licensed to us could also face such claims. If we or our licensors fail in defending any such claims, in addition to paying monetary
damages, we may lose
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valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material
adverse effect on our business. Even if we or our licensors are successful in defending against such claims, litigation could result in substantial costs and be
a distraction to management and other employees.
Any trademarks we may obtain may be infringed or successfully challenged, resulting in harm to our business.
We expect to rely on trademarks as one means to distinguish any of our product candidates that are approved for marketing from the products of our
competitors. We have not yet selected trademarks for our product candidates and have not yet begun the process of applying to register trademarks for our
product candidates. Once we select trademarks and apply to register them, our trademark applications may not be approved. Third parties may oppose our
trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced
to rebrand our products, which could result in loss of brand recognition and could require us to devote resources to advertising and marketing new brands.
Our competitors may infringe our trademarks and we may not have adequate resources to enforce our trademarks.
In addition, any proprietary name we propose to use with our clinical-stage product candidates or any other product candidate in the United States
must be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark. The FDA typically conducts a review of
proposed product names, including an evaluation of the potential for confusion with other product names. If the FDA objects to any of our proposed
proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable proprietary product name that
would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition to seeking patent and trademark protection for our product candidates, we also rely on trade secrets, including unpatented know-
how, technology and other proprietary information, to maintain our competitive position. We seek to protect our trade secrets, in part, by entering into non-
disclosure and confidentiality agreements with parties who have access to them, such as our employees, consultants, advisors and other third parties. We
also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. Despite these efforts, any of these parties
may breach the agreements and disclose our proprietary information, including our trade secrets. Monitoring unauthorized uses and disclosures of our
intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property will be effective. In addition, we
may not be able to obtain adequate remedies for any such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is
difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or
unwilling to protect trade secrets.
Moreover, our competitors may independently develop knowledge, methods and know-how equivalent to our trade secrets. Competitors could
purchase our products and replicate some or all of the competitive advantages we derive from our development efforts for technologies on which we do not
have patent protection. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to
prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our trade secrets were to be
disclosed to or independently developed by a competitor, our competitive position would be harmed.
We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our
intellectual property rights in some countries outside the United States could be less extensive than those in the United States. In some cases, we may not
be able to obtain patent protection for certain technology outside the United States. In addition, the laws of some foreign countries do not protect
intellectual property rights to the same extent as federal and state laws in the United States, even in jurisdictions where we do pursue patent protection.
Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, even in jurisdictions
where we do pursue patent protection or from selling or importing products made using our inventions in and into the United States or other jurisdictions.
Competitors may use our technologies in jurisdictions where we have not pursued and obtained patent protection to develop their own products
and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United
States. These products may compete with our product candidates and preclinical programs and our patents or other intellectual property rights may not be
effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal
systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property
protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents, if pursued and
obtained, or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign
jurisdictions could result in
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substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted
narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits
that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our
intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop
or license.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other
requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these
requirements.
Periodic maintenance and annuity fees on any issued patent are due to be paid to the USPTO and patent agencies outside the United States in
several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of
procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be
cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in
abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-
compliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed
time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we or our licensors fail to maintain the patents and patent
applications covering our products or product candidates, our competitors might be able to enter the market, which would harm our business. In addition, to
the extent that we have responsibility for taking any action related to the prosecution or maintenance of patents or patent application in-licensed from a
third party, any failure on our part to maintain the in-licensed rights could jeopardize our rights under the relevant license and may expose us to liability.
Risks Related to Ownership of Our Securities and Our Status as a Public Company
An active trading market for our ADSs may not continue to develop or be sustained.
Prior to our IPO in June 2018, there was no public market for our ordinary shares or our ADSs. Although our ADSs are listed on The Nasdaq Global
Select Market, we cannot assure you that an active trading market for our ADSs will continue to develop or be sustained. If an active market for our ADSs
does not continue to develop or is not sustained, it may be difficult for investors to sell ADSs without depressing the market price for the ADSs or to sell
the ADSs at all.
The trading price of our ADSs has been and may continue to be highly volatile and may fluctuate due to factors beyond our control.
We completed our initial public offering in June 2018, and there has been a public market for the ADSs for only a short period of time. From January 1,
2020 to February 26, 2021, the closing sale price of our ADSs ranged from a high of $16.30 to a low of $4.20 per ADS. The trading price of our ADSs is
likely to continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control, including limited trading volume.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report, these factors include:
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the commencement, enrollment or results of our planned and future clinical trials;
positive or negative results from, or delays in, testing and clinical trials by us, collaborators or competitors;
the loss of any of our key scientific or management personnel;
regulatory or legal developments in the United States, United Kingdom and other countries;
the success of competitive products or technologies;
adverse actions taken by regulatory agencies with respect to our clinical trials or manufacturers;
changes or developments in laws or regulations applicable to our product candidates and preclinical program;
changes to our relationships with collaborators, manufacturers or suppliers;
concerns regarding the safety of our product candidates or programmed T cells in general;
announcements concerning our competitors or the pharmaceutical industry in general;
actual or anticipated fluctuations in our operating results;
changes in financial estimates or recommendations by securities analysts;
potential acquisitions, financing, collaborations or other corporate transactions;
the results of our efforts to discover, develop, acquire or in-license additional product candidates;
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the trading volume of our ADSs on The Nasdaq Global Select Market;
sales of our ADSs or ordinary shares by us, members of our senior management and directors or our shareholders or the anticipation that such
sales may occur in the future;
general economic, political, and market conditions and overall fluctuations in the financial markets in the United States or the United Kingdom;
price and volume fluctuations of the listed securities comparable companies and, in particular, those that operate in the biopharmaceutical
industry;
investors’ general perception of us and our business; and
other events and factors, many of which are beyond our control.
These and other market and industry factors may cause the market price and demand for our ADSs to fluctuate substantially, regardless of our
actual operating performance, which may limit or prevent investors from selling their ADSs and may otherwise negatively affect the liquidity of our ADSs.
In addition, the stock market in general, and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have
often been unrelated or disproportionate to the operating performance of these companies.
Broad market and industry factors, including the effects of the COVID-19 pandemic on the global economy, may negatively affect the market price
of our ADSs, regardless of our actual operating performance. For example, negative publicity regarding drug pricing and price increases by pharmaceutical
companies has negatively impacted, and may continue to negatively impact, the markets for biotechnology and pharmaceutical stocks. In the past,
following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted
against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our
business, financial condition, results of operations and growth prospects.
Future sales of our ADSs in the public market could cause our share price to decline
As of March 1, 2021, approximately 70.5 million of our ordinary shares (including ordinary shares in the form of ADSs) were issued and outstanding.
Sales of a substantial number of shares of our ADSs in the public market, or the perception that these sales might occur, could depress the market price of
our ADSs and could impair our ability to raise capital through the sale of additional equity securities.
We previously filed a registration statement on Form S-8 under the Securities Act to register ordinary shares (including in the form of ADSs) subject to
options or other equity awards issued or reserved for future issuance under our equity incentive plans, and we have also filed a "shelf" registration
statement on Form F-3 under the Securities Act to register securities having an aggregate offering price not to exceed $300 million. We have also entered
into a sales agreement with Jefferies pursuant to which we may issue and sell ADSs with aggregate offering proceeds of up to $100 million, on an "at-the-
market" basis from time to time, and as of March 1, 2021, $84.1 million worth of ADSs remained available for sale under the program. In addition, in the
future, we may issue ordinary shares, ADS or other securities if we need to raise additional capital. The number of new ordinary shares or ADSs, or
securities convertible into our ordinary shares or ADSs, issued in connection with raising additional capital could represent a material portion of our then-
outstanding ordinary shares.
Additionally, the holders of an aggregate of approximately 12.2 million of our ordinary shares, or their transferees, have rights, subject to some
conditions, to require us to file one or more registration statements covering their shares or to include their shares in registration statements that we may file
for ourselves or other shareholders. If we were to register the resale of these shares or ADSs, they could be freely sold in the public market. If these
additional shares or ADSs are sold, or if it is perceived that they will be sold, in the public market, the trading price of our ADSs could decline.
If we fail to implement and maintain effective internal controls over financial reporting, our ability to produce accurate financial statements on
a timely basis could be impaired.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the rules and regulations of
The Nasdaq Global Market. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, beginning with this Annual Report, we were required to perform
system and process evaluation and testing of our internal control over financial reporting to allow our management to report on the effectiveness of our
internal control over financial reporting. However, while we remain an emerging growth company, we will not be required to include an attestation report
on internal control over financial reporting issued by our independent registered public accounting firm. We will incur substantial additional professional
fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts.
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Under standards established by the Public Company Accounting Oversight Board, a material weakness is a deficiency, or combination of
deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or
interim financial statements will not be prevented or detected and corrected on a timely basis. In the course of auditing our financial statements as of and
for the years ended September 30, 2017 and 2016 in preparation for our IPO, our independent registered public accounting firm identified a material
weakness related to our financial statement closing process. Although we made significant progress to enhance our in-house accounting and finance
function, in connection with the audit of our financial statements as of and for the year ended September 30, 2018, our independent registered public
accounting firm concluded that the material weakness had not yet been fully remediated as of September 30, 2018. This material weakness primarily
related to our lack of controls over the review of new complex accounting issues involving significant judgment or estimates in the financial statement
closing process, and insufficient management review controls over identifying the accounting impact of changes to contractual arrangements in the
financial statement closing process, including the impact on our financial statements and disclosures.
In 2018 and 2019, we have hired additional finance and accounting personnel with appropriate expertise to perform specific functions and build
out our financial infrastructure, implemented improved processes and internal controls and further developed and documented our accounting policies and
financial reporting procedures, including ongoing senior management review and audit committee oversight. Our independent registered public accounting
firm concluded that the material weakness was remediated as of December 31, 2019.
If other material weaknesses are identified in the future or we are not able to comply with the requirements of Section 404 in a timely manner, the
accuracy and timing of our financial reporting may be adversely affected. If we are unable to maintain effective internal controls, we may not have
adequate, accurate or timely financial information, and we may be unable to meet our reporting obligations as a public company, including the
requirements of the Sarbanes-Oxley Act, we may be unable to accurately report our financial results in future periods, or report them within the timeframes
required by the requirements of the SEC, Nasdaq or the Sarbanes-Oxley Act. Failure to comply with the Sarbanes-Oxley Act, when and as applicable,
could also potentially subject us to sanctions or investigations by the SEC or other regulatory authorities. Any failure to maintain or implement required
new or improved controls, or any difficulties we encounter in their implementation, could result in identification of additional material weaknesses or
significant deficiencies, cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Furthermore, if we
cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed, and investors could lose confidence in
our reported financial information.
Our senior management, directors and principal shareholders, if they choose to act together, have the ability to control or significantly influence all
matters submitted to our shareholders for approval.
As of December 31, 2020, members of our senior management, directors and current beneficial owners of 5% or more of our ordinary shares and
their respective affiliates beneficially owned, in the aggregate, approximately 70% of our outstanding ordinary shares (including ordinary shares in the form
of ADSs). As a result, if these shareholders were to choose to act together, they would be able to control or significantly influence all matters submitted to
our shareholders for approval, as well as our management and affairs. For example, these persons, if they choose to act together, would control or
significantly influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration
of ownership control may harm the market price of our ADSs by:
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delaying, deferring, or preventing a change in control;
entrenching our management and/or the board of directors;
impeding a merger, scheme of arrangement, consolidation, takeover, or other business combination involving us; or
discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
In addition, some of these persons or entities may have interests different than yours. For example, because many of these shareholders purchased their
shares at prices substantially lower than our current trading price and have held their shares for a longer period, they may be more interested in selling our
company to an acquirer than other investors, or they may want us to pursue strategies that deviate from the interests of other shareholders.
The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.
We are incorporated under English law. The rights of holders of ordinary shares and, therefore, certain of the rights of holders of our ADSs, are
governed by English law, including the provisions of the U.K. Companies Act 2006, or the Companies Act, and by our Articles of Association. These rights
differ in certain respects from the rights of shareholders in typical U.S. corporations. See the section titled “Differences in Corporate Law” set below for a
description of the principal differences between the provisions of the Companies Act applicable to us and, for example, the Delaware General Corporation
Law relating to shareholders’ rights and protections.
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Holders of our ADSs may not have the same voting rights as the holders of our ordinary shares and may not receive voting materials in time to be able
to exercise their right to vote.
Holders of the ADSs do not have the same rights as our shareholders and in accordance with the provisions of the deposit agreement, will not be able to
exercise voting rights attaching to the ordinary shares evidenced by the ADSs on an individual basis. The Depositary or its nominee will act as the
representative for the holders of the ADSs and will exercise the voting rights attached to the ordinary shares represented by the ADSs. Holders of our ADSs
may not receive voting materials in time to instruct the Depositary to vote, and it is possible that they, or persons who hold their ADSs through brokers,
dealers or other third parties, will not have the opportunity to exercise a right to vote. Furthermore, the Depositary will not be liable for any failure to carry
out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, holders of our ADSs may not be able to
exercise voting rights and may lack recourse if their ADSs are not voted as requested. In addition, holders of our ADSs will not be able to call a
shareholders’ meeting.
Holders of our ADSs may not receive distributions on our ordinary shares represented by the ADSs or any value for them if it is illegal or impractical to
make them available to holders of ADSs.
Although we do not have any present plans to declare or pay any dividends, in the event we declare and pay any dividend, the Depositary for the ADSs
has agreed to pay to holders of our ADSs the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited
securities after deducting its fees and expenses. Holders of our ADSs will receive these distributions in proportion to the number of our ordinary shares
their ADSs represent. However, in accordance with the limitations set forth in the deposit agreement, it may be unlawful or impractical to make a
distribution available to holders of the ADSs. We have no obligation to take any other action to permit distribution on the ADSs, ordinary shares, rights or
anything else to holders of the ADSs. This means that holders of our ADSs may not receive the distributions we make on our ordinary shares or any value
from them if it is unlawful or impractical to make them available to you. These restrictions may have an adverse effect on the value of the ADSs.
Because we do not anticipate paying any cash dividends on our ADSs in the foreseeable future, capital appreciation, if any, will be our ADS holders’
and shareholders’ sole source of gains and they may never receive a return on their investment.
Under current English law, a company’s accumulated realized profits must exceed its accumulated realized losses (on a non-consolidated basis)
before dividends can be paid. Therefore, we must have distributable profits before issuing a dividend. We have never declared or paid a dividend on our
ordinary shares in the past, and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. As a result,
capital appreciation, if any, on our ADSs will be our ADS holders’ sole source of gains for the foreseeable future, and they will suffer a loss on their
investment if they are unable to sell their ADSs at or above the price at which they purchased the ADSs.
If we are a passive foreign investment company, there could be adverse U.S. federal income tax consequences to U.S. Holders.
Under the Internal Revenue Code of 1986, as amended, or the Code, we will be a passive foreign investment company, or PFIC, for any taxable
year in which (1) 75% or more of our gross income consists of passive income or (2) 50% or more of the average quarterly value of our assets consists of
assets that produce, or are held for the production of, passive income, including cash. For purposes of these tests, passive income includes dividends,
interest, gains from the sale or exchange of investment property and certain rents and royalties. In addition, for purposes of the above calculations, a non-
U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of
the assets and received directly its proportionate share of the income of such other corporation. If we are a PFIC for any taxable year during which a U.S.
Holder (as defined in Item 10.E. “Taxation - Material U.S. Federal Income Tax Considerations for U.S. Holders”) holds our ADSs, the U.S. Holder may be
subject to adverse tax consequences regardless of whether we continue to qualify as a PFIC, including ineligibility for any preferred tax rates on capital
gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting requirements.
We do not believe we were a PFIC for our taxable year ended December 31, 2020. Based on our current estimates of expected gross assets and
income, we do not believe we will be a PFIC for our taxable year ending December 31, 2021. However, no assurances regarding our PFIC status can be
provided for any past, current or future taxable years. The determination of whether we are a PFIC is a fact-intensive determination made on an annual
basis and the applicable law is subject to varying interpretation. In particular, the characterization of our assets as active or passive may depend in part on
our current and intended future business plans, which are subject to change. In addition, for our current and future taxable years, the total value of our
assets for PFIC testing purposes may be determined in part by reference to the market price of our ordinary shares or ADSs from time to time, which may
fluctuate considerably. Under the income test, our status as a PFIC depends on the composition of our income which will depend on the transactions we
enter into in the future and our corporate structure. The composition of our income and assets is also affected by how, and how quickly, we spend the cash
we raise in any offering. Our U.S. counsel expresses no opinion with
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respect to our PFIC status for our taxable year ended December 31, 2020, and also expresses no opinion with regard to our expectations regarding our PFIC
status in the future.
If we are a PFIC, U.S. Holders (as defined in Item 10.E. “Taxation - Material U.S. Federal Income Tax Considerations for U.S. Holders) of our
ADSs would be subject to adverse U.S. federal income tax consequences, such as ineligibility for any preferred tax rates on capital gains or on actual or
deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting requirements under U.S. federal income tax laws and
regulations. For further discussion of the PFIC rules and the adverse U.S. federal income tax consequences in the event we are classified as a PFIC, see
Item 10.E. “Taxation - Material U.S. Federal Income Tax Considerations for U.S. Holders” in this Annual Report.
If a United States person is treated as owning at least 10% of our ordinary shares, including ordinary shares represented by ADSs, such holder may be
subject to adverse U.S. federal income tax consequences.
If a U.S. Holder is treated as owning (directly, indirectly or constructively through the application of attribution rules) at least 10% of the value or
voting power of our ordinary shares, including ordinary shares represented by ADSs, such U.S. Holder may be treated as a “United States shareholder”
with respect to each “controlled foreign corporation” in our group (if any). Because our group includes at least one U.S. subsidiary (Autolus Inc.), certain
of our non-U.S. subsidiaries may be treated as controlled foreign corporations (regardless of whether Autolus Therapeutics plc is treated as a controlled
foreign corporation). A United States shareholder of a controlled foreign corporation may be required to annually report and include in its U.S. taxable
income its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations,
regardless of whether we make any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally
would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. We
cannot provide any assurances that we will assist investors in determining whether any of our non-U.S. subsidiaries, if any, are treated as a controlled
foreign corporation or whether such investor is treated as a United States shareholder with respect to any of such controlled foreign corporations. Further,
we cannot provide any assurances that we will furnish to any U.S. shareholder information that may be necessary to comply with the reporting and tax
paying obligations discussed above. Failure to comply with these reporting obligations may subject you to significant monetary penalties and may prevent
the statute of limitations with respect to your U.S. federal income tax return for the year for which reporting was due from starting. U.S. Holders should
consult their tax advisors regarding the potential application of these rules to their investment in our ADSs.
Future changes to tax laws could materially adversely affect our company and reduce net returns to our shareholders.
The tax treatment of the company is, and our ADSs and ordinary shares are, subject to changes in tax laws, regulations and treaties, or the
interpretation thereof, tax policy initiatives and reforms under consideration and the practices of tax authorities in jurisdictions in which we operate, as well
as tax policy initiatives and reforms related to the Organization for Economic Co-Operation and Development’s, or OECD, Base Erosion and Profit
Shifting, or BEPS, Project, the European Commission’s state aid investigations and other initiatives.
Such changes may include (but are not limited to) the taxation of operating income, investment income, dividends received or (in the specific
context of withholding tax) dividends paid, or the stamp duty of stamp duty reserve tax treatment of our ADSs or ordinary shares. We are unable to predict
what tax reform may be proposed or enacted in the future or what effect such changes would have on our business, but such changes, to the extent they are
brought into tax legislation, regulations, policies or practices, could affect our financial position and overall or effective tax rates in the future in countries
where we have operations, reduce post-tax returns to our shareholders, and increase the complexity, burden and cost of tax compliance.
Tax authorities may disagree with our positions and conclusions regarding certain tax positions, or may apply existing rules in an unforeseen manner,
resulting in unanticipated costs, taxes or non-realization of expected benefits.
A tax authority may disagree with tax positions that we have taken, which could result in increased tax liabilities. For example, Her Majesty’s
Revenue & Customs, or HMRC, the U.S. Internal Revenue Service or another tax authority could challenge our allocation of income by tax jurisdiction and
the amounts paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including amounts paid with
respect to our intellectual property development. Similarly, a tax authority could assert that we are subject to tax in a jurisdiction where we believe we have
not established a taxable connection, often referred to as a ‘‘permanent establishment’’ under international tax treaties, and such an assertion, if successful,
could increase our expected tax liability in one or more jurisdictions. A tax authority may take the position that material income tax liabilities, interest and
penalties are payable by us, in which case, we expect that we might contest such assessment. Contesting such an assessment may be lengthy and costly and
if we were unsuccessful in disputing the assessment, the implications could increase our anticipated effective tax rate, where applicable.
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We may be unable to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments or benefits from
favorable U.K. tax legislation.
As a U.K. resident trading entity, we are subject to U.K. corporate taxation. Due to the nature of our business, we have generated losses since
inception. As of December 31, 2020 we had cumulative carryforward tax losses of $211.7 million. Subject to any relevant utilization criteria and
restrictions (including those that limit the percentage of profits that can be reduced by carried forward losses and those that can restrict the use of carried
forward losses where there is a change of ownership of more than half the ordinary shares of the company and a major change in the nature, conduct or
scale of the trade), we expect these to be eligible for carry forward and utilization against future operating profits. As a company that carries out extensive
research and development activities, we benefit from the U.K. research and development tax relief programs, being the Small and Medium-sized
Enterprises R&D tax relief program, or SME Program, and, to the extent that our projects are grant funded or relate to work subcontracted to the company
by third parties, the Research and Development Expenditure Credit program, or RDEC Program. Under the SME Program, we are able to surrender some
of our trading losses that arise from our qualifying research and development activities for a cash rebate of up to 33.35% of such qualifying research and
development expenditures. The majority of our pipeline research, clinical trials management and manufacturing development activities are eligible for
inclusion within these tax credit cash rebate claims. We may not be able to continue to claim payable research and development tax credits in the future if
we cease to qualify as a SME, based on size criteria concerning employee headcount, turnover and gross assets. The U.K. Government has published draft
legislation by which it intends to introduce a cap on payable credit claims in excess of £20,000 with effect from April 2021 by reference to, broadly, three
times the total PAYE and NICs liability of the company, subject to an exception. If such cap comes into force, and if such exception does not apply, this
could restrict the amount of payable credit that we claim.
We may benefit in the future from the United Kingdom’s “patent box” regime, which allows certain profits attributable to revenues from patented
products (and other qualifying income) to be taxed at an effective rate of 10% by giving an additional tax deduction. We are the exclusive licensee or owner
of one patent and several patent applications which, if issued, would cover our product candidates, and accordingly, future upfront fees, milestone fees,
product revenues and royalties could be eligible for this deduction. When taken in combination with the enhanced relief available on our research and
development expenditures, we expect a long-term rate of corporation tax lower than statutory to apply to us. If, however, there are unexpected adverse
changes to the U.K. research and development tax credit regime or the “patent box” regime, or for any reason we are unable to qualify for such
advantageous tax legislation, or we are unable to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax
payments then our business, results of operations and financial condition may be adversely affected. This may impact our ongoing requirement for
investment and the timeframes within which additional investment is required.
We will incur significantly increased costs and demands upon management as a result of being a public company, and our management will be
required to devote substantial time to new compliance initiatives.
As a public company listed in the United States, we have and will continue to incur significant legal, accounting and other expenses that we did not
incur previously. These expenses will likely be even more significant after we no longer qualify as an emerging growth company. The Sarbanes-Oxley Act,
the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations
impose various requirements on public companies in the United States, including the establishment and maintenance of effective disclosure and financial
controls and corporate governance practices. Our senior management and other personnel will need to devote a substantial amount of time to these
compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more
time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to maintain
director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified senior management personnel or
members for our board of directors.
We are an “emerging growth company” and as a result of the reduced disclosure and governance requirements applicable to emerging growth
companies, our ADSs may be less attractive to investors.
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue
to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public
companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404,
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved. As an emerging growth company, we are able to report only two years of financial results and selected financial data
compared to three and five years, respectively, for comparable data reported by other public companies. We may take advantage of these exemptions until
we are no longer an emerging growth company. We could be an emerging growth company for up to five years, although circumstances could cause us to
lose that status earlier, including if the aggregate market value of our ordinary shares, including ordinary shares represented by ADSs, held by non-
affiliates exceeds $700 million as of the end of our second fiscal quarter before that time, in which case we would no longer be an emerging growth
company as of the following December 31 (the last day of our fiscal year). We cannot predict if investors will find our ADSs less attractive because we
may rely on these
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exemptions. If some investors find our ADSs less attractive as a result, there may be a less active trading market for our ADSs and the price of our ADSs
may be more volatile.
Under Section 107(b) of the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as
those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards
and, therefore, we are subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
As a foreign private issuer, we are permitted to and follow certain home country practices in relation to corporate governance matters that differ
significantly from Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if
we complied fully with Nasdaq corporate governance listing standards.
As a foreign private issuer, we are permitted to and follow certain home country corporate governance practices as opposed to those requirements
that would otherwise be required by the Nasdaq Stock Market for domestic U.S. issuers. Following our home country governance practices allows us to
follow English corporate law and the Companies Act with regard to certain corporate governance matters as opposed to the requirements that would
otherwise apply to U.S. companies listed on Nasdaq may provide less protection to our shareholders than what is accorded to investors under the Nasdaq
rules applicable to domestic U.S. issuers.
As a foreign private issuer, we are exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxy
statements. Our officers, directors and principal shareholders are also exempt from the reporting and short-swing profit recovery provisions contained in
Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file reports and financial statements with the SEC as frequently
or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act and we are exempt from filing quarterly reports with
the SEC under the Exchange Act. We also intend to continue to follow English corporate governance practices in lieu of the following corporate
governance requirements of Nasdaq: (i) disclosure requirement within four business days of any determination to grant a waiver of the code of business
conduct and ethics to directors and officers and (ii) requirement to obtain shareholder approval for certain issuances of securities, including shareholder
approval of option plans. Moreover, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information,
although we have voluntarily adopted a corporate disclosure policy substantially similar to Regulation FD. These exemptions and leniencies will reduce the
frequency and scope of information and protections to which you may otherwise have been eligible in relation to a U.S. domestic issuer.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting
requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently
completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2021. We would lose our foreign
private issuer status if, for example, more than 50% of our ordinary shares are directly or indirectly held by residents of the United States and we fail to
meet additional requirements necessary to maintain our foreign private issuer status.
If we lose our foreign private issuer status on this determination date, we will be required to file with the SEC periodic reports and registration
statements on U.S. domestic issuer forms beginning on January 1, 2022, which are more detailed and extensive than the forms available to a foreign private
issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become
subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon
exemptions from certain corporate governance requirements under the Nasdaq listing rules. As a U.S. listed public company that is not a foreign private
issuer, we would incur significant additional legal, accounting and other expenses that we do not currently incur as a foreign private issuer, as well as
increased accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange.
Provisions in the U.K. City Code on Takeovers and Mergers that may have anti-takeover effects do not currently apply to us.
The U.K. City Code on Takeovers and Mergers, or the Takeover Code, applies to an offer for, among other things, a public company whose
registered office is in the United Kingdom if the company is considered by the Panel on Takeovers and Mergers, or the Takeover Panel, to have its place of
central management and control in the United Kingdom (or the Channel Islands or the Isle of Man). This is known as the “residency test.” The test for
central management and control under the Takeover Code is different from that used by the U.K. tax authorities. Under the Takeover Code, the Takeover
Panel will determine whether we have our place of central management and control in the United Kingdom by looking at various factors, primarily where
the directors are resident.
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In June 2019, the Takeover Panel Executive confirmed that, based on our current circumstances, we are not subject to the Takeover Code. As a
result, our shareholders are not entitled to the benefit of certain takeover offer protections provided under the Takeover Code. We believe that this position
is unlikely to change at any time in the near future but, in accordance with good practice, we will review the situation on a regular basis and consult with
the Takeover Panel if there is any change in our circumstances which may have a bearing on whether the Takeover Panel would determine our place of
central management and control to be in the United Kingdom.
You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited,
because we are incorporated under the laws of England and Wales, conduct most of our operations outside the United States and most of our directors
and senior management reside outside the United States.
We are incorporated and have our registered office in, and are currently existing under the laws of, England and Wales. In addition, most of our
tangible assets are located, and most of our senior management and directors reside, outside of the United States. As a result, it may not be possible to serve
process within the United States on certain directors or us or to enforce judgments obtained in U.S. courts against such directors or us based on civil
liability provisions of the securities laws of the United States. As a result, it may not be possible for investors to effect service of process within the United
States upon such persons or to enforce judgments obtained in U.S. courts against them or us, including judgments predicated upon the civil liability
provisions of the U.S. federal securities laws.
The United States and the United Kingdom do not currently have a treaty providing for recognition and enforcement of judgments (other than
arbitration awards) in civil and commercial matters. Consequently, a final judgment for payment given by a court in the United States, whether or not
predicated solely upon U.S. securities laws, would not automatically be recognized or enforceable in the United Kingdom. In addition, uncertainty exists as
to whether English courts would entertain original actions brought in the United Kingdom against us or our directors or senior management predicated
upon the securities laws of the United States or any state in the United States. Any final and conclusive monetary judgment for a definite sum obtained
against us in U.S. courts would be treated by English courts as a cause of action in itself and sued upon as a debt at common law so that no retrial of the
issues would be necessary, provided that certain requirements are met.
Whether these requirements are met in respect of a judgment based upon the civil liability provisions of the U.S. securities laws, including whether
the award of monetary damages under such laws would constitute a penalty, is subject to determination by the court making such decision. If an English
court gives judgment for the sum payable under a U.S. judgment, the English judgment will be enforceable by methods generally available for this purpose.
These methods generally permit the English court discretion to prescribe the manner of enforcement.
As a result, U.S. investors may not be able to enforce against us or certain of our directors any judgments obtained in U.S. courts in civil and
commercial matters, including judgments under the U.S. federal securities laws.
As an English public limited company, certain capital structure decisions will require shareholder approval, which may limit our flexibility to
manage our capital structure.
On June 18, 2018, we altered the legal status of our company under English law from a private limited company by re-registering as a public limited
company and changing our name from Autolus Therapeutics Limited to Autolus Therapeutics plc. English law provides that a board of directors may only
allot shares (or rights to subscribe for or convertible into shares) with the prior authorization of shareholders, such authorization stating the aggregate
nominal amount of shares that it covers and valid for a maximum period of five years, each as specified in the articles of association or relevant shareholder
resolution. We have obtained authority from our shareholders to allot additional shares for a period of five years from June 2018 (being the date on which
we adopted our articles of association containing the relevant authorization), up to a maximum nominal amount of $8,400, which authorization will need to
be renewed upon expiration (i.e., at least every five years) but may be sought more frequently for additional five-year terms (or any shorter period).
English law also generally provides shareholders with preemptive rights when new shares are issued for cash. However, it is possible for the articles
of association, or for shareholders to pass a special resolution at a general meeting, being a resolution passed by at least 75% of the votes cast, to disapply
preemptive rights. Such a disapplication of preemptive rights may be for a maximum period of up to five years from the date of adoption of the articles of
association, if the disapplication is contained in the articles of association, or from the date of the shareholder special resolution, if the disapplication is by
shareholder special resolution. In either case, this disapplication would need to be renewed by our shareholders upon its expiration (i.e., at least every five
years). We have obtained authority from our shareholders to disapply preemptive rights for a period of five years from June 2018 (being the date at which
we adopted our articles of association containing the relevant disapplication) up to a maximum nominal amount of $8,400, which disapplication will need
to be renewed upon expiration (i.e., at least every five years) to remain effective, but may be sought more frequently for additional five-year terms (or any
shorter period).
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English law also generally prohibits a public company from repurchasing its own shares without the prior approval of shareholders by ordinary
resolution, being a resolution passed by a simple majority of votes cast, and other formalities. Such approval may be for a maximum period of up to five
years.
Our articles of association designates that the U.S. federal district courts will be the exclusive forum for the resolution of any complaint asserting a
cause of action arising under the Securities Act.
Our articles of association provides that the U.S. federal district courts will be the exclusive forum for resolving any complaint asserting a cause of
action arising under the Securities Act. This choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds
favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits. If a court were to find either choice of
forum provision contained in our articles of association to be inapplicable or unenforceable in an action, we may incur additional costs associated with
resolving such action in other jurisdictions, which could adversely affect our results of operations and financial condition.
If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, the
price and trading volume of our ADSs could decline.
The trading market for our ADSs is influenced by the research and reports that equity research analysts publish about us and our business. As a
newly public company, we have only limited research coverage by equity research analysts. Equity research analysts may elect not to provide research
coverage of our ADSs, and such lack of research coverage may adversely affect the market price of our ADSs. Even if we have equity research analyst
coverage, we will not have any control over the analysts, or the content and opinions included in their reports. The price of our ADSs could decline if one
or more equity research analysts downgrade our ADSs or issue other unfavorable commentary or research about us. If one or more equity research analysts
ceases coverage of us or fails to publish reports on us regularly, demand for our ADSs could decrease, which in turn could cause the trading price or trading
volume of our ADSs to decline.
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Item 4. Information on the Company.
A. History and development of the company.
We are a public limited company, originally incorporated pursuant to the laws of England and Wales in February 2018 as a private company with limited
liability called Autolus Therapeutics Limited. Autolus Limited was originally incorporated under the laws of England and Wales in July 2014. Pursuant to
the terms of a corporate reorganization, the shareholders of Autolus Limited exchanged each of the shares held by them in Autolus Limited for the same
number and class of newly issued shares of Autolus Therapeutics Limited and, as a result, Autolus Limited became a wholly owned subsidiary of Autolus
Therapeutics Limited, a holding company incorporated in February 2018 with nominal assets and liabilities, which had not conducted any operations prior
to the share exchange other than actions incidental to the exchange and its incorporation. On June 18, 2018, Autolus Therapeutics Limited re-registered as a
public limited company and was renamed Autolus Therapeutics plc. Following the re-registration of Autolus Therapeutics Limited as a public limited
company, Autolus Limited reduced its issued share capital pursuant to Part 17 of the Companies Act by way of the cancellation of all of its issued series A
preferred shares, C ordinary shares, deferred shares and all but 100 B ordinary shares. On June 22, 2018, the different classes of our issued share capital
were converted into a single class of ordinary shares and various classes of deferred shares, and we completed our IPO on the Nasdaq Global Select
Market. Our ADSs trade under the symbol AUTL. Our ordinary shares are not listed.
Our registered office and principal executive offices are located at Forest House, 58 Wood Lane, White City, London W12 7RZ, United Kingdom and
our telephone number is +44 20 3829 6230. Our website address is www.autolus.com. Information contained in, or that can be accessed through, our
website is not a part of, and shall not be incorporated by reference into, this document. We have included our website address in this document solely as an
inactive textual reference. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information
regarding registrants, such as us, that file electronically with the SEC.
Our agent for service of process in the United States is Corporation Service Company, 1180 Avenue of the Americas, Suite 210, New York, New York
10036.
Our capital expenditures for the years ended December 31, 2020 and 2019, the three months ended December 31, 2018, and year ended September
30, 2018 amounted to $14.7 million, $18.3 million, $4.4 million, and $9.5 million, respectively. These capital expenditures primarily consisted of leasehold
improvements, laboratory equipment, and computer and office equipment in the United Kingdom. We expect our capital expenditures to increase in
absolute terms in the near term as we continue to advance our research and development programs, to expand our internal manufacturing capabilities, and
otherwise to grow our operations. We anticipate our capital expenditures in 2021 to be financed from the proceeds from our existing cash and cash
equivalents, including the net proceeds from the sale of ADSs under our at-the-market offering program in January 2021 and our follow-on capital raise in
February 2021 .
B. Business overview.
We are a biopharmaceutical company developing next-generation programmed T cell therapies for the treatment of cancer. Using our broad suite of
proprietary and modular T cell programming technologies, we are engineering precisely targeted, controlled and highly active T cell therapies that are
designed to better recognize cancer cells, break down their defense mechanisms and attack and kill these cells. We believe our programmed T cell therapies
have the potential to be best-in-class and offer cancer patients substantial benefits over the existing standard of care, including the potential for cure in
some patients.
Cancers thrive on their ability to fend off T cells by evading recognition by T cells and by establishing other defense mechanisms, such as
checkpoint inhibition, and creating a hostile microenvironment. Our T cell programming technologies allow us to tailor our therapies to address the specific
cancer we are targeting and introduce new programming modules into a patient’s T cells to give those T cells improved properties to better recognize
cancer cells and overcome fundamental cancer defense mechanisms. We believe our leadership in T cell programming technologies will provide us with a
competitive advantage as we look to develop future generations of T cell therapies targeting both hematological cancers and solid tumors, including
potential products that could have a tolerability profile such to make them amenable to be used in outpatient settings.
Our current clinical-stage pipeline comprises five programs being developed in eight hematological and solid tumor indications. We have
worldwide commercial rights to all of our programmed T cell therapies.
Our current clinical-stage programs are:
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AUTO1:
A CD19-targeting programmed T cell investigational therapy with a CD19 binder designed to improve the efficacy and safety
profile, as compared to other CD19 CAR T therapies. In December 2020, we announced updated data that supports AUTO1’s
anti-leukemia activity in the absence of severe cytokine release syndrome, or CRS, in ALLCAR19, an ongoing Phase 1 clinical
trial in adult patients with relapsed or refractory acute B lymphocytic leukemia, or Adult ALL. Data presented showed AUTO1
was well tolerated, despite patients having high disease burden and being heavily pre-treated. High level of sustained complete
response rate, or CR, were achieved without need for subsequent stem cell transplant and durability of remissions was highly
encouraging. We initiated a Phase 1b/2 clinical trial of AUTO1 for the treatment of adult ALL in 2020. This trial may potentially
be a registrational trial. In addition, we are exploring activity for AUTO1 in other B-Cell malignancies. The AUTO1 ALLCAR19
Phase 1 trial has been extended in B cell lymphomas including indolent NHL, or iNHL, and chronic lymphocytic leukemia, or
CLL. We presented initial data from four patients with iNHL at the 2020 Annual Meeting of the American Society of
Hematology, or ASH. Furthermore, AUTO1 will be investigated in primary CNS lymphoma, or PCNSL, in collaboration with our
academic partner University College London, or UCL, in an exploratory Phase 1 clinical trial called CAROUSEL, expected to
start in the first quarter of 2021. We expect to provide updates from these additional studies in 2021. Furthermore, we may pursue
a pediatric label through an investigational program in pediatric ALL.
AUTO1/22:
AUTO3:
We commenced a Phase 1 clinical trial in pediatric patients with relapsed or refractory ALL with our next-generation product
candidate, AUTO1/22, (previously designated AUTO1NG) in the fourth quarter of 2020. AUTO1/22 is a dual-targeting CAR-T
which builds on the AUTO1 approach utilizing the same CD19 CAR, alongside a novel CD22 CAR designed to reduce antigen
negative relapse of disease. We expect to report initial data from this trial in the fourth quarter of 2021.
The first dual-targeting, bicistronic, or having two chimeric antigen receptors within one vector, programmed T cell
investigational therapy for the treatment of relapsed or refractory diffuse large B-cell lymphoma, or r/r DLBCL, independently
targeting B-lymphocyte antigens CD19 and CD22.
DLBCL (ALEXANDER Trial): We initiated a Phase 1/2 clinical trial of AUTO3 in DLBCL in the third quarter of 2017 and
reported initial data from the dose-escalation phase of the trial in the fourth quarter of 2018. Since then, we have periodically
reported updated safety and efficacy results indicating that AUTO3 was generally well tolerated. Data presented in December
2020 from the cohort of patients receiving the recommended Phase 2 dose (doses of greater than or equal to 150 x 106 CAR T
cells) and pre-conditioning pembrolizumab on day minus 1, showed an objective response rate, or ORR, of 66% and CR rate, of
55%. For all patients on study, across all dose levels, that were evaluable in the trial (n = 49), the ORR was 65% and CR rate was
51%. As of the data cut-off date of October 30, 2020, 49 patients in the Phase 1/2 clinical trial of AUTO3 have been treated and
were evaluable for safety. Across all 49 patients, only three cases of neurotoxicity, or NT, have been reported, with two patients
experiencing Grade 3 or higher NT. None of the patients achieving a CR experienced any NT and all cases of NT reported have
been atypical in nature and seen in a setting with disease progression and confounding factors. A majority of patients receiving
AUTO3 in the outpatient setting did not require hospital admission. Those patients admitted were managed without requiring ICU
care. In January 2021, we announced our intent to seek a partner for the AUTO3 program before progressing the program into the
next phase of development.
AUTO4:
A programmed T cell investigational therapy for the treatment of peripheral T-cell lymphoma targeting TRBC1. Unique targeting
of TRBC1 potentially opens a new therapeutic approach. The preclinical study package suggested selective binding and anti-
tumor activity of TRBC1 and TRBC2 CARs in vitro and in vivo. We initiated a Phase 1/2 clinical trial in the fourth quarter of
2018 and we expect to report Phase 1 interim data in 2021.
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AUTO6:
A programmed T cell investigational therapy targeting GD2 in development for the treatment of neuroblastoma utilizing a new
binder designed to minimize on-target, off-tumor toxicity, humanized to reduce immunogenicity, including RQR8 safety switch.
Findings from a Phase 1 clinical trial with AUTO6 were published in November 2020 and provide evidence that AUTO6 induces
clinical activity in this solid tumor setting without inducing on-target off-tumor toxicity. We are developing a next-generation
product candidate, which we refer to as AUTO6NG, which builds on this approach utilizing the same GD2 CAR alongside
additional programming modules to enhance the activity and persistence. In June 2020, we presented preclinical data of
AUTO6NG, including data from a tumor model in small cell lung cancer indicating that GD2 is an attractive target for
programmed T cell therapies in that indication. We expect to initiate a Phase 1/2 clinical trial of AUTO6NG in 2021.
Our Pipeline
Our product pipeline is built on our core principles of modular innovation with protein-based cell programming focused on advanced targeting,
pharmacological control and enhancement of activity. After identifying a cancer target, we select the suite of programming modules that we believe is best
suited to target that particular cancer based on the latest clinical data and the results of our cancer research. The particular modules selected may vary, and
not every product candidate, including our current product candidates, contain all categories of modules. A viral vector is used to introduce combinations of
these modules into the DNA of the T cells, as depicted in the graphic below. The diagram below shows how our programming modules relate to our
product candidates.
Our programs have been highly tailored and specifically engineered via our proprietary modules, and have the potential to be truly differentiated
assets that could address limitations of current treatments and provide innovative options for patients.
AUTO1 has an optimized engagement of the CD19 target designed to enhance the persistence of AUTO1. We believe that these properties may
enable AUTO1 to be a suitable candidate for the treatment of adult patients with ALL, who tend to be less tolerant of severe toxicity than children with
ALL. There are currently no CAR T cell therapies approved for the treatment of adult ALL. AUTO1/22 builds on the AUTO1 approach utilizing the same
CD19 CAR alongside a novel CD22 CAR designed to reduce antigen negative relapse of disease.
AUTO3 is designed to address a key escape route used by hematological cancers in response to T cell therapies. Cancer cells often mutate and
cease to express the antigen that current therapies were designed to recognize. This loss of the target antigen can lead to antigen negative relapse of disease.
Consequently, we have developed AUTO3 to employ a dual-targeting mechanism because we believe it may improve response rate and durability of
treatment response and reduce the frequency of cancer relapse when compared to other currently approved single-targeting T cell therapies, including other
CAR T cell therapies.
AUTO4, which we are developing for the treatment of peripheral T-cell lymphoma, employs a novel and differentiated treatment approach. AUTO4
is designed to selectively kill cancerous T cells in a manner that we believe will preserve a portion of the patient’s normal, healthy T cells to maintain
immunity. It targets an antigen, TRBC1 found on approximately 40% of T cell lymphomas. Since our AUTO4 approach is a novel mechanism to target T
cells, we have also programmed the product candidate with a “safety switch” in order to allow physicians to manage toxicity by eliminating the
programmed T cells if a patient experiences severe adverse side effects from the treatment. AUTO5 is a preclinical TRBC2 programmed T cell product
candidate for the treatment of peripheral T-cell lymphoma. TRBC2 is found on approximately 60% of T cell lymphomas. We plan to progress AUTO5 into
the clinic in the second half of 2021, subject to clinical data from the AUTO4 program.
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We are developing AUTO6NG, which builds upon AUTO6 data by incorporating additional programming modules intended to enhance efficacy by
aiming to extend persistence, and address the layers of defense that cancer cells deploy to evade T cell killing.
AUTO7, our anti-PSMA humanized CAR T candidate, is being developed for prostate cancer indications and is expected to start clinical
development in 2022. AUTO7 is designed to tackle the complex solid tumor environment, through the addition of modules, introduced in the cells via a
gamma retro-viral vector, for potentially improved persistence and resistance in prostate cancer.
AUTO8 is our next-generation product candidate for multiple myeloma which targets both BCMA and a second, undisclosed target. We also plan
on incorporating in this investigational CAR T cell therapy two programming modules, a dominant negative TGFßRII protein and a truncated SHP2
protein, designed to block inhibitory signals from the tumor microenvironment. We believe that the final design of AUTO8 has the potential to induce deep
and durable responses and extend the durability of effect over other BCMA CARs currently in development. We expect to initiate a Phase 1 clinical trial in
multiple myeloma in the first half of 2021.
We expect to continue in 2021 to expand our suite of cell programming technologies to include programming modules designed for allogeneic
applications. A first novel allogeneic program is expected to enter the clinic in the first half of 2021.
The manufacture and delivery of programmed T cell therapies to patients involves complex, integrated processes, including harvesting T cells from
patients, programming the T cells ex vivo, or outside the body, multiplying the programmed T cells to obtain the desired dose, and ultimately infusing the
programmed T cells back into a patient’s body. Providing T cell therapies to patients in a commercially successful manner requires a manufacturing process
that is reliable, scalable and economical. We are using a semi-automated, fully enclosed system for cell manufacturing, which is designed to provide a
common platform suitable for manufacturing all of our product candidates and to allow for rapid development of our product candidates through clinical
trial phases and the regulatory approval processes. In addition, this platform allows for parallel processing and the ability to scale for commercial supply in
a controlled environment and at an economical cost. We intend to continue building internal manufacturing and supply capabilities as well as to utilize the
expertise of collaborators on some of the aspects of product delivery, logistics and capacity expansion. We believe having established manufacturing
processes suitable for commercialization early in the development of our T cell therapies will allow us to focus on expanding manufacturing capacity
during our clinical trials.
We anticipate that the market for T cell therapies will be characterized by rapid cycling of product improvements. We believe our modular approach
to T cell programming and the common manufacturing platform used across all our T cell therapies will position us to more quickly develop follow-on, or
next- generation, product candidates with enhanced characteristics, such as pharmacological control, insensitivity to checkpoint inhibition or other desirable
features.
Our Management Team
Our management team has a strong track record of accomplishments in the fields of redirected T cell therapies, gene therapy, transplantation and
oncology. Their collective experience spans key areas of expertise required of a fully integrated company delivering advanced programmed T cell
therapies, including fundamental innovation in therapeutic design, translational medicine and clinical development, process sciences, manufacturing and
commercialization. We are led by Dr. Christian Itin, our Chairman and Chief Executive Officer. His prior experience includes serving as the Chief
Executive Officer of Micromet, Inc., a public biotechnology company acquired by Amgen Inc. in 2012 for $1.2 billion, where he led the development of
blinatumomab, which in 2014 became the first redirected T cell therapy approved by the U.S. Food and Drug Administration, or FDA. Our proprietary and
modular T cell programming technologies were invented by Dr. Martin Pulé, our scientific founder and Senior Vice President and Chief Scientific Officer.
Dr. Pulé has been an innovator in the field of genetic engineering of T cells for cancer treatment for almost 20 years.
Background on T Cells and Cancer Treatment Approaches
Cancers originate from individual cells that have developed mutations in essential cellular programs, driving increased cell division and growth. A key
control mechanism to detect and eliminate such cells is the patient’s own T cells. T cells are a type of white blood cells used by the human immune system
to defend the body against infectious pathogens and cancerous cells. Using their T cell receptor like a molecular scanner, T cells are able to discriminate
between normal human cells and ones that contain a mutation that alters their function. If the T cell recognizes an altered cell, it becomes activated and kills
that particular cell. For a cancer to grow to the detriment of the patient, cancer cells evolve mechanisms to evade recognition by, or establish other defenses
against, T cells.
T Cell Activation- and Redirection-Based Therapies
Cancer immunotherapy treatment requires the activation and expansion of cancer-specific T cells, which kill cancer cells by recognizing antigen targets
expressed on cancer cells. Studies have shown that tumors develop escape mechanisms that prevent T cell-mediated destruction through immune
checkpoint proteins, which shut down anti-tumor immunity. Clinical trials have shown that treatment with immune checkpoint inhibitors can restore T cell
activity and results in durable clinical responses. These observations
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have led to the FDA approval of several checkpoint inhibitors including ipilimumab (anti-CTLA-4), nivolumab (anti-PD-1), pembrolizumab (anti-PD-1),
durvalumab (anti-PD-L1) and atezolizumab (anti-PD-L1). Treatment with checkpoint inhibitors has shown the ability to activate CD8+ T cells, shrink
tumors, and improve patient survival. While these approaches collectively represented major advances in cancer treatment, they all lack active redirection
of the patient’s T cells to the cancer, eventually limiting clinical activity.
More recently, redirected T cell therapies that are designed to give the patient’s T cells a new specificity to recognize cancer cells have been developed.
The first approved product of this class is a bi-specific T cell engager called blinatumomab (Blincyto ) from Amgen Inc. Blinatumomab targets the CD19
antigen on the surface of B cells and cancers derived from B cells. Blinatumomab received an accelerated approval for the treatment of patients with
relapsed or refractory B cell acute lymphoblastic leukemia, or B-ALL, in 2014, followed by a full approval for all age groups in B-ALL in 2017. In 2017,
the first two genetically programmed redirected T cell therapies were approved, both also targeting CD19, CAR-T therapy Kymriah by Novartis AG for
pediatric B-ALL and Yescarta by Kite Pharma, Inc. (acquired by Gilead Sciences, Inc.) for DLBCL. All three of these therapies received breakthrough
therapy designation and showed high response rates and, in a subset of patients, prolonged treatment effects. For those patients experiencing a relapse, the
common causes for relapse are insufficient survival of the programmed T cells, loss of the CD19 target on the cancer cells and upregulation of checkpoint
inhibitor PD-L1 on the cancer cells.
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In view of the limitations of current therapies, there remains a critical unmet medical need for improved T cell therapies. We believe that improving
efficacy and durability over the products currently on the market or in development for the treatment of cancers requires addressing target antigen loss,
countering checkpoint inhibition and adding novel targets to expand the range of indications amenable to programmed T cell therapy. We believe our
clinical-stage product candidates and our approach to T cell programming have the potential to address these limitations.
Programmed T Cell Therapies
Process of T Cell Programming
Existing programmed T cell therapies for oncology have focused on engineering CAR T cells. CARs are membrane-bound proteins, combining the
tumor-recognition properties of an antibody with the naturally occurring T cell activation mechanism. CARs are designed such that a portion on the outside
of the T cell binds to a structure on the surface of a cancer cell and a portion on the inside of a T cell transmits an activating signal and leads the T cell to
attack the cancer cell. The actual steps to create CAR T cells start with leukapheresis, a process in which white blood cells are collected from the patient
and separated from the blood. The sample is then enriched by stimulating the T cells, which causes them to replicate. During that process, a viral gene
vector is used to introduce the genetic information encoding the CAR into the DNA of the T cells. T cells then read this information and produce CARs on
their cell surface. The programmed T cells are then infused back into the patient intravenously following a short course of chemotherapy to condition the
bone marrow to accept the programmed T cells.
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Limitations of Current T Cell Immunotherapies
Although existing T cell immunotherapies, including CAR T therapies, have shown significant efficacy in hematological malignancies, the extent
and duration of the treatment effects and disease remission remain unknown. Optimizing the targeting module of a programmed T cell may enhance its
effect and safety. Also, in response to targeted therapies, cancer cells often mutate and cease to express the antigen the therapy was designed to recognize.
This loss of target antigen leads to patient relapse. Additionally, numerous challenges, including lack of T cell persistence and upregulation of checkpoint
inhibitors, represent significant hurdles that need to be addressed by new therapies. T cell immunotherapies also have the capacity to elicit toxicities
including CRS, neurologic toxicity and the elimination of normal cells via on-target off tumor recognition. Further, manufacturing T cells can be
prohibitively costly if the manufacturing process is not appropriately designed to support parallel processing and automation. Finally, realization of the
potential of this approach across a broad range of solid tumor types will require multiple technology solutions in order to address limitations of the current
generation of therapies. Our broad array of proprietary and modular T cell programming technologies are designed to address these limitations.
Our Solution: Advanced T Cell Programming Using a Modular Approach
We are applying our broad array of T cell programming technologies and capabilities to engineer precisely targeted, controlled and highly active T
cell therapies that are designed to better recognize cancer cells, break down their defense mechanisms and attack and kill these cells. The breadth of our
technology platform allows us to select from a range of programming modules, and our modular approach is designed to enable us to tailor our therapies to
address the specific cancer we are targeting, or to improve an already established therapy, such as by making it suitable for outpatient use. We believe this
capability represents a competitive advantage in the field and will allow us to position our product candidates to have the potential to be best-in-class.
After identifying a cancer target, we select the suite of programming modules that we believe is best suited to target that particular cancer based on
our latest clinical data and the results of our cancer research. The particular modules selected may vary, and not every product candidate, including our
current product candidates, contain all categories of modules. A viral vector is used to introduce combinations of these modules into the DNA of the T
cells, as depicted in the graphic below. With the exception of AUTO1, all of our product candidates contain two or more programming modules. The
diagram in this section following the table summarizing our clinical programs shows how our programming modules relate to our product candidates.
Advanced Targeting Technologies Used in our Modular Approach
We have developed advanced antigen targeting modules to improve the ability of our programmed T cell therapies to selectively identify, target and
destroy cancer cells and overcome shortcomings of the current generation of T cell therapies. These targeting technologies include innovative binders,
novel targets, dual-targeting and pattern recognition.
Innovative Binders and Novel Targets
Binding domains allow for selective targeting of cancer cells, and the properties of binders are crucial to the performance of T cell therapies. The
binders of each of our programs have been optimized, are novel binders, or bind to novel targets.
The T cells of other CD19 CAR T cell therapies that have been approved or that are in clinical development are engineered to express high affinity
binders that can engage their targets for an extended period of time. This can lead to excessive T cell activation and toxicities caused by cytokine release, as
well as exhaustion of the CAR T cell. The programmed T cells of AUTO1 express a CD19 binder with a fast off-rate, which refers to the rate at which a T
cell disengages from a target antigen. This is similar to the off-rate of naturally occurring T cells. AUTO1, with this enhanced kinetic profile, appears to
result in reduced CRS and in increased T cell engraftment compared to data reported for other CAR T cell product candidates in clinical development for
ALL that use high affinity binders.
AUTO3 includes an optimized CD22 binder that increases the avidity for the CD22 target. It is challenging to target CD22 for immunotherapy
because of its large size and extensive post-translational modifications. Our optimized CD22 binder combines five CAR binding domains to allow for
suitable orientation and efficient target engagement compared to a traditional CAR.
Each of the TRBC1 binder used in AUTO4 and TRBC2 binder used in AUTO5 are highly selective for one of two highly related variants of the
constant domain in T cell receptor beta chains. These binders allow AUTO4 to target TRBC1-positive T cell lymphoma cells without affecting healthy
TRBC2-positive T cells and allow AUTO5 to target TRBC2-positive T cell lymphoma cells without affecting healthy TRBC1-positive T cells
AUTO6 is designed to target GD2 with an optimized anti-GD2 binder which uses a humanized targeting domain. Initial clinical data from an
ongoing Phase 1 clinical trial sponsored by CRUK indicates early signs of clinical activity in the absence of neurotoxicity.
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Dual-Targeting Technology
Escape from T cell recognition by losing the antigen, the very structure the programmed T cell is designed to recognize, is a fundamental defense
mechanism of hematological cancers. All clinical programs targeting CD19, CD22 or BCMA in a single-target approach have reported patients relapsing
with cells that no longer have detectable levels of the target antigen. A notable example of this defense mechanism of cancer cells was reported for children
relapsing under CD19-targeting Kymriah treatment, with more than half the children at time of relapse showing a loss of the CD19 antigen on the recurring
cancer cells.
We believe that directly targeting two antigens on a cancer cell will reduce the chances for relapse and may also improve a response in those
patients with low levels of expression of a target antigen on their cancer cells. AUTO8, our programmed T cell therapy for the treatment of multiple
myeloma, binds to two receptors, BCMA and a second undisclosed target. AUTO3, the first dual-targeting programmed T cell therapy for the treatment of
pediatric ALL and DLBCL, targets both the CD19 and CD22 antigens, both of which are B-cell antigens with similar patterns of expression.
Pattern Recognition Technology
Programmed T cells are very powerful and must be highly selective for the cancer cells in order to avoid unwanted side effects. Particularly for the
treatment of solid tumors, which have greater complexity, achieving a sufficient level of selectivity based on a single target to avoid toxicity can be
challenging. For such cancers, we have developed a programming module designed to make a kill decision based on the presence of two or more targets on
the cancer cell. This technology is designed to allow us to program T cells to eliminate tumor cells only if two different targets are both present on the
surface of the cell, thereby sparing healthy cells that express only one of these targets in isolation. We are also developing technology that we believe will
allow us to program T cells to eliminate a tumor if only the tumor target, but not a target only found on healthy cells, is present on the cancer cell.
Pharmacological Control of T Cell Activity
Management of toxicity is a critical step in the successful application of programmed T cell therapies. We have developed multiple technologies
designed to pharmacologically control T cell activity. These technologies fall into two distinct categories: safety switches and tunable T cells.
Safety Switches
Also referred to as “off switches” or “suicide switches,” safety switches selectively eliminate the programmed T cells and are intended to be
triggered in the event a patient suffers certain serious adverse events related to the T cell therapy, such as CRS or neurotoxicity. We incorporate the RQR8
safety switch into some of our programmed T cell product candidates, which allows us to selectively eliminate the programmed T cells by the
administration of the commercially available monoclonal antibody rituximab, or Rituxan , which binds to the surface of the T cell and thereby triggers cell
death. We use the RQR8 safety switch in our AUTO4 and AUTO6 programs. The next generation of our safety switches, which we plan to incorporate in
our solid tumor programs, utilizes rapamycin activated Caspase 9 (rapaCasp9), a cell therapy safety switch that allows for selective elimination of
programmed T cells using a single therapeutic dose of the commercially available product rapamycin, such as sirolimus or Rapamune . Rapamycin is a
small molecule drug, which we expect will have the benefit of better tissue penetration and may require less time to take effect as compared to a
monoclonal antibody-activated safety switch.
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Tunable T Cells
Eliminating programmed T cells with a safety switch like RQR8 has the potential to allow the patient to recover from treatment-related side effects
but also to preclude the anti-tumor activity following elimination of the programmed T cells, which could lead to relapse. To avoid this undesirable
consequence of the safety switch, we are developing several programming modules that are designed to allow tunable programmed T cell responses by
reducing programmed T cell activity if a patient experiences severe toxicity, while also allowing for the subsequent reactivation of programmed T cells,
thereby allowing for the possibility of persistence and sustained anti-tumor activity. One such system we have developed is designed to reversibly dampen
the activity of the programmed T cells by temporarily dislocating the signaling domain on the inside of the T cell from the cancer cell recognition domain
with two commercially available antibiotics, tetracycline and minocycline.
Enhanced T Cell Activity Technologies
We have also developed a wide range of technologies designed to inhibit the immunosuppressive effects of the tumor microenvironment and
enhance T cell persistence.
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Evading Hostile Tumor Microenvironments Including Checkpoint Inhibition
Proteins expressed on tumor cells can trigger inhibitory receptors on T cells to block their ability to eliminate the tumor, such as PD-L1/PD-
1 immune checkpoints. These inhibitory receptors act through a common signaling pathway inside the T cell that prevents normal T cell activation. We
have developed a programming module designed to cause T cells to express a modified version of an adaptor protein, SHP2, that in preclinical studies has
been shown to efficiently counteracts the inhibition of T cells resulting from the PD-L1/PD-1checkpoint interaction. Unlike methods that rely on blocking
one inhibitory receptor using antibodies that are separately administered to the patient and are known to have significant side effects on their own, we have
designed this programming module to be engineered into the T cells and not to require the administration of a separate pharmaceutical agent. In addition, it
is designed to simultaneously disarm multiple inhibitory receptors on the cancer cell.
Enhanced T Cell Persistence
Programmed T cell therapies that target hematological malignancies are regularly stimulated by engaging tumor and normal cells in the bone
marrow and lymph tissue. This continued stimulation helps the programmed T cell survive and persist, allowing them to attack the tumor for an extended
period of time. One of the challenges of targeting some solid tumors is the lack of such easily accessible stimulation for programmed T cells, leading to
poor persistence and a weak anti-tumor activity. Programmed T cell therapies have been co-administered with cytokines that boost T cell activity and
persistence in an attempt to enhance their effect on solid tumors. However, systemic or local administration of cytokines can be toxic. Therefore, we have
developed a technology that is designed to deliver a cytokine signal directly inside our programmed T cells without administration of cytokines themselves.
Depending on the tumor microenvironment, the cytokine persistence signal may be further enhanced by antigens secreted by the tumor. We believe our
approach will be more potent and will have the potential to be less toxic, when compared to approaches that rely on systemic or local delivery of cytokines.
Advanced T Cell Programming is Key for Solid Tumor Programs
Achieving a meaningful and durable response with programmed T cell therapies in the treatment of solid tumors is more challenging than in
hematological cancers for a variety of reasons. Solid tumors have fewer suitably selective, single antigen targets that can be used as a basis for tumor
recognition, and solid tumors employ multiple sophisticated lines of defense to evade T cell killing.
Consequently, in order to be able to tackle the more complex biology of solid tumors, we anticipate that programmed T cell products will need to
employ multiple modules of technology to overcome these challenges. With our broad array of proprietary programming modules and our ability to
incorporate multiple elements into our programmed T cell product candidates, we believe we are well positioned to design these types of product
candidates and expand our pipeline into solid tumor indications, including with our development of AUTO6NG and AUTO7.
Advanced T Cell Programming for Allogeneic Programs
We expect to continue to expand our suite of cell programming technologies to include programming modules designed for allogeneic applications
in 2021. There are two key challenges for allogenic T cell therapies. The first is to address Graft vs Host Disease, which is mediated by the T cell Receptor
(TCR) of the donor cells used to make the product candidate attacking the patient’s tissues. This can be life threatening for the patient. The second
challenge is to address immune rejection where the patient T cells recognize and reject the engineered T cell as foreign tissue, thus preventing it from
persisting and potentially limiting its anti-tumor activity. We have developed novel approaches using protein-based programming that integrate with our
existing T cell programming and manufacturing platform. TCR expression is disrupted by intracellular retention and degradation using a single
programming module and programming modules are also in development to protect the donor cells from immune rejection. These approaches avoid
technical and intellectual property complexities of gene editing. A first novel allogeneic application is expected to enter the clinic in the first half of 2021.
Our Product Candidates for the Treatment of Hematological Cancers
Our three clinical-stage product candidates targeting hematological cancers are AUTO1, AUTO3 and AUTO4. We have additional hematological
product candidates AUTO1NG, AUTO3NG, AUTO5, and AUTO8 in preclinical development.
AUTO1: Our Programmed T Cell Therapy for the Treatment of ALL
Introduction to AUTO1
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AUTO1 is a gene therapy product consisting of autologous enriched T cells that are transduced with a lentiviral vector to express a novel anti-CD19
Chimeric Antigen Receptor (CD19 (CAT) CAR). The transduced T cells express second-generation CARs in which the CD19 CAR construct uses 41BB-ζ
and CD3- ζ endodomains.
CD19 is an ideal target for a CAR T cell therapy as it is a cell surface marker for lymphocytes that is present on most B cell malignancies. CD19 CAR T
cell therapies have proven effective in treating leukemia and lymphoma, with efficacy dependent on engraftment and expansion of the CAR T cells.
However, rapid activation and expansion of CAR T cells can result in CRS &/or ICANS, which in some cases can be life-threatening, particularly for
elderly patients and patients with higher tumor burden that have a poor tolerance for toxicity. Furthermore, excessive activation of CAR T cells can lead to
cell exhaustion and limit their persistence, which may impact the durability of therapeutic effect. AUTO1 is an investigational therapy in which a patient’s
T cells are genetically modified to express a novel CD19-specific binder designed to reduce side effects observed with this class of therapeutics.
AUTO1, currently the subject of an ongoing Phase 1/2 trial (FELIX) in adult ALL, has been designed to recognize CD19 and interact with the
target with a fast off-rate enabled by the novel CAT scFv binding domain. This property allows the AUTO1 cells to efficiently recognize cancer cells, inject
cytotoxic proteins to initiate the natural self-destruction process present in all human cells and then rapidly disengage from them in order to engage the next
cancer cell, a process also known as serial killing. Rapid disengagement from the target antigen is expected to minimize excessive activation of the
programmed T cells, reduce toxicity and may also reduce T cell exhaustion.
Our academic partner, UCL, has conducted two separate Phase 1 clinical trials evaluating the safety and efficacy of AUTO1. The first Phase 1
clinical trial in pediatric ALL patients is named the CARPALL trial the second Phase 1 clinical trial in adult ALL patients is named the ALLCAR19 trial,
latter being the foundation for a Phase 1b/2 clinical trial noted above, which we intend will be a registrational trial.
Clinical Development of AUTO1 in Adult ALL
Background of Adult ALL
AUTO1 is currently being tested in a Phase 1b/2 clinical trial for the treatment of adult ALL, which according to the American Cancer Society is predicted
to affect approximately 5,960 adults in the United States in 2018. Combination chemotherapy enables 90% of adult patients to experience complete
remission, or CR. Despite this, and in contrast to pediatric ALL, the prognosis of adult ALL is still poor and has not changed significantly during the last
two to three decades, with long-term remission rates limited to 30-40%. Approximately 50% of all adult ALL patients will relapse, and data from the
Medical Research Council’s UKALL12/ECOG 2993 study, published in 2007, found that five-year overall survival, or OS, rate in adults who relapse
following standard multi-agent chemotherapy is 7%. The only curative option for relapsed or refractory ALL consists of achieving a second CR by salvage
therapy followed by an allogeneic hematopoietic stem cell transplant, or allo-HSCT. Without allo-HSCT, a subsequent relapse occurs in nearly all patients.
However, less than half of patients achieve a second CR, and therefore only a subset will be eligible for this procedure. Even then, less than one-third of
patients receiving the transplant are expected to sustain long-term disease-free survival. Further, allo-HSCT is associated with severe morbidity and
significant mortality. Many patients with relapsed or refractory ALL will have been maximally treated with chemotherapy, and often do not achieve a
second CR with standard-of-care chemotherapy in order to be eligible for allo-HSCT.
Two targeted immuno therapies have recently been approved for the treatment of adult ALL: blinatumomab and inotuzumab ozogamicin. Both of
these therapies achieve high complete response rates, but durability is limited. In a randomized Phase 3 clinical trial of blinatumomab in heavily pretreated
B-cell precursor ALL, the blinatumomab arm achieved a complete response rate of 44%, of which 76% also achieved MRD-negative CR, and the median
duration of remission was 7.3 months. The median OS in those patients, though significantly improved compared to chemotherapy, was still only 7.7
months. Similarly, in a Phase 3 clinical trial of inotuzumab ozogamicin, a higher percentage of patients achieved MRD-negative CR when treated with
inotuzumab compared to standard-of-care chemotherapy, but the median duration of remission was 4.6 months and median OS was 7.7 months.
AUTO1 Phase 1 Clinical Trial in Adult ALL (ALLCAR19 Trial)
In the first quarter of 2018, our academic partner University College London, or UCL, initiated a single-arm, open label, multi-center Phase 1
clinical trial of AUTO1, named the ALLCAR19 trial, in patients aged 16 to 65 years with high-risk, relapsed or refractory CD19 positive B-lineage ALL.
The clinical trial was conducted at sites in the United Kingdom. The trial enrolled patients with a high tumor burden; 45% of treated patients had 50% or
greater bone marrow blasts. As of the most recent data cut-off date of November 12, 2020, 20 patients received AUTO1; product for 14 of those patients
was manufactured using a semi-automated, fully-enclosed process, which we anticipate using for commercial supply, if approved.
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As of the most recent data recent cut-off date of November 12, 2020, 20 patients in the ALLCAR19 trial had received AUTO1. Based on this
preliminary data, we have observed a manageable safety profile for AUTO1, with no patients experiencing Grade 3 or higher CRS (using the Lee grading
criteria, which is the standard currently adopted by the medical community for grading CRS and enables comparison of clinical trial safety data across
clinical studies) and three patients (15%) experiencing Grade 3 neurotoxicity that resolved with steroids. Of those 20 patients, three patients (15%)
experienced Grade 3 neurotoxicity that resolved swiftly with steroids. We also observed Grade 3 or higher neutropenias in 7 of 20 patients reporting such
neutropenias prior to treatment with AUTO1 and 8 of 17 patients reporting Grade 3 or higher neutropenias 28 days after treatment with AUTO1, with most
resolving by month two or three post-dosing. Of the 20 patients, seven patients died while enrolled in the ALLCAR19 clinical trial, of which two deaths
were determined to be due to progression of the leukemia, one death occurred post progression following infective complication post-transplant and the
four remaining deaths were determined to be due to infectious complications (a common complication of advanced ALL). Of the 19 patients evaluable for
efficacy (patients with at least four weeks follow-up as of the data cut-off date of November 12,2020), 16 patients (84%) achieved minimal residual
disease, or MRD, negative complete responses following AUTO1 infusion At 12 months post-treatment, we observed that the event free survival was 52%
and overall survival was 63%. In the sub-group of patients that were dosed with AUTO1 manufactured using our semi-automated, fully enclosed system for
manufacturing, 13 were evaluable for efficacy. In this sub-group, as of the data cut-off date of November 12,2020, 12 of the 13 evaluable patients (92%)
had achieved MRD-negative complete response. The EFS and OS data are preliminary considering the small number of patients.
In October 2019, we announced that the U.S. Food and Drug Administration, or FDA, granted orphan drug designation for AUTO1 for the treatment
of ALL. We also received IND clearance for our Phase 1b/2 clinical trial in April 2020.
The ALLCAR19 clinical trial has also been expanded to include three additional cohorts with 10 treated patients in each cohort:
Regimen B: r/r DLBCL (including transformed follicular lymphoma, or FL, but not Richter’s transformation
Regimen C: relapsed or refractory B-cell chronic lymphocytic leukemia / small lymphocytic leukemia
Regimen D: relapsed or refractory indolent B-NHL (either FL, mantle cell lymphoma or marginal zone lymphoma)
•
•
•
UCL has also initiated a Phase 1 exploratory trial of AUTO1 in patients with relapsed or refractory Primary CNS Lymphoma, or PCNSL. This trial, named
CAROUSEL (NCT04443829), is expected to initiate enrolment in the first quarter of 2021 and will evaluate the feasibility of generating AUTO1 and
safety of administration in this patient population
Development Strategy for Adult ALL
In 2020, we initiated a multicenter, single-arm Phase 1b/2 trial of AUTO1 in adult patients with relapsed or refractory ALL, or r/r ALL. We refer to
this trial as the FELIX trial. We are planning to recruit patients in the United Kingdom, the United States and Spain, and clinical trial sites are open for
enrollment in the United Kingdom and the United States. Subject to confirmation by regulatory authorities, we hope that this trial may be a registrational
trial in r/r adult ALL population.
The Phase 1b component of the trial is currently enrolling patients. We anticipate progressing to the Phase 2 portion of the trial in the second half of
2021. The Phase 2 cohort will include approximately 90 patients with morphological disease (>5% blasts in the bone marrow at screening), with ORR as
the primary endpoint; and EFS, DOR and MRD negative CR as key secondary endpoints. An exploratory cohort is also planned in the Phase 2 part of this
trial, in which patients with MRD positive disease in morphological remission as well as patients with isolated extramedullary disease will be treated with
AUTO1.
Background of Pediatric ALL
Pediatric B-cell ALL is a type of blood cancer in which the bone marrow makes too many immature lymphocytes (named as lymphoid blasts),
which are a type of white blood cell. According to the American Cancer Society, B-cell ALL is most common in childhood, peaking between two and four
years of age. As per the National Cancer Institute Surveillance, Epidemiology and End Results statistics database, there are approximately 3,400 new cases
of pediatric ALL diagnosed in the United States each year.
The current standard of care for both pediatric and adult B-cell ALL patients is a standard regimen of combination chemotherapy. Pediatric patients
typically respond well to the complex first-line chemotherapy treatment. According to the American Cancer Society, the five-year survival rate for children
with B-cell ALL is more than 85% overall. However, 10 to 20% of pediatric B-cell ALL patients relapse with chemotherapy-resistant disease. These
patients are re-treated with intensive chemotherapy, and those that respond may proceed to receive an allogenic stem cell transplant, or SCT. However, SCT
can be associated with significant long-term morbidity due to the risk of developing graft-versus-host disease, or GVHD, and treatment-related mortality,
although the risk of death have declined with better post-transplant management.
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Patients with high-risk clinical or genetic features including gene abnormalities, as well as those who have an inadequate response to initial
chemotherapy, may not respond well with the current available treatments for B-cell ALL (including SCT), some of these patients will have a five-year OS
rate of approximately 15%. Additionally, long-term survival rates are only approximately 10 to 20% among patients receiving a second SCT and negligible
in those unable to proceed to a second transplant.
There is still a significant unmet medical need in pediatric patients with high-risk relapsed or refractory B-cell ALL. CD19 CAR T cell therapies
have been developed for these patients. The approved CD19 CAR T therapy showed approximately 80% of complete molecular response rate. However, at
six months after treatment, approximately 40% of the patients relapsed and the majority of the relapses were CD19 negative disease. In fact, in one study of
CD19-targeting Kymriah treatment, approximately two-thirds of relapses were determined to have been due to loss of CD19 on the target cells.
CD19 CAR T cell therapies have been tested in pediatric ALL patients and have shown sustained responses without allo-HSCT. In adult ALL,
however, one of the major challenges has been severe toxicity, including death due to CAR T cell-mediated toxicity observed in the clinical trials of these
products. AUTO1 has been designed to reduce toxicity but still sustain durable CRs, and we believe it has the potential to become a standalone therapy for
adult ALL.
AUTO1 Phase 1 Clinical Trial in Pediatric ALL (CARPALL Trial)
The CARPALL trial was initiated by UCL in the second quarter of 2016 and is a single-arm, open label, multi-center Phase 1 trial enrolling patients
aged 24 years or younger with high-risk relapsed or refractory CD19 positive B-lineage ALL. The main objective of the trial is to evaluate the safety and
efficacy of AUTO1 when administered at a single dose of 1 million cells/kg. The trial has completed enrollment with AUTO-1. However, the extension
arm is now open, and treating pediatric ALL patients with AUTO 1/22 (previously designated AUTO1NG).
As of the data cut-off date of November 22, 2019, the trial has enrolled a total of 25 patients, in two cohorts; one cohort utilized a manual
manufacturing process (cohort 1) and one cohort utilized a semi-automated fully enclosed manufacturing process (cohort 2). Product was generated for 14
of 17 patients in cohort 1 and the median follow-up for the 14 treated patients was 23 months. Seven patients were treated in cohort 2. The aim of cohort 2
was to increase feasibility of manufacture at scale; one patient died before infusion and product was generated for 100% of patients. Median follow-up for
patients in cohort 2 was seven months.
None of the patients experienced Grade 3 or higher CRS and one patient out of 21 (5%) experienced Grade 4 neurotoxicity, which was deemed
more consistent with fludarabine than CAR-associated neurotoxicity. Two patients experienced Grade 5 sepsis and death, one in the context of progressive
disease and the second was considered related to AUTO1. This patient was in MRD-negative CR and had ongoing Grade 4 cytopenia associated with
resistant HSV encephalitis. 13 patients experienced Grade 4 cytopenias that were ongoing at day 28. Nineteen of 21 treated patients (90%) achieved
molecular complete remission at post-infusion. Consistent with preclinical results, CAR T cell expansion and persistence was excellent and CARs were
detectable by flow for up to 36 months in four of the patients in cohort 1 who had ongoing responses beyond 12 months. Persistence was noted in 15 of 21
patients at last follow-up, up to 36 months. All of the patients in cohort 2 achieved molecular complete remission at one month post-infusion.
For cohort 1, with a median follow-up of 23 months, the overall survival at six and 12 months was 86% and 71%, respectively, and event-free
survival at six and 12 months was 71% and 54%, respectively. In cohort 2, at a median follow-up of 7 months, five patients remain in complete molecular
remission and two patients relapsed. Five of eight evaluable relapses in cohort 1 and cohort 2 combined were due to CD19 negative escape.
AUTO1/22
We commenced a Phase 1 clinical trial in pediatric patients with relapsed or refractory ALL with our next-generation product candidate, AUTO1/22
(previously designated AUTO1NG) in the fourth quarter of 2020. AUTO1/22 is a dual-targeting CAR-T which builds on the AUTO1 approach utilizing the
same CD19 CAR, alongside a novel CD22 CAR designed to reduce antigen negative relapse of disease. We expect to report initial data from this trial in the
fourth quarter of 2021.
AUTO3: Our Programmed T Cell Therapy for the Treatment of Pediatric ALL and Adult DLBCL
Introduction to AUTO3
AUTO3, the first dual-targeting programmed T cell product candidate that targets B cell antigens CD19 and CD22, is being explored for the
treatment of pediatric patients with relapsed or refractory B-cell ALL, as well as the treatment of adult patients with DLBCL.
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By simultaneously targeting both B cell antigens, we believe the novel molecular design of AUTO3 addresses a major limitation of current CAR T
cell products that target only CD19 or CD22; the loss or downregulation of the target antigen on the surface of the cancer cell, which is the main cause of
disease relapse after single targeting CAR T-cell therapy.
AUTO3 Phase 1/2 Clinical Trial in Pediatric ALL (AMELIA Trial)
We initiated a single-arm, open label, multi-center Phase 1/2 clinical trial of AUTO3 in patients up to 24 years of age with high-risk relapsed or
refractory B-lineage ALL in the third quarter of 2017. We refer to this trial as the AMELIA Trial. We presented final results from this clinical trial in
January 2021, with a data cut-off date of July 29, 2020.
6
Twenty-three patients were screened in this trial, and product was generated in 19 of 20 (95%) patients who underwent leukapheresis and a total of 15
patients received infusion of AUTO3. AUTO3 has been observed to have a manageable safety profile, with no patients experiencing Grade 3 or higher
CRS. One patient treated in the low dose (0.3 x10 /kg) had Grade 3 encephalopathy which was considered likely related to prior intrathecal methotrexate.
The majority of Grade 3 or higher adverse events were determined to be hematological in nature. No patient deaths have been determined to be related to
AUTO3. The rate of complete response/complete response with incomplete bone marrow recovery (CR/CRi) and Minimal Residual Disease (MRD)-
Negative Response in the Bone Marrow (PCR)) was 87% (13/15) at month 1 after AUTO3 infusion. Two patients did not respond to the treatment. As of
the data cut-off (29-Jul-2020), 9 patients ultimately had morphological relapse. The majority of the relapses (6 of 9 patients) were CD19-positive/CD22-
positive disease associated with a lack of long-term CAR T cell persistence. The median morphological EFS was 4.9 months (95% CI: 1.64, 12.42). The
most common cause of relapse was due to the absence of CAR T cell persistence. Three of the 9 disease relapses were CD19-negative (including 1 patient
with CD22-positive disease relapse, 1 patient with low expression of CD22, and 1 patient with both antigens lost: CD19-negative/CD22-negative disease
relapse). The 1 case with CD22-negative disease relapse and the 1 disease relapse with downregulation of CD22 expression confirms the activity of the
CD22 CAR in the AUTO3 construct. Based on this small number of 15 patients, 1-year OS is 60%, in the pediatric and young adult relapsed/refractory B-
cell ALL setting.
Development Strategy for Pediatric ALL
In September 2019, we reported that we would not be continuing development of AUTO3 in pediatric B-cell ALL but instead will continue
development in a pediatric setting with AUTO1 in the form a Pediatric Investigational Program, required by the European Medicines Agency, or EMA, and
with AUTO1/22, a next generation version of AUTO1, which incorporates the CD19 CAR of AUTO1 and a novel CD22 CAR. We initiated clinical
development of AUTO1/22 in 2020.
Background of DLBCL
Non-Hodgkin lymphoma, or NHL, consists of a diverse group of malignant neoplasms. According to the American Cancer Society, DLBCL is the
most common subtype of NHL, accounting for approximately one-third of the approximately 72,000 adult NHL patients diagnosed in 2017 in the United
States. DLBCL arises from a mature B cell that generally express CD19 and CD22 antigens on the surface. DLBCL is classified as an aggressive
lymphoma, in which survival is measured in months rather than years.
First-line therapy usually consists of a chemotherapy regimen known as R-CHOP, which combines the monoclonal antibody rituximab with the
drugs cyclophosphamide, doxorubicin, vincristine and prednisone. Approximately 50% to 60% of DLBCL patients are cured with first-line therapy and do
not have recurrence of their lymphoma.
For patients who relapse or are refractory to first-line therapy, the current standard of care for second-line therapy consists of a platinum-based
chemotherapy regimen with rituximab. These second-line chemotherapy regimens are either R-ICE, consisting of rituximab, ifosfamide, carboplatin and
etoposide, or R-DHAP, consisting of rituximab, dexamethasone, cytarabine and cisplatin. Patients who respond to second-line therapy may go on to receive
autologous hematopoietic stem cell transplantation, or HSCT. Patients who are not candidates for HSCT or those who do not respond to second-line
therapy or who relapse after HSCT are typically treated with a third-line salvage chemotherapy. These patients have a poor prognosis, and treatment is
generally palliative to try to prevent further cancer growth without the intent to cure.
Indolent lymphomas account for 40% of all NHL cases. The subtypes of indolent lymphoma, including follicular lymphoma and others, initially
respond well to chemotherapy or antibody therapy, or a combination of both. However, in patients with progressive disease or relapse after CR, there is no
defined standard of care, and such patients are generally encouraged to participate in clinical trials whenever possible. Relapsed patients who are
symptomatic or need treatment are usually treated with chemotherapy, which is unfortunately not curative. Additionally, a minority of these patients are
eligible to receive HSCT, which provides long-term disease free survival in some cases.
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AUTO3 Phase 1/2 Clinical Trial in Adult DLBCL (ALEXANDER Trial)
We have designed AUTO3 to address limitations of current therapies for DLBCL. Simultaneous targeting of both CD19 and CD22 antigens is
designed to reduce CD19 antigen negative disease relapses observed in one-third of the patients relapsing after treatment with Yescarta. Our clinical trial
design also includes the administration of three doses of an anti-checkpoint inhibitor, designed to address tumor relapse due to upregulation of checkpoints
in DLBCL patients treated with CAR T cell therapy. We are initially developing AUTO3 as a third-line therapy for DLBCL.
In September 2017, we initiated a single-arm, open label, multi-center Phase 1/2 clinical trial of AUTO3, which included a cohort of patients
receiving AUTO3 followed by limited duration of consolidation with the anti-PD-1 antibody pembrolizumab in adult DLBCL patients who have
chemotherapy-refractory disease or with relapsed disease after two lines of prior therapy. We refer to this trial as the ALEXANDER Trial. We have
completed the Phase 1 dose escalation portion of the trial and have declared a RP2D along with feasibility of use in the outpatient setting.
As of the October 30, 2020 data cut-off date, 49 patients in the ALEXANDER trial have been treated and were evaluable for safety. Across all
dose levels, 43 patients were evaluable for efficacy, with an objective response rate (ORR) of 65% and a CR rate of 51%. Of the 29 evaluable patients
receiving the recommended Phase 2 dose (a dose of ≥ 150 x 10 cells) and pre-conditioning with pembrolizumab at Day -1, the ORR was 66% and the CR
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rate was 55%. A subsequent analysis of these data suggested a superior response rate at higher dose levels, with 15 evaluable patients treated at 450 x 10
cells achieving an ORR of 87% and a CRR of 73%. Across all cohorts in the trial, 73% (16/22) of patients achieving a CR were without disease
progression at a median follow up of 4 months (1 – 24 months). AUTO3 was observed to be well tolerated, with low rates of cytokine release syndrome
(CRS) and neurotoxicity (NT). Across all 49 patients, there was only one case of Grade 3 CRS with primary infusion, and only three cases of NT were
reported, with two being ≥ Grade 3. None of the patients achieving a complete response (CR) experienced any NT and all cases of NT were observed in a
setting of disease progression and with confounding factors and minimal or undetectable CAR T cells in peripheral blood. No prophylactic measures of any
kind have been used to manage CRS or NT in this study. Two patients had death possibly related to AUTO3. One in the setting of disease progression and
multiorgan failure and other due to infection in a patient with secondary hemophagocytic lymphohistiocytosis.
6
The majority of patients receiving AUTO3 in the outpatient setting did not require hospital admission. Those patients admitted were managed,
without requiring ICU care. Combined with the overall favorable tolerability data across the Phase 1 trial, the profile of AUTO3 supports administration in
an outpatient setting.
Development Strategy for Adult DLBCL
We have completed enrollment of patients in the Phase 1 part of this trial and plan to seek a partner for the before committing to further
development of this program.
AUTO4: Our Programmed T-Cell Lymphoma Program
Introduction to AUTO4
We are developing a programmed T cell product candidate, AUTO4, as a potential treatment for T-cell lymphomas. We are developing this product
candidate with a unique targeting approach that is designed to avoid the severe immunosuppression typically associated with the current investigational
CAR T-cell therapies which uses a pan t-cell antigen. for this disease.
T cells have one of two functionally identical genes, known as TRBC1 and TRBC2. A normal/healthy T cell population contains a mix of cells
expressing either TRBC1 or TRBC2. Both forms are active and provide the body with natural immunity, including antiviral immunity. Because T-cell
lymphomas are clonal tumors that develop from a single T cell, they are either entirely TRBC1-positive or entirely TRBC2-positive. Currently available
products for the treatment of T-cell lymphoma indiscriminately target all T cells, leading to the severe immunosuppression associated with these treatments.
We have designed AUTO4 as a programmed T cell to specifically target and deplete cells expressing TRBC1, while preserving healthy T cells that
express TRBC2. A normal T cell population consists of varying amounts of TRBC1-positive and TRBC2-positive T cells. Based on the typical distribution
of TRBC1-positive and TRBC2-positive T cells, we believe that patients treated with AUTO4 should be left with a population of healthy, functional
polyclonal T cells, which provides the immune system of these patients the ability to respond to bacterial and viral infections and other pathogens. In
addition, this product candidate will have a built-in safety switch designed to eliminate the programmed CAR T cells in the event a patient suffers certain
serious adverse events related to the CAR T cell therapy, such as CRS or neurotoxicity.
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Companion Diagnostic for AUTO4
We are developing a proprietary diagnostic test to distinguish the T-cell lymphoma which express the clonal TRBC1-positive T cells versus the
clonal TRBC2-positive T cells. When a patient presents with T-cell lymphoma, this diagnostic is designed to test the patient’s tumor to assess whether the
tumor is TRBC1-positive or TRBC2-positive, which will determine whether the patient is potentially a candidate to receive AUTO4.
Background of T-Cell Lymphoma
Mature T cell lymphomas are aggressive, treatment resistant malignancies that are associated with poor prognosis. Clinical application of
immunotherapeutic approaches has been limited by a lack of target antigens that discriminate malignant from healthy/polyclonal T cells. T-cell lymphoma
is a rare and heterogeneous form of NHL, representing approximately 10 to 20% of NHL cases and 3 to 4% of all hematological malignancies. Most T-cell
lymphomas are peripheral T-cell lymphomas, (PTCL), the initial indication for which we are developing AUTO4. We estimate that PTCL affects
approximately 2,900 patients in the United States each year. PTCL generally involves high-grade tumors and occurs at a similar age as aggressive B cell
lymphomas, with a relatively high proportion of patients becoming rapidly unwell. For the majority the PTCL subtypes, the five-year survival rate may
range from 18% to 24%. The three most common subtypes of PTCL are peripheral T-cell lymphoma not otherwise specified, or PTCL-NOS, anaplastic
large-cell lymphoma, or ALCL, and angioimmunoblastic T-cell lymphoma, or AITL, together accounting for approximately 70% of all PTCLs in the
United States.
The first-line treatment for PTCL consists of the combination chemotherapy (e.g CHOP, consisting of cyclophosphamide, vincristine, doxorubicin
and prednisolone). However, CHOP chemotherapy, complete response rates are low and disease relapse is common. In many treatment centers, CHOP
chemotherapy may be consolidated with autologous or allogenic stem cell transplantation in selected patients.
Little is understood in terms of treatment guidance for the other PTCL subtypes and these lymphomas lack clear treatment guidelines. A large
proportion of T-cell lymphoma patients are refractory to or relapse following treatment with standard therapies and there remains a need to develop an
effective therapy for this currently unmet medical need.
Unlike B cell lymphomas, T-cell lymphomas have not benefited from advances in immunotherapeutic approaches. This is mainly due to the lack of
therapeutic development in T-cell lymphomas to identify suitable target antigens to distinguish malignant T cells from normal/polyclonal T cells. While a
similar problem exists with B cell lymphomas, targeting a pan B cell antigen is an acceptable strategy, as the concomitant depletion of the normal B cell
compartment is well tolerated, and some targeted approaches may be ameliorated by the administration of immunoglobulin. In contrast, targeting a pan T
cell antigen would result in severe immunosuppression, where there is currently no available rescue medication. Some competitors that are pursuing this
approach are planning to use CAR T-cells therapy as a bridging to SCT. However, this approach would only benefit the transplant eligible patients who
may not be the majority of the T-cell lymphoma patients. There is currently no programmed T cell therapy that is being developed as a standalone
treatment.
Clinical Development of AUTO4
Because AUTO4 represent a novel approach to treating T-cell lymphomas, our development strategy for these product candidates is based on
initially commencing a Phase 1/2 clinical trial of AUTO4 for the treatment of TRBC1-positive T-cell lymphoma.
Phase 1/2 Clinical Trial of AUTO4
In the fourth quarter of 2018, we began enrolling patients in a single-arm, open label, multi-center Phase 1/2 clinical trial, Libra T1, in patients with
TRBC1 positive PTCL-NOS, AITL and ALCL, the three most common subtypes of PTCL, for which patients have failed, or have relapsed disease
following, at least one prior therapy. We have received approval from the Medicines and Healthcare products Regulatory Agency (2018) and Spanish health
authority (2020), to begin enrollment and we are in the process of enrolling patients. We refer to this trial as the LibrA-T1 trial, which will initially be
conducted at sites in the United Kingdom and Spain. Patients are screened for TRBC status of tumor cells using a CE-marked next-generation sequencing
(NGS) method prior to full enrollment in the trial. Provided that data from the initial patients in the UK and Spain in the trial is satisfactory, we intend to
submit an IND and initiate additional sites for this trial in the United States.
The main objective of the Phase 1 portion of the trial is to evaluate the safety of AUTO4 and to determine a recommended dose for the Phase 2
portion of the trial. The main objective of the Phase 2 portion will be to further evaluate the safety of the treatment and evaluate efficacy endpoints, such as
overall response rate and complete response rate.
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We have designed the trial to evaluate up to three dose levels of AUTO4, beginning with a low dose of 25 million AUTO4 cells in cohorts of three
to six patients. Assuming that we do not observe any DLT, the dose escalation phase of the trial will continue to higher doses of 75 million AUTO4 cells
and 225 million AUTO4 cells/. We expect that we will enroll a total of up to 25 patients in the Phase 1 portion of the trial. Once a recommended phase 2
dose has been identified in the Phase 1 portion of the trial, we intend to treat up to 30 patients in the Phase 2 portion of the trial. In parallel with clinical
development, the companion diagnostic will be developed to enable use within a potential pivotal trial and commercialization.
Development Strategy for AUTO4
Based on our expected enrollment rates for the trial, we anticipate generating clinical proof of concept data in 2021. If the preliminary efficacy data
is positive, we intend to convert the Phase 2 portion to a potential registrational trial, subject to discussions with regulatory authorities. The final number of
patients to be enrolled in the trial, specific endpoints and other aspects of the design of the trial will be determined based on feedback from regulatory
authorities. If the safety and efficacy data from the Phase 2 portion of the trial are positive, we plan to submit a BLA forAUTO4 as a second-line therapy
for TRBC1-positive T-cell lymphoma patients.
Our Solid Tumor Programs
Solid tumors present a particular challenge to CAR T cell therapies, since solid tumors tend to fend off T cells with upregulation of checkpoint
inhibition and a hostile microenvironment. In addition, contrary to hematological cancer cells that are readily accessible to programmed T cells in the
circulating blood of a patient, solid tumors are more difficult for programmed T cells to track down in sufficient numbers to impact the disease. In addition,
the persistence of programmed T cells tends to be limited, which also leads to a reduced effect on solid tumor cells. In addition to the programs we are
currently pursuing described below, we intend to continue to evaluate other possible solid tumor indications.
AUTO6: Our Neuroblastoma Program
Introduction to AUTO6 and AUTO6NG
We have been granted an exclusive, worldwide license under our license agreement with UCLB to AUTO6 (1RG-CART), a programmed T cell
product candidate targeting the glycosphingolipid GD2. CRUK has completed an exploratory Phase 1 clinical trial of AUTO6 in pediatric patients with
neuroblastoma. We are developing a next-generation product candidate, which we refer to as AUTO6NG, incorporating additional programming modules
designed to improve efficacy, safety and persistence of AUTO6. We expect to initiate two Phase 1/2 clinical trials of AUTO6NG, with the first clinical trial
expected to commence in 2021.
Background of Neuroblastoma
Neuroblastoma is a cancer that develops from immature nerve cells found in several areas of the body, and most commonly arises in and around the
adrenal glands, which have similar origins to nerve cells and sit atop the kidneys. However, neuroblastoma can also develop in other areas of the abdomen
and in the chest, neck and near the spine, where groups of nerve cells exist. Neuroblastoma most commonly affects children age five or younger, though it
may rarely occur in older children. According to the American Cancer Society, there are approximately 700 new cases of neuroblastoma each year in the
United States.
Preclinical Studies of AUTO6
In preclinical in vitro studies, AUTO6 selectively, effectively and efficiently killed GD2-expressing tumor cells while sparing cells that did not
express GD2. In addition, the RQR8 safety switch activation by rituximab was tested in vitro, where the addition of rituximab was shown to activate the
safety switch and eliminate the programmed T cells from the culture, and residual cells did not possess any intrinsic anti-GD2 activity. This safety switch
activation was also observed in vivo in a mouse model, where the murine analogue of rituximab was able to deplete the GD2-targeting programmed T cell
product candidate from the bone marrow, blood, lymph node and spleen of animals that had previously been engrafted with programmed T cells.
In November 2019, we reported preclinical data of AUTO6NG. AUTO6 had previously shown clinical responses in two of our patients treated at
the highest dose without inducing neurotoxicity in pediatric patients with relapsed/refractory neuroblastoma. Building on AUTO6, in AUTO6NG we
introduced additional programming modules in order to help the programmed T cells persist in and withstand the hostile tumor microenvironment.
AUTO6NG is a programmed T cell therapy incorporating the GD2-targeted CAR T and RQR8 safety switch from AUTO6 but also incorporating three
additional programming modules: (i) an IL7 chimeric cytokine receptor designed to increase persistence, (ii) a dominant negative TGFbRII protein
designed to block inhibitor signals from TGFb and (iii) a truncated SHP2 protein designed to block inhibitor signals from PD1. These modules are
delivered, or transduced, into the T cells via two viral vectors. Both single- and dual-transduced CAR T cells were evaluated in vitro for anti-tumor
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activity, cytokine secretion, T cell proliferation, survival, and resistance to immunosuppressive pathways. The addition of these three modules in the
AUTO6NG product candidate significantly augmented its function by extending T cell persistence and rendering modified T cells resistant to TGFb- and
PD1/PDL1-driven immune inhibition when compared to AUTO6 in vitro. Additionally, intravenous delivery of AUTO6NG in mice with established tumor
burden exhibited potent anti-tumor activity and extended survival, whereas AUTO6 showed no activity in that model.
We presented new preclinical data for AUTO6NG in June 2020 at the American Association for Cancer Research (AACR) Virtual Annual Meeting.
GD2 was evaluated as a therapeutic CAR-T target antigen in Small Cell Lung Cancer (SCLC). AUTO6 alone has demonstrated efficacy in an in vitro
SCLC model, but successful tumor targeting alone was not sufficient to drive meaningful in vivo efficacy in the same SCLC model. Autolus has presented
new preclinical data demonstrating the ability to target GD2 in SCLC cell line models in vitro, and the requirement for enhancing modules, designed to
overcome TME suppressive mechanisms, to drive superior in vivo efficacy in a SCLC mouse model. The data suggests that AUTO6NG can overcome the
immune suppressive mechanisms in the TME
We believe these data support the continued development of AUTO6NG, and we expect to initiate the first of two planned Phase 1/2 clinical trials
of AUTO6NG in the first half of 2021.
Phase 1 Dose Escalation Trial of AUTO6 by CRUK in Relapsed or Refractory Neuroblastoma
In the first quarter of 2016, CRUK initiated a single-arm Phase 1 dose escalation trial of AUTO6 in relapsed or refractory neuroblastoma at two
pediatric cancer centers in the United Kingdom. The trial evaluated the safety profile of AUTO6. The Phase 1 trial is also evaluating escalating intensity of
the pre-conditioning regimen along with AUTO6 dose escalation. CRUK plans to enroll 15 to 27 patients in this trial.
As presented at the Annual Meeting of the American Association for Cancer Research in April 2018, twelve patients with relapsed or refractory
neuroblastoma with measurable disease in bone (n=11), bone marrow (n=7) or soft tissue sites (n=9) have been enrolled in the trial. Ten patients have been
treated, with the first six patients receiving a dose of 10 million AUTO6 cells/m , four without preconditioning, one with cyclophosphamide alone and one
with a combination of cyclophosphamide and fludarabine, or cy/flu. A further three patients were treated with a dose of 100 million AUTO6 cells/m with
cy/flu preconditioning. In the next cohort, a further patient was treated with a dose of one billion AUTO6 cells/m with cy/flu preconditioning. The trial is
2
continuing to enroll patients at the dose of one billion AUTO6 cells/m .
2
2
2
Updated findings published in Science Translational Medicine suggest that AUTO6 can induce rapid regression of bulky disease in a solid tumor
setting without inducing on-target off-tumor toxicity, despite dose dependent CAR T expansion. CAR T cell expansion has been observed in all six patients
treated at the higher cell dose cohorts in this Phase 1 study. Three of these six patients demonstrated evidence of transient CAR T cell activity, including
cytokine release syndrome, and regression of soft tissue and bone marrow disease activity. The GD2 binder used in AUTO6 has been designed to minimize
on-target off-tumor neurotoxicity associated with GD2 expression at low levels in pain fibers and the brain. Despite the presence of clear CAR T cell
activity, no neurotoxicity was observed. The publication also suggests that, whilst AUTO6 is a valid and safe strategy for targeting neuroblastoma, further
modifications are required to promote CAR T cell persistence and induce deeper and more durable responses for these patients.
Clinical Development Strategy of AUTO6NG
Based on preliminary data from proof-of-concept in CRUK’s ongoing Phase 1 clinical trial, we believe it is possible to safely target GD2-expressing
cancers or tumors with a CAR. We are currently developing a next-generation T cell product candidate, which we refer to as AUTO6NG, which builds on
AUTO6 by incorporating additional programming modules intended to enhance the efficacy, safety and persistence of AUTO6.
Because GD2 is expressed in numerous pediatric and adult tumors including neuroblastoma, osteosarcoma, soft tissue sarcoma, melanoma,
astrocytoma and small cell lung cancer, or SCLC, our clinical development strategy is to develop AUTO6NG in parallel in neuroblastoma and in additional
indications. To that end, we are planning to initiate two Phase 1/2 clinical trials of AUTO6NG. The first trial will be in adult patients and is expected to
commence in the first half of 2021, and the second trial will be in pediatric patients and is expected to commence in the second half of 2021.
In the first planned Phase 1/2 clinical trial, we plan to enroll pediatric patients with relapsed or refractory neuroblastoma and osteosarcoma.
Osteosarcoma is the most common type of bone cancer in children and teens, with approximately 800 to 900 new cases diagnosed each year in the United
States, the majority of which will be GD2 positive. Following evaluation of safety and selection of the recommended Phase 2 dose, we plan to initiate the
three-arm Phase 2 portion of the clinical trial, which will enroll patients with neuroblastoma, osteosarcoma and other GD2-positive tumors, respectively, in
each individual arm of the trial. If the preliminary efficacy data from the Phase 2 portion of the trial based on appropriate criteria for individual tumor types
is positive in one or more arms, we intend to discuss with the FDA the possibility of converting the Phase 2 portion into a registrational trial, with separate
arms
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for each indication. The final number of patients to be enrolled in the trial and endpoints for each individual indication will be determined based on
feedback from regulatory authorities.
In our second planned Phase 1/2 trial, we intend to enroll adult patients with metastatic melanoma, SCLC and other GD2-positive malignancies and
who have received at least one prior therapy. The timing of this trial will be staggered with the first Phase 1/2 clinical trial in order to incorporate learnings
from the early dose cohorts of pediatric patients. We anticipate that prior to initiation of this second Phase 1/2 clinical trial, a diagnostic assay for GD2
assessment may be needed. Melanoma is one of the most common types of cancer, with approximately 90,000 new cases diagnosed each year in the United
States. SCLC accounts for about 10-15% of all lung cancer cases, with 30,000 new cases diagnosed each year in the United States. It has been reported that
approximately half of the patients are positive for the GD2 antigen. Following selection of the recommended Phase 2 dose, we plan to initiate the three-arm
Phase 2 portion of the clinical trial, which will enroll patients with melanoma, SCLC and other GD2-positive tumors, respectively, in each individual arm
of the trial. If the preliminary efficacy data such as overall response rate from the Phase 2 portion of the trial is promising in one or more arms, we intend to
discuss with the FDA the possibility of converting the Phase 2 portion into a registrational trial, with separate arms for each indication. The final number of
patients to be enrolled in the trial and endpoints for each individual indication will be determined based on feedback from regulatory authorities.
AUTO7—Our Prostate Cancer Program
We are in preclinical development of AUTO7, a programmed T cell product candidate designed to target and treat prostate cancer. According to the
American Cancer Society, other than skin cancer, prostate cancer is the most common cancer in American men, with approximately 165,000 new cases
diagnosed each year. This program incorporates enhanced safety modules including our small molecule mediated safety switch and enhanced T cell activity
modules that we are developing to overcome the immuno-suppressive effects of the tumor micro-environment and enhance T cell persistence. We have
incorporated a technology in AUTO7 that is designed to deliver a cytokine signal directly inside our programmed T cells. This cytokine persistence signal
is further enhanced by engagement with antigens secreted by the tumor.
We presented new preclinical data for AUTO7 in June 2020 at the American Association for Cancer Research (AACR) Virtual Annual Meeting.
The preclinical data demonstrate that AUTO7 is highly potent in cytotoxicity assays against cells expressing PSMA, even at low levels, and demonstrate
the feasibility of this multi-modular cell programming approach in overcoming the immunotherapeutic challenges presented by advanced prostate cancer,
which is typically otherwise an immunologically cold tumor.
We intend to initiate our clinical development of AUTO7 in H1 2022. We anticipate starting a Phase 1/2 trial in patients with metastatic castration-
resistant prostate cancer to evaluate the safety and identify the optimum Phase 2 dose of AUTO7 in the Phase 1 part of the trial and preliminary efficacy in
the Phase 2 portion of the trial.
Partnerable Coronavirus Disease (COVID-19) Project
Our research team has developed a potentially universal SARS-CoV2 decoy receptor with virus neutralizing activity against SARS-CoV2 and its
variants, and also active against SARS-CoV1.
Manufacture and Delivery of Programmed T Cell Therapies to Patients
We are devoting significant resources to process development and manufacturing in order to optimize the safety and efficacy of our product
candidates, as well as to reduce our per unit manufacturing costs and time to market if we obtain regulatory approval for any of our programmed T cell
product candidates.
The manufacture and delivery of programmed T cell therapies to patients involves complex, integrated processes, including harvesting T cells from
patients, manufacturing viral vectors with nucleic acid content encoded with our programming modules, manufacturing programmed T cells using the viral
vectors ex vivo, multiplying the T cells to obtain the desired dose, and ultimately infusing the T cells back into a patient’s body.
Commercial success in T cell therapies requires a manufacturing process that is reliable, scalable and economical. We have established a
manufacturing process that is scalable and serves as a manufacturing platform designed to support rapid development of our programmed T cell therapy
product candidates through clinical trial phases and regulatory approval processes. We are using a semi-automated, fully enclosed system for cell
manufacturing, which is designed to provide a common platform suitable for manufacturing all of our product candidates. This platform allows for parallel
processing having the ability to scale for commercial supply in a controlled environment at an economical cost. We have improved our viral vector
production and viral transduction process to reduce process variability.
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Our manufacturing and logistics process is designed to ensure that product integrity is maintained during shipment along with accurate tracking and
tracing of shipments. We are expanding internal manufacturing and supply capabilities as well as the use of expert service providers on maturing our vein-
to-vein logistics and our gradual capacity expansion.
Our manufacturing and commercialization strategy requires a fully integrated vein-to-vein product delivery cycle. We believe having established
manufacturing processes suitable for commercialization early in the development of our T cell therapies will allow us to focus on expanding manufacturing
capacity during our clinical trials and early commercial launch needs. Over time, we expect to establish regional manufacturing hubs to meet projected
product requirements for commercialization. We believe that anticipated future commercial requirements can be met. Our plan is to establish our
manufacturing infrastructure in a manner that would ameliorate logistics complexities and costs for all regions on initial commercial launch.
We believe our scalable closed-system manufacturing process, along with our proprietary and modular T cell programming technologies, would be
challenging and costly for potential competitors to replicate.
Manufacturing Agreements
We have manufacturing agreements with King’s College London for early phase vector manufacturing. Autolus also has an internal capability to
produce vector for early and late-stage trials. Additionally, we have also established an agreement with AGC Bio for late stage clinical and commercial
supply of vector. All vector manufacturing is done in accordance with Current Good Manufacturing Practice, or cGMP, in compliant manufacturing
facilities. The manufacturing agreements governing the external supply arrangements also provide for access to services including quality management
systems, qualified persons for product release, office space, frozen storage and warehousing services.
We have established our cell and vector manufacturing capacity at the Cell and Gene Therapy Catapult in Stevenage, United Kingdom. We have 2
cell manufacturing suites capable of supporting clinical and early stage commercial launch. We also have a vector production suite capable of supplying
clinical supplies. The Cell and Gene Therapy Catapult provides for access to architecturally and operationally segregated manufacturing suites. This facility
approach has been reviewed and approved by the MHRA. This operational approach has also been reviewed with the FDA.
In March 2018, we entered into a strategic, long-term supply agreement with Miltenyi Biotec GmbH, or Miltenyi, for the supply of Miltenyi’s
CliniMACS Prodigy instruments, reagents and disposables for the manufacture of our programmed T cell therapies for preclinical and clinical use and, if
approved, for commercial use, as well as support services. The supply agreement sets forth procedures to ensure continuity of supply to us of Miltenyi’s
products, both during the clinical phase and any future commercial phase of our product candidates. After the initial ten-year term of the agreement, we
have two separate options to renew the agreement, each for an additional five-year term. The supply agreement contains customary termination provisions,
allowing for termination by a party upon the other party’s uncured material breach, upon the other party’s bankruptcy or insolvency or upon the other party
being subject to an extended period of force majeure events. We may also terminate the supply agreement upon advance written notice, if we decide to
suspend or discontinue the development or commercialization of our product candidates. The supply agreement is governed under the laws of Germany.
Commercialization
Given our stage of development, we have not yet established a commercial infrastructure or distribution capabilities. We are developing our
clinical-stage programs for the treatment of patients with late-stage or rare hematological cancers and solid tumors, most of whom are treated in specialized
treatment centers or hospitals. With our experience in gene therapy, transplantation and oncology, we aim to provide high levels of service and scientific
engagement at these treatment centers, and to pilot and establish systems necessary for product delivery by the time of launch. We believe this approach
will require less investment in commercial infrastructure compared to the current standard of care. By focusing on these centers, we can begin to build our
commercialization capabilities with limited resources.
We have retained worldwide commercial rights for our product candidates. We currently plan to build our global commercialization capabilities
internally over time such that we are able to commercialize any product candidate for which we may obtain regulatory approval. We may selectively pursue
strategic collaborations with third parties in order to maximize the commercial potential of our product candidates. We generally expect to launch any of
our products that receive regulatory approval in the United States first, followed by the European Union and subsequently in other major markets. For
AUTO1, we may look to commercialize first in markets outside the United States, if any, where we receive regulatory approvals, with a launch following
regulatory approval in the United States occurring after the earlier of either the expected expiration of any applicable third-party patents covering AUTO1
that expire between 2023 and 2025, the invalidation of such patents or the receipt of a license to such patents on commercially reasonable terms. See “Risk
Factors–Risks Related to our Intellectual Property–Third parties may initiate legal proceedings alleging that we are infringing their intellectual property
rights, the outcome of which would be uncertain and could significantly harm our business.”
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Intellectual Property
Intellectual property is of vital importance in our field and in biotechnology generally. We seek to protect and enhance proprietary technology,
inventions and improvements that are commercially important to the development of our business by seeking, maintaining and defending patent rights,
whether developed internally or licensed from third parties. We will also seek to rely on regulatory protection afforded through orphan drug designations,
data exclusivity, market exclusivity and patent term extensions where available.
Our intellectual property estate, which includes in-licensed intellectual property and intellectual property that we own, is designed to provide
multiple layers of protection. For example, we are pursuing patent protection for core constructs used in our product candidates, various methods of
treatment for particular therapeutic indications using our approach, specific product candidates, innovative manufacturing processes, and constructs that
may be used in future product candidates to improve the ability of our programmed T cells to better recognize and kill cancer cells. A portion of our patent
portfolio is directed to certain current product candidates or technologies deployed in certain product candidates, and the remainder of the portfolio is
directed to alternative approaches, technologies or modules that are not currently deployed in our current product candidates.
As of December 31, 2020, our patent portfolio is comprised of 96 patent families, of which 25 patent families originated from UCLB, the technology-
transfer company of UCL, 3 patent families are in-licensed from Noile-Immune Biotech, Inc., and 68 patent families we own and have originated from our
own research. Of the 25 patent families that were originally in-licensed from UCLB, 24 have now been assigned to Autolus under a Deed of Assignment
dated 15 October 2020. We believe that our current patent portfolio, together with our ongoing efforts to develop and patent new technologies, will provide
us with substantial intellectual property protection for our product candidates and other technologies that are not currently deployed in our product
candidates.
Commercially or strategically important non-U.S. jurisdictions in which certain patent applications that we have in-licensed are currently pending
include: Europe, Australia, Canada, Japan, China, Brazil, Chile, Israel, India, Republic of Korea, Hong Kong, Mexico, New Zealand, Russian Federation,
Singapore, South Africa, Colombia, Peru, Cuba, Indonesia, Malaysia and Philippines.
Our strategy is to develop and obtain additional intellectual property covering innovative manufacturing processes and methods for genetically
engineering T cells expressing new constructs with properties that are designed to improve the ability of our programmed T cells to recognize and kill
cancer cells. To support this effort, we have established expertise and development capabilities focused in the areas of T cell programming, preclinical and
clinical research and development, and manufacturing and manufacturing process scale-up, and we expect that our ongoing research and development
activities will yield additional patentable inventions and patent applications that will expand our intellectual property portfolio.
The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we
file, the patent term is 20 years from the date of filing of the first non-provisional application to which priority is claimed. In the United States, a patent’s
term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office in
granting a patent or may be shortened if a patent is terminally disclaimed over an earlier-filed patent. The term of a patent that covers an FDA-approved
drug may also be eligible for a patent term restoration of up to five years under the Hatch-Waxman Act, which is designed to compensate for the patent
term lost during the FDA regulatory review process. The length of the patent term restoration is calculated based on the length of time the drug is under
regulatory review. A patent term restoration under the Hatch-Waxman Act cannot extend the remaining term of a patent beyond a total of 14 years from the
date of product approval and only one patent applicable to an approved drug may be restored. Moreover, a patent can only be restored once, and thus, if a
single patent is applicable to multiple products, it can only be extended based on one product. Similar provisions are available in Europe and certain other
foreign jurisdictions to extend the term of a patent that covers an approved drug. If and when possible, we expect to apply for patent term extensions for
patents covering our product candidates or their methods of use.
Our commercial success may depend in part on our ability to obtain and maintain patent and other proprietary protection for commercially
important technology, inventions and know-how related to our business, defend and enforce our patents, preserve the confidentiality of our trade secrets,
and operate without infringing the valid enforceable patents and proprietary rights of third parties. Our ability to stop third parties from making, using,
selling, offering to sell or importing our products may depend on the extent to which we have rights under valid and enforceable patents or trade secrets
that cover these activities. With respect to both licensed and company-owned intellectual property, we cannot be sure that patents will be granted with
respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any patents, if
granted, will be commercially useful in protecting our commercial products and methods of manufacturing the same. Development and commercialization
of products can be subject to substantial delays and it is possible that, at the time of commercialization, any patent covering the product has expired or will
be in force for only a short period of time following commercialization. Numerous third-party
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U.S. and non-U.S. issued patents exist in the area of programmed T cell therapies, including patents held by our competitors. We cannot predict with any
certainty if any third-party U.S. or foreign patent rights, or other proprietary rights, will be deemed infringed by the use of our technology. Nor can we
predict with certainty which, if any, of these rights will or may be asserted against us by third parties. Should we need to defend ourselves against any such
claims, substantial costs may be incurred. Furthermore, parties making such claims may be able to obtain injunctive or other equitable relief, which could
effectively block our ability to develop or commercialize some or all our products in the United States, European Union and other major markets.
We may rely, in some circumstances, on trade secrets to protect our technology. However, trade secrets can be difficult to protect. We seek to
protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors
and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and
physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems,
agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise
become known or be independently discovered by competitors. To the extent that our consultants, contractors or collaborators use intellectual property
owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
Our License Agreement with UCL Business Ltd.
In September 2014, we entered into an exclusive license agreement with UCLB, the technology-transfer company of UCL, for the development and
commercialization rights to certain T cell programming modules. The license agreement was amended and restated in March 2016 to also include certain
development and commercialization rights to improvements and new T cell programming modules. The license agreement was further amended and
restated in March 2018 to include a license to AUTO1, for which UCL is conducting Phase 1 clinical trials in pediatric and adult ALL patients. The license
agreement was further amended and restated in October 2020 to reflect our election to have various patent rights assigned to us, and to include a license to
new technology and further licenses to AUTO1 for which UCL is conducting Phase 1 clinical trials in primary CNS Lymphoma patients. Under the license
agreement, subject to certain limitations, exceptions and retained rights of UCLB, we received an exclusive license of certain patent rights and know-how
owned by UCLB covering T cell programming modules. The licensed rights cover our AUTO1, AUTO3, AUTO4/5 and AUTO6 targeting modules, as well
as additional T cell programming modules and technologies, including dual-targeting technology, pattern recognition technology, safety switches (including
RQR8), tunable T cells, manufacturing processes as well as certain technology for evading tumor micro-environments. We also have option rights and
rights of first negotiation to obtain an exclusive license for development and commercialization rights to certain new T cell programming modules.
In exchange for the rights under the original license agreement, we granted UCLB 4,769,994 B ordinary shares of Autolus Limited, which, in
connection with our corporate reorganization in June 2018, were converted to 1,497,643 ordinary shares of Autolus Therapeutics plc. We also agreed to pay
a management fee, milestone payments and royalties upon future net sales of any products that use the in-licensed rights. The management fee of £120,000
was payable in equal installments on the first four anniversaries of our entry into the original license agreement. In exchange for the additional rights we
received in March 2016 when the license agreement was amended, we issued UCLB an additional 1,000,000 B ordinary shares, which, in connection with
our corporate reorganization in June 2018, were converted to 313,971 ordinary shares of Autolus Therapeutics plc, and made a one-time payment of
£150,000. In exchange for the additional rights we received in March 2018 when the license agreement was further amended, we made an initial payment
of £1.5 million and paid the additional £0.35 million in connection with UCLB's transfer of clinical data to the Company in December 2020.
Under the license agreement, as amended, we are obligated to pay UCLB milestone payments upon the initiation of certain clinical activities in an
aggregate amount of £0.18 million, the receipt of specified regulatory approvals in an aggregate amount of £37.5 million, the start of commercialization in
an aggregate amount of £18 million, and the achievement of net sales levels in an aggregate amount of £51 million. On a per-product basis, these milestone
payments range from £1 million to £18.5 million, depending on which T cell programming modules are used in the product achieving the milestone. Under
the terms of the license, we have the right to grant sub-licenses to third parties, subject to certain restrictions. If we receive any income in connection with
such sublicenses, we must pay UCLB a percentage of the income allocable to the value of the sublicensed intellectual property rights ranging from low
twenties to mid-single digits, decreasing based on the development expenses incurred by us and the passage of time. UCLB has retained the right to use the
licensed T cell programming modules for academic research purposes at UCL and with other academic institutions, subject to certain restrictions.
Upon commercialization of any of our products that use the in-licensed patent rights, we are obligated to pay UCLB a flat royalty for each licensed
product ranging from the low- to mid-single digits, depending on which technologies are deployed in the licensed product, based on worldwide annual net
sales of each licensed product, subject to certain reductions, including for the market entry of competing products and for loss of patent coverage of
licensed products. We may deduct from the royalties payable to UCLB half of any payments made to a third party to obtain a license to such third party’s
intellectual property that is necessary to exploit any licensed products. Once net sales of a licensed product have reached a certain specified threshold, we
may exercise an option to buy
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out UCLB’s rights to the remaining milestone payments, royalty payments, and sublicensing revenue payments for such licensed product, on terms to be
negotiated at the time.
As mentioned above, we acquired ownership of the majority of the licensed patent rights under the license agreement (with the exception of the
RQR8 patent rights) by virtue of a Deed of Assignment from UCLB which was executed on 15 October 2020. Our payment and diligence obligations
remain unaffected by the assignment of the licensed patent rights to us.
Under the license agreement, we are solely responsible, at our expense, for developing the products that use the in-licensed patent rights and
obtaining all regulatory approvals for such products worldwide. We are also solely responsible, at our expense, for commercializing the products
worldwide after receiving regulatory approval. Further, we are obligated to use commercially reasonable efforts to develop certain products using the patent
rights pertaining to the T cell programming modules we have licensed from UCLB. Failure to achieve diligence obligations may result in loss of
exclusivity or termination of the license on a program-by-program basis.
The license agreement expires on a product-by-product and country-by-country basis upon the expiration of the royalty term with respect to each
product in each country. We may unilaterally terminate the license agreement for any reason upon advance notice to UCLB. Either party may terminate the
license agreement for the uncured material breach by the other party or for the insolvency of the other party. If UCLB terminates the license agreement
following our insolvency or our material breach of the agreement, or if we terminate the agreement unilaterally, all rights and licenses granted to us will
terminate, and all patent rights and know-how transferred, licensed or assigned to us pursuant to the agreement will revert back to UCLB. In addition,
UCLB has the right to negotiate with us for the grant of an exclusive license to our improvements to the T cell programming modules we have licensed on
terms to be agreed upon at the time.
Competition
Presently, the biotechnology and pharmaceutical industries put significant resources in developing novel and proprietary therapies for the treatment
of cancer. While we believe that our differentiated product candidates and scientific expertise in the field of cellular immunotherapy provide us with
competitive advantages, we face potential competition from various sources, including larger and better-funded pharmaceutical, specialty pharmaceutical
and biotechnology companies, as well as from academic institutions, governmental agencies and public and private research institutions. We anticipate that
we will face intense and increasing competition as new drugs and therapies enter the market and advanced technologies become available. Due to their
promising clinical therapeutic effect in clinical exploratory trials, advanced T cell therapies, redirected T cell therapies in general and antibody-drug
conjugates are being pursued by multiple biotechnology and pharmaceutical companies, including Novartis AG, or Novartis, Gilead Sciences, Inc., or
Gilead, Bristol-Myers Squibb, or BMS, Janssen Biotech Inc., bluebird bio, Inc., or bluebird bio, Roche Holding AG, Seattle Genetics, and Amgen Inc. Our
competitors may succeed in developing, acquiring or licensing technologies and products that are more effective, more effectively marketed and sold or
less costly than any product candidates that we may develop, which could render our product candidates non-competitive and obsolete.
Currently there are now four approved anti-CD19 CAR T cell therapies, including Tecartus from Kite/Gilead and Breynazi from BMS, which were
approved in February 2021.These companies and products will compete directly with AUTO3, our dual-targeting CD19/CD22 programmed T cell product
candidate and AUTO1, our CD19 targeting programmed T cell product candidate in some indications.
The BCMA space continues to be highly competitive with the first CAR T cell therapy in this indication anticipated to come to market in the near
future. Bluebird bio, Inc., in collaboration with BMS, is developing a BCMA CAR T cell therapy for the treatment of multiple myeloma. Nanjing Legend
Biotech and Janssen Biotech, Inc., a subsidiary of Johnson & Johnson, are collaborating on the development of a similar therapy. In addition, some
companies, such as Gilead, BMS and Poseida Therapeutics Inc. are also developing BCMA CAR T cell therapies for the treatment of multiple myeloma.
The BCMA landscape continues to evolve, with BMS deciding to abandon a second BCMA CAR-T candidate in February 2021. Some companies like
Amgen, BMS and Genentech, Inc., a member of the Roche Group, are developing BCMA-targeting T cell engagers for the treatment of multiple myeloma,
which are expected to compete directly with CAR-T approaches. All of these therapies will compete directly with our AUTO8 product candidate.
While we believe that other known types of immunotherapies may potentially be used in conjunction with CAR T cell therapies, such as checkpoint
inhibitors, to enhance efficacy, we do not currently expect substantial direct competition from these other types of immunotherapies. However, we cannot
predict whether other types of immunotherapies may be enhanced and show greater efficacy, and we may have direct and substantial competition from such
immunotherapies in the future.
In addition, more effective small molecules, cancer vaccines and other approaches may be developed and used as first line or second line
treatments, which would reduce the market opportunity for our programmed T cell therapies.
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Many of our competitors, either alone or with their strategic collaborators, have substantially greater financial, technical and human resources than
we do. Accordingly, our competitors may be more successful than we are in obtaining approval for treatments and achieving widespread market acceptance
and may render our treatments obsolete or non-competitive. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in
even more resources being concentrated among a smaller number of our competitors. These competitors also compete with us in recruiting and retaining
qualified scientific and management personnel and establishing clinical study sites and patient registration for clinical studies, as well as in acquiring
technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly
through collaborative arrangements with large and established companies.
We anticipate that we will face intense and increasing competition as new products and therapies enter the market and advanced technologies
become available. We expect any treatments that we develop and commercialize to compete on the basis of, among other things, efficacy, safety, delivery,
price and the availability of reimbursement from government and other third-party payors.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective,
have fewer or less severe side effects, are more convenient or are less expensive or better reimbursed than any products that we may commercialize. Our
competitors also may obtain FDA, EMA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could
result in our competitors establishing a strong market position for either the product or a specific indication before we are able to enter the market.
Government Regulation and Product Approval
As a biopharmaceutical company, we are subject to extensive regulation. Our programmed T cell product candidates, if approved, will be regulated
as biological medicines. With this classification, commercial production of our products will need to occur in registered and licensed facilities in
compliance with current Good Manufacturing Practices, or cGMPs, for biologics.
Human immunotherapy products are a new category of therapeutics. The FDA categorizes human cell- or tissue-based products as either minimally
manipulated or more than minimally manipulated and has determined that more than minimally manipulated products require clinical trials to demonstrate
product safety and efficacy and the submission of a Biologics License Application, or BLA, for marketing authorization.
Government authorities in the United States (at the federal, state and local level) and in other countries and jurisdictions, including the European
Union, extensively regulate, among other things, the research, development, preclinical and clinical testing, manufacturing, quality control, labeling,
packaging, storage, record-keeping, promotion, advertising, sale, distribution, post-approval monitoring and reporting, marketing and export and import of
biopharmaceutical products such as those we are developing. Our product candidates must be approved by the FDA before they may be legally marketed in
the United States and by the appropriate foreign regulatory agency before they may be legally marketed in foreign countries. Generally, our activities in
other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important
differences. Additionally, some significant aspects of regulation in Europe are addressed in a centralized way, but country-specific regulation remains
essential in many respects. The process for obtaining regulatory marketing approvals and the subsequent compliance with applicable federal, state, local
and foreign statutes and regulations require the expenditure of substantial time and financial resources.
U.S. Product Development Process
In the United States, the FDA regulates biological products under the Public Health Service Act, or PHSA, and the Federal Food, Drug and
Cosmetic Act, or FDCA, and implementing regulations. Products are also subject to other federal, state and local statutes and regulations. The process of
obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the
expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product
development process, approval process or after approval, may subject an applicant to administrative or judicial sanctions. FDA sanctions could include,
among other actions, refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters and similar public notice of alleged
non-compliance with laws, product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution, fines,
refusals of government contracts, restitution, disgorgement of profits, or civil or criminal penalties. Any agency or judicial enforcement action could have a
material adverse effect on us. The process required by the FDA before a biological product may be approved for marketing in the United States generally
involves the following:
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completion of preclinical laboratory tests and animal studies according to Good Laboratory Practices, or GLPs, and applicable requirements for
the humane use of laboratory animals or other applicable regulations;
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submission to the FDA of an Investigational New Drug Application, or IND, which must become effective before human clinical trials may begin;
performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as Good Clinical
Practices, or GCPs, and any additional requirements for the protection of human research subjects and their health information, to establish the
safety and efficacy of the proposed biological product for its intended use;
preparation and submission to the FDA of a Biologics License Application, or BLA, for marketing approval that includes substantive evidence of
safety, purity, and potency from results of nonclinical testing and clinical trials;
satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities where the biological product is produced to
assess compliance with cGMP to assure that the facilities, methods and controls used in product manufacture are adequate to preserve the
biological product’s identity, strength, quality and purity and, if applicable, the FDA’s current Good Tissue Practices, or GTPs, for the use of
human cellular and tissue products;
potential FDA audit of the nonclinical study and clinical trial sites that generated the data in support of the BLA;
payment of user fees for FDA review of the BLA; and
FDA acceptance, review and approval, or licensure, of the BLA, which might include review by an advisory committee, a panel typically
consisting of independent clinicians and other experts who provide recommendations as to whether the application should be approved and under
what conditions.
Before testing any biological product candidate, including our product candidates, in humans, the product candidate must undergo rigorous the
preclinical testing. Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations as well as in vitro and animal studies to assess the
potential safety and efficacy of the product candidate. After sufficient preclinical testing has been conducted, the conduct of the preclinical tests must
comply with federal regulations and requirements including GLPs. The clinical trial sponsor must submit an IND to the FDA before clinical testing can
begin in the United States. An IND must contain the results of the preclinical tests, manufacturing information, analytical data, any available clinical data
or literature, a proposed clinical protocol, an investigator’s brochure, a sample informed consent form, and other materials. Clinical trial protocols detail,
among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor
subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events should occur. Each protocol and any amendments
to the protocol must be submitted to the FDA as part of the IND. Some preclinical testing, such as toxicity studies, may continue even after the IND is
submitted.
The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions regarding the proposed
clinical trials or places the trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any
outstanding concerns before the clinical trial can begin. The FDA may also impose clinical holds on a biological product candidate at any time before or
during clinical trials due to safety concerns or non-compliance. If the FDA imposes a clinical hold, trials may not recommence without FDA authorization
and then only under terms authorized by the FDA. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials
to begin, or that, once begun, issues will not arise that suspend or terminate such trials.
Further, each clinical trial must be reviewed and approved by an independent institutional review board, or IRB, at or servicing each institution at
which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether
the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the
form and content of the informed consent that must be signed by each clinical trial subject or his or her legal representative and must monitor the clinical
trial until completed. Clinical trials involving recombinant or synthetic nucleic acid molecules also must be reviewed by an institutional biosafety
committee, or IBC, a local institutional committee that reviews and oversees basic and clinical research conducted at that institution. The IBC assesses the
safety of the research and identifies any potential risk to public health or the environment.
Clinical trials involve the administration of the biological product candidate to healthy volunteers or patients under the supervision of qualified
investigators, generally physicians not employed by or under the trial sponsor’s control. Clinical trials must be conducted and monitored in accordance with
the FDA’s regulations comprising the GCP requirements, including the requirement that all research patients provide informed consent.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:
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Phase 1. The biological product is initially introduced into healthy human subjects and tested for safety. In the case of some products for severe or
life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human
testing is often conducted in patients with the target disease or condition.
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Phase 2. The biological product is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily
evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.
Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an expanded patient population,
generally at geographically dispersed clinical trial sites. These clinical trials are intended to generate enough data to statistically evaluate the
efficacy and safety of the product for approval, to establish the overall risk to benefit profile of the product and to provide an adequate basis for
product labeling.
Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, if at all.
Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These clinical trials
are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.
During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and
clinical trial investigators. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Written IND safety reports must
be promptly submitted to the FDA, and the investigators for serious and unexpected adverse events, any findings from other studies, tests in laboratory
animals or in vitro testing that suggest a significant risk for human patients, or any clinically important increase in the rate of a serious suspected adverse
reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor
determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse
reaction within seven calendar days after the sponsor’s initial receipt of the information. The FDA or the sponsor or its data safety monitoring board, an
independent group of experts that evaluates study data for safety and makes recommendations concerning continuation, modification, or termination of
clinical trials, may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research patients are being exposed to an
unacceptable health risk, including risks inferred from other unrelated immunotherapy trials. Similarly, an IRB can suspend or terminate approval of a
clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biological product has been
associated with unexpected serious harm to patients.
Because this is a relatively new and expanding area of novel therapeutic interventions, there can be no assurance as to the length of the trial period,
the number of patients the FDA will require to be enrolled in the trials in order to establish the safety, efficacy, purity and potency of immunotherapy
products, or that the data generated in these trials will be acceptable to the FDA to support marketing approval.
Concurrently with clinical trials, companies usually complete additional nonclinical studies and must also develop additional information about the
physical characteristics of the biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with
cGMP requirements. To help reduce the risk of the introduction of adventitious agents with use of biological products, the PHSA emphasizes the
importance of manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of consistently
producing quality batches of the product candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality,
potency and purity of the final biological product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted
to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.
U.S. Review and Approval Processes
After the completion of clinical trials of a biological product, FDA approval of a BLA must be obtained before commercial marketing of the
biological product. The BLA must include results of product development, laboratory and animal studies, human trials, information on the manufacture and
composition of the product, proposed labeling and other relevant information. The testing and approval processes require substantial time and effort and
there can be no assurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all as the
FDA has significant discretion to approve or reject the BLA and to require additional preclinical or clinical studies.
Under the Prescription Drug User Fee Act, or PDUFA, as amended, each BLA must be accompanied by a significant user fee. The FDA adjusts the
PDUFA user fees on an annual basis. PDUFA also imposes an annual program fee for approved biological products. Fee waivers or reductions are available
in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed
on BLAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.
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Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the
agency accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may
request additional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to
review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the BLA. The
FDA reviews the BLA to determine, among other things, whether the proposed product is safe, potent, and/or effective for its intended use, and has an
acceptable purity profile, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, safety,
strength, quality, potency and purity. The FDA may refer applications for novel biological products or biological products that present difficult questions of
safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to
whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it
considers such recommendations carefully when making decisions. During the biological product approval process, the FDA also will determine whether a
Risk Evaluation and Mitigation Strategy, or REMS, is necessary to ensure that the benefits of the product outweigh its risks and to assure the safe use of the
biological product, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution
methods, patient registries and other risk minimization tools. FDA determines the requirement for a REMS, as well as the specific REMS provisions, on a
case-by-case basis. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS. The FDA will not approve a BLA
without a REMS, if required.
Before approving a BLA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it
determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the
product within required specifications. For immunotherapy products, the FDA also will not approve the product if the manufacturer is not in compliance
with the GTPs, to the extent applicable. These are FDA regulations and guidance documents that govern the methods used in, and the facilities and controls
used for, the manufacture of human cells, tissues, and cellular and tissue based products, or HCT/Ps, which are human cells or tissue intended for
implantation, transplant, infusion, or transfer into a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue based
products are manufactured in a manner designed to prevent the introduction, transmission and spread of communicable disease. FDA GTP regulations also
require tissue establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing.
Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical trials were conducted in
compliance with IND trial requirements and GCP requirements.
To assure cGMP, GTP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training,
recordkeeping, production, and quality control.
Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory
criteria for approval and deny approval. If the agency decides not to approve the BLA in its present form, the FDA will issue a Complete Response Letter,
which generally outlines the specific deficiencies in the BLA identified by the FDA and may require additional clinical or other data or impose other
conditions that must be met in order to secure final approval of the application. The deficiencies identified may be minor, for example, requiring labeling
changes, or major, for example, requiring additional clinical trials. Even with the submission of additional information, the FDA may ultimately decide that
the application does not satisfy the regulatory criteria for approval. If a Complete Response Letter is issued, the applicant may either resubmit the BLA,
addressing all of the deficiencies identified in the letter, or withdraw the application.
If a product receives regulatory approval, the approval is limited to the conditions of use (e.g., patient population, indication) described in the
application.
Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling, or otherwise limit the
scope of any approval. In addition, the FDA may require post marketing clinical trials, sometimes referred to as Phase 4 clinical trials, designed to further
assess a biological product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been
commercialized. After approval, many types of changes to the approved product, such as adding new indications, manufacturing changes and additional
labeling claims, are subject to further testing requirements and FDA review and approval.
In addition, under the Pediatric Research Equity Act, or PREA, a BLA or supplement to a BLA must contain data to assess the safety and
effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric
subpopulation for which the product is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers.
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Post-Approval Requirements
Any products for which we receive FDA approvals are subject to continuing regulation by the FDA, including, among other things, record-keeping
requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and
distribution requirements, and complying with FDA promotion and advertising requirements, which include, among others, standards for direct-to-
consumer advertising, restrictions on promoting products for uses or in patient populations that are not described in the product’s approved uses (known as
“off-label use”), limitations on industry-sponsored scientific and educational activities, and requirements that important safety information and material
facts related to the product be disclosed. Although physicians may prescribe legally available products for off-label uses, if the physicians deem to be
appropriate in their professional medical judgment, manufacturers may not market or promote such off-label uses. The FDA and other agencies actively
enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may
be subject to significant civil, criminal and administrative liability.
In addition, quality control and manufacturing procedures must continue to conform to applicable manufacturing requirements after approval to
ensure the long-term stability of the product. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial
quantities of our products in accordance with cGMP regulations. cGMP regulations require among other things, quality control and quality assurance as
well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP.
Manufacturers and other entities involved in the manufacture and distribution of approved products are required to register their establishments with the
FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and
other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP
compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved BLA,
including, among other things, recall or withdrawal of the product from the market.
The FDA also may require post-marketing testing, known as Phase 4 testing, and surveillance to monitor the effects of an approved product.
Discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, with manufacturing processes,
or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative
enforcement, complete withdrawal from the market, product recalls, warning letters from the FDA, mandated corrective advertising or communications
with doctors, product seizure or detention, injunctions, and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness
data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the
implementation of other risk management measures. Also, new government requirements, including those resulting from new legislation, may be
established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development.
U.S. Marketing Exclusivity
The Biologics Price Competition and Innovation Act amended the PHSA to authorize the FDA to approve similar versions of innovative biologics,
commonly known as biosimilars. Biosimilars are approved pursuant to an abbreviated pathway whereby applicants need not submit the full slate of
preclinical and clinical data, and approval is based in part on the FDA’s findings of safety, purity, and potency for the original biologic (i.e., the reference
product). Original BLAs are eligible to receive 12 years of exclusivity from the time of first licensure of the product, which prevents the FDA from
approving any biosimilars to the reference product through the abbreviated pathway, but does not prevent approval of BLAs that are accompanied by a full
data package and that do not rely on the reference product. A biosimilar may be approved if the product is highly similar to the reference product
notwithstanding minor differences in clinically inactive components and there are no clinically meaningful differences with the reference product in terms
of the safety, purity, and potency.
Pediatric exclusivity is another type of regulatory market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to
existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be
granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request” for such a trial.
Coverage, Pricing and Reimbursement
Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we obtain regulatory approval. In
the United States and markets in other countries, sales of any products for which we receive regulatory approval for commercial sale will depend, in
significant part, on the extent to which third-party payors provide coverage, and establish adequate reimbursement levels for such products. In the United
States, third-party payers include federal and state healthcare programs, private managed care organizations, health insurers and other organizations. The
process for determining whether a third-party payer will provide coverage for a product may be separate from the process of establishing the
reimbursement rate that such a
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payor will pay for the product. Third-party payors may limit coverage to specific products on an approved list, also known as a formulary, which might not
include all of the FDA-approved products for a particular indication. Third-party payors are increasingly challenging the price, examining the medical
necessity of and reviewing the cost-effectiveness of medical products, therapies and services, in addition to questioning their safety and efficacy.
Reimbursement may impact the demand for, and/or the price of, any product candidate which obtains marketing approval. Even if coverage and
reimbursement is obtained for a given product candidate by a third-party payor, the resulting reimbursement payment rates may not be adequate or may
require co-payments that patients find unacceptably high. Patients who are prescribed medications for the treatment of their conditions, and their
prescribing physicians, generally rely on third-party payors to reimburse all or part of the costs associated with those medications. Patients are unlikely to
use a product, and physicians may be less likely to prescribe a product, unless coverage is provided and reimbursement is adequate to cover all or a
significant portion of the cost of the product. Therefore, coverage and adequate reimbursement is critical to new drug product acceptance.
Additionally, we are developing a proprietary diagnostic test for use with certain of our product candidates. The diagnostic test will require separate
regulatory approval in addition to the regulatory approval of AUTO4 and AUTO5. Failure to obtain marketing approval for the diagnostic test could
prevent us from commercializing either AUTO4 or AUTO5 unless another similar diagnostic test for distinguishing TRBC1-positive and TRBC2-positive
T cell lymphomas is commercially available.
Different pricing and reimbursement schemes exist in other countries. In the EU, governments influence the price of pharmaceutical products
through their pricing and reimbursement rules and control of national healthcare systems that fund a large part of the cost of those products to consumers.
Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed. To
obtain reimbursement or pricing approval, some of these countries may require the completion of additional clinical trials that compare the cost-
effectiveness of a particular product candidate to currently available therapies. Other member states allow companies to fix their own prices for medicines,
but monitor and control company profits. In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on
pricing within a country.
The downward pressure on healthcare costs in general, particularly prescription drugs and biologics, has become very intense. Governments have
shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for
substitution of generic products. As a result, increasingly high barriers are being erected to the entry of new products. The marketability of any product
candidates for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide coverage and
adequate reimbursement. In addition, emphasis on managed care in the United States has increased and we expect will continue to increase the pressure on
healthcare pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is
attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented
in the future.
Healthcare Laws Governing Interactions with Healthcare Providers
In addition to FDA restrictions on marketing of pharmaceutical products, several other types of state and federal laws restrict our business
activities, including certain marketing practices. These laws include, without limitation, anti-kickback laws, false claims laws, data privacy and security
laws, as well as transparency laws regarding payments or other items of value provided to healthcare providers.
The U.S. federal Anti-Kickback Statute prohibits any person or entity from, among other things, knowingly and willfully offering, paying,
soliciting or receiving remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, purchasing, leasing, ordering or arranging
for the purchase, lease or order of any healthcare item, good, facility or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal
healthcare programs. The term ‘‘remuneration’’ has been broadly interpreted to include anything of value. This statute has been interpreted to apply to
arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other hand. Although
there are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions,
the exceptions and safe harbors are drawn narrowly, and practices that involve remuneration that are alleged to be intended to induce prescribing, purchases
or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular
applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the U.S. federal Anti-Kickback Statute. Instead, the
legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances. Several courts have
interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal
healthcare covered business, the U.S. federal Anti-Kickback Statute has been violated. Additionally, the intent standard under the U.S. federal Anti-
Kickback Statute was amended by the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation
Act of 2010, collectively the Affordable Care Act, or ACA, to a stricter standard such that a person or entity no longer
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needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In addition, the ACA codified case law
that a claim including items or services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for
purposes of the U.S. federal False Claims Act.
Federal civil and criminal false claims laws and civil monetary penalties laws, including the U.S. federal False Claims Act, , which can be enforced
through civil whistleblower or qui tam actions, prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a
false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to have a false claim paid.
Pharmaceutical and other healthcare companies have been prosecuted under these laws for, among other things, allegedly inflating drug prices they report
to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product
to customers with the expectation that the customers would bill federal programs for the product. In addition, certain marketing practices, including off-
label promotion, may also violate false claims laws. Further, pharmaceutical manufacturers can be held liable under the U.S. federal False Claims Act even
when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims.
The U.S. federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created new federal criminal statutes that prohibit among
other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-
party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a
healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent
statement in connection with the delivery of or payment for healthcare benefits, items or services. Like the U.S. federal Anti-Kickback Statute, the ACA
amended the intent standard for certain healthcare fraud under HIPAA such that a person or entity no longer needs to have actual knowledge of the statute
or specific intent to violate it in order to have committed a violation.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations,
impose certain requirements on “covered entities,” including certain healthcare providers, health plans and healthcare clearinghouses, as well as their
respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity,
and their covered subcontractors, relating to the privacy, security, transmission and breach of individually identifiable health information. Further, HITECH
also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and
gave state attorneys general new authority to file civil actions for damages or injunctions in U.S. federal courts to enforce HIPAA and seek attorneys’ fees
and costs associated with pursuing federal civil actions.
Additionally, the federal Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, require certain
manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health
Insurance Program (with certain exceptions) to annually report to the Centers for Medicare and Medicaid Services, or CMS, information related to certain
payments or other transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching
hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals as well as certain ownership and
investment interests held by physicians and their immediate family members. Beginning in 2022, applicable manufacturers also will be required to report
information regarding payments and transfers of value provided to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse
anesthetists, anesthesiologist assistants, and certified nurse-midwives.
Additionally, similar healthcare laws and regulations in the European Union and other jurisdictions, including reporting requirements detailing
interactions with and payments to healthcare providers and laws governing the privacy and security of certain protected information, such as GDPR, which
imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the European Union (including health data).
Finally, the majority of states also have statutes or regulations similar to the aforementioned federal laws, some of which are broader in scope and
apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. Some state laws
require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance
promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to clinicians and other
healthcare providers or marketing expenditures. Some states and local jurisdictions require the registration of pharmaceutical sales representatives. State
and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant
ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Because of the breadth of these laws and the narrowness of their exceptions and safe harbors, it is possible that business activities can be subject to
challenge under one or more of such laws. The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current
environment of healthcare reform, especially in light of the lack of applicable precedent and
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regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare
providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.
Ensuring that business arrangements with third parties comply with applicable healthcare laws and regulations is costly and time consuming. If
business operations are found to be in violation of any of the laws described above or any other applicable governmental regulations a pharmaceutical
manufacturer may be subject to penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment,
exclusion from governmental funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, diminished profits and
future earnings, additional reporting obligations and oversight if subject to a corporate integrity agreement or other agreement to resolve allegations of non-
compliance with these laws, and curtailment or restructuring of operations, any of which could adversely affect a pharmaceutical manufacturer’s ability to
operate its business and the results of its operations.
Healthcare Reform Efforts
A primary trend in the United States healthcare industry and elsewhere is cost containment. Over the last several years, there have been federal and
state proposals and legislation enacted regarding the pricing of pharmaceutical and biopharmaceutical products, limiting coverage and reimbursement for
drugs and other medical products, and making changes to healthcare financing and the delivery of care in the United States. We do not expect this trend to
dissipate with the advent of a new administration; but may take an initial back seat to its work on COVID 19 vaccination and prevention efforts.
During his 2020 campaign, President Biden stressed his desire to expand and strengthen the Affordable Care Act, in which he played a large role to
help pass through Congress in 2010. Specifically, this includes lowering the age of Medicare eligibility to 60, expanding coverage to those who are caught
in the gap between Medicaid eligibility and qualifying for ACA subsidies, and potentially creating a “public option” to cover those who have systemically
been uninsured. We also expect the Biden administration will overturn several of the last minute regulations and waivers approved by the Trump
administration including Medicaid work requirements. In fact, the administration on Day 1 issued a regulatory freeze to all federal agencies and requested
agencies delay the effective date of new regulations until the new appointed agency head has reviewed those regulations.
We expect the Biden Administration may ramp up its efforts on drug pricing as it explores ways to pay for its various efforts to combat COVID 19,
health equity, insurance coverage, and other priorities. One area we anticipate increased interest is direct Medicare price negotiation with drug
manufacturers, however, it will remain challenging for Democrats to pass partisan legislation despite having control of the White House and Congress. The
current 50-50 split in the Senate (with the Vice President breaking any tie votes) means that Democrats will need to either pursue legislation that will get
some Republican votes or use the budget reconciliation mechanism to pass a more limited set of proposals with only 51 votes. We also anticipate the new
administration will continue to use executive orders and Medicare demonstration authority to control drug costs. While the courts have essentially deemed
the Trump administration’s Most Favored Nations model—which would have benchmarked Medicare payment rates on international reference prices for
drugs—dead in the water, some of the proposals within the model may resurface under a new name. Other areas of reform like copay accumulators and Part
D reform may also have impact on drug pricing.
Further, there remains heightened Congressional scrutiny in the United States of pharmaceutical pricing practices designed to, among other things,
bring more transparency in product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program
reimbursement methodologies for products. We expect both the Biden Administration’s first budget proposal and Congressional actors to begin hearings in
earnest once relief measures for COVID 19 and other “first 100 day” issues like immigration, rejoining various International accords, and staffing at federal
agencies, has taken place. US states are also not immune to such discussions. At the state level, legislatures have increasingly enacted legislation and
implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints,
discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage
importation from other countries and bulk purchasing. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding
procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. It is
also possible that additional governmental action is taken in response to the COVID-19 pandemic.
In addition, other federal health reform measures have been proposed and adopted in the United States that could impact cell therapy. Most notably,
the previous administration supported and promulgated a rule related to value based payment alternatives in the Medicaid program. Medicaid is a jointly
run federal and state program that provides health benefits coverage for low-income residents and children. In exchange for broad coverage in Medicaid,
drug manufacturers are required to sign a Medicare Drug Rebate agreement which requires them to offer Medicaid programs the “best price” available for a
particular product. This “best price” takes into consideration any rebates or concessions manufacturers offer, with some exceptions. The final rule would
exempt value-based or outcomes-based payment arrangements from the definition of “best price” which provides manufacturers more flexibility to work
with
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commercial payers and states on innovate payment mechanisms for high-cost cell and gene therapies. While Medicaid is not a significant driver of cell
therapy sales it is a bellwether program and one we watch closely.
FCPA, the Bribery Act and Other Laws
The FCPA, prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or
indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the
individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply
with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation,
including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. Activities
that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines, imprisonment, disgorgement, oversight,
and debarment from government contracts.
Our operations are also subject to non-U.S. anti-corruption laws such as the Bribery Act. As with the FCPA, these laws generally prohibit us and
our employees and intermediaries from authorizing, promising, offering, or providing, directly or indirectly, improper or prohibited payments, or anything
else of value, to government officials or other persons to obtain or retain business or gain some other business advantage. Under the Bribery Act, we may
also be liable for failing to prevent a person associated with us from committing a bribery offense.
We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of
the United Kingdom and the United States and authorities in the European Union, including applicable export control regulations, economic sanctions and
embargoes on certain countries and persons, anti-money laundering laws, import and customs requirements and currency exchange regulations, collectively
referred to as trade control laws.
Failure to comply with the Bribery Act, the FCPA and other anti-corruption laws and trade control laws could subject us to criminal and civil
penalties, disgorgement and other sanctions and remedial measures, and legal expenses.
Review and Approval of New Drug Products in the European Union
In the European Union, medicinal products, including advanced therapy medicinal products, or ATMPs, are subject to extensive pre- and post-
market regulation by regulatory authorities at both the European Union and national levels. ATMPs comprise gene therapy products, somatic-cell therapy
products and tissue engineered products, which are cells or tissues that have undergone substantial manipulation and that are administered to human beings
in order to regenerate, repair or replace a human tissue. We anticipate that our T cell therapy products will be regulated as ATMPs in the European Union.
There is legislation at a European Union level relating to the standards of quality and safety for the collection and testing of human blood and blood
components for use in cell-based therapies, which could apply to our products. Additionally, there may be local legislation in various European Union
Member States, which may be more restrictive than the European Union legislation, and we would need to comply with such legislation to the extent it
applies.
Clinical Trials
Clinical trials of medicinal products in the European Union must be conducted in accordance with European Union and national regulations and the
International Conference on Harmonization, or ICH, guidelines on Good Clinical Practices, or GCP. Additional GCP guidelines from the European
Commission, focusing in particular on traceability, apply to clinical trials of ATMPs. The sponsor must take out a clinical trial insurance policy, and in most
European Union countries, the sponsor is liable to provide “no fault” compensation to any study subject injured in the clinical trial.
Prior to commencing a clinical trial, the sponsor must obtain a clinical trial authorization from the competent authority, and a positive opinion from
an independent ethics committee. The application for a clinical trial authorization must include, among other things, a copy of the trial protocol and an
investigational medicinal product dossier containing information about the manufacture and quality of the medicinal product under investigation. Currently,
clinical trial authorization applications must be submitted to the competent authority in each EU Member State in which the trial will be conducted. Under
the new Regulation on Clinical Trials, which is expected to take effect in December 2021, there will be a centralized application procedure where one
national authority takes the lead in reviewing the application and the other national authorities have only a limited involvement. Any substantial changes to
the trial protocol or other information submitted with the clinical trial applications must be notified to or approved by the relevant competent authorities
and ethics committees. Medicines used in clinical trials must be manufactured in accordance with cGMP. Other national and European Union-wide
regulatory requirements also apply.
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During the development of a medicinal product, the EMA and national medicines regulators within the European Union provide the opportunity for
dialogue and guidance on the development program. At the EMA level, this is usually done in the form of scientific advice, which is given by the Scientific
Advice Working Party of the Committee for Medicinal Products for Human Use, or CHMP. A fee is incurred with each scientific advice procedure. Advice
from the EMA is typically provided based on questions concerning, for example, quality (chemistry, manufacturing and controls testing), nonclinical
testing and clinical studies, and pharmacovigilance plans and risk-management programs. In accordance with the EMA’s policy, scientific advice will not
be legally binding with regard to any future marketing authorization application of the product concerned.
Marketing Authorizations
In order to market a new medicinal product in the European Union, a company must submit and obtain approval from regulators of a marketing
authorization application, or MAA. The process for doing this depends, among other things, on the nature of the medicinal product.
The centralized procedure results in a single marketing authorization, or MA, granted by the European Commission that is valid across the EEA
(i.e., the European Union as well as Iceland, Liechtenstein and Norway). The centralized procedure is compulsory for human drugs that are: (i) derived
from biotechnology processes, such as genetic engineering, (ii) contain a new active substance indicated for the treatment of certain diseases, such as
HIV/AIDS, cancer, diabetes, neurodegenerative diseases, autoimmune and other immune dysfunctions and viral diseases, (iii) officially designated orphan
medicines and (iv) advanced-therapy medicines, such as gene therapy, somatic cell therapy or tissue-engineered medicines. The centralized procedure may
at the request of the applicant also be used in certain other cases. Therefore, the centralized procedure would be mandatory for the products we are
developing.
The Committee for Advanced Therapies, or CAT, is responsible in conjunction with the CHMP for the evaluation of ATMPs. The CAT is primarily
responsible for the scientific evaluation of ATMPs and prepares a draft opinion on the quality, safety and efficacy of each ATMP for which a marketing
authorization application is submitted. The CAT’s opinion is then taken into account by the CHMP when giving its final recommendation regarding the
authorization of a product in view of the balance of benefits and risks identified. Although the CAT’s draft opinion is submitted to the CHMP for final
approval, the CHMP may depart from the draft opinion, if it provides detailed scientific justification. The CHMP and CAT are also responsible for
providing guidelines on ATMPs and have published numerous guidelines, including specific guidelines on gene therapies and cell therapies. These
guidelines provide additional guidance on the factors that the EMA will consider in relation to the development and evaluation of ATMPs and include,
among other things, the preclinical studies required to characterize ATMPs; the manufacturing and control information that should be submitted in a
marketing authorization application; and post-approval measures required to monitor patients and evaluate the long term efficacy and potential adverse
reactions of ATMPs. Although these guidelines are not legally binding, we believe that our compliance with them is likely necessary to gain and maintain
approval for any of our product candidates.
Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of an MAA by the EMA is 210 days. This
excludes so-called clock stops, during which additional written or oral information is to be provided by the applicant in response to questions asked by the
CHMP. At the end of the review period, the CHMP provides an opinion to the European Commission. If this is opinion favorable, the Commission may
then adopt a decision to grant an MA. In exceptional cases, the CHMP might perform an accelerated review of an MAA in no more than 150 days. This is
usually when the product is of major interest from the point of view of public health and, in particular, from the viewpoint of therapeutic innovation.
The European Commission may grant a so-called “marketing authorization under exceptional circumstances”. Such authorization is intended for
products for which the applicant can demonstrate that it is unable to provide comprehensive data on the efficacy and safety under normal conditions of use,
because the indications for which the product in question is intended are encountered so rarely that the applicant cannot reasonably be expected to provide
comprehensive evidence, or in the present state of scientific knowledge, comprehensive information cannot be provided, or it would be contrary to
generally accepted principles of medical ethics to collect such information. Consequently, marketing authorization under exceptional circumstances may be
granted subject to certain specific obligations, which may include the following:
•
•
•
the applicant must complete an identified program of studies within a time period specified by the competent authority, the results of which form
the basis of a reassessment of the benefit/risk profile;
the medicinal product in question may be supplied on medical prescription only and may in certain cases be administered only under strict medical
supervision, possibly in a hospital and in the case of a radiopharmaceutical, by an authorized person; and
the package leaflet and any medical information must draw the attention of the medical practitioner to the fact that the particulars available
concerning the medicinal product in question are as yet inadequate in certain specified respects.
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A marketing authorization under exceptional circumstances is subject to annual review to reassess the risk-benefit balance in an annual
reassessment procedure. Continuation of the authorization is linked to the annual reassessment and a negative assessment could potentially result in the
marketing authorization being suspended or revoked. The renewal of a marketing authorization of a medicinal product under exceptional circumstances,
however, follows the same rules as a “normal” marketing authorization. Thus, a marketing authorization under exceptional circumstances is granted for an
initial five years, after which the authorization will become valid indefinitely, unless the EMA decides that safety grounds merit one additional five-year
renewal.
The European Commission may also grant a so-called “conditional marketing authorization” prior to obtaining the comprehensive clinical data
required for an application for a full marketing authorization. Such conditional marketing authorizations may be granted for product candidates (including
medicines designated as orphan medicinal products), if (i) the risk-benefit balance of the product candidate is positive, (ii) it is likely that the applicant will
be in a position to provide the required comprehensive clinical trial data, (iii) the product fulfills an unmet medical need and (iv) the benefit to public health
of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still required.
A conditional marketing authorization may contain specific obligations to be fulfilled by the marketing authorization holder, including obligations with
respect to the completion of ongoing or new studies, and with respect to the collection of pharmacovigilance data. Conditional marketing authorizations are
valid for one year, and may be renewed annually, if the risk-benefit balance remains positive, and after an assessment of the need for additional or modified
conditions and/or specific obligations. The timelines for the centralized procedure described above also apply with respect to the review by the CHMP of
applications for a conditional marketing authorization.
The European Union medicines rules expressly permit the EU Member States to adopt national legislation prohibiting or restricting the sale, supply
or use of any medicinal product containing, consisting of or derived from a specific type of human or animal cell, such as embryonic stem cells. While the
products we have in development do not make use of embryonic stem cells, it is possible that the national laws in certain EU Member States may prohibit
or restrict us from commercializing our products, even if they have been granted an EU marketing authorization.
Data Exclusivity
Marketing authorization applications for generic medicinal products do not need to include the results of preclinical and clinical trials, but instead
can refer to the data included in the marketing authorization of a reference product for which regulatory data exclusivity has expired. If a marketing
authorization is granted for a medicinal product containing a new active substance, that product benefits from eight years of data exclusivity, during which
generic marketing authorization applications referring to the data of that product may not be accepted by the regulatory authorities, and a further two years
of market exclusivity, during which such generic products may not be placed on the market. The two-year period may be extended to three years if during
the first eight years a new therapeutic indication with significant clinical benefit over existing therapies is approved.
There is a special regime for biosimilars, or biological medicinal products that are similar to a reference medicinal product but that do not meet the
definition of a generic medicinal product, for example, because of differences in raw materials or manufacturing processes. For such products, the results of
appropriate preclinical or clinical trials must be provided, and guidelines from the EMA detail the type of quantity of supplementary data to be provided for
different types of biological product. There are no such guidelines for complex biological products, such as gene or cell therapy medicinal products, and so
it is unlikely that biosimilars of those products will currently be approved in the European Union. However, guidance from the EMA states that they will be
considered in the future in light of the scientific knowledge and regulatory experience gained at the time.
Pediatric Development
In the European Union, companies developing a new medicinal product must agree to a Pediatric Investigation Plan, or PIP, with the EMA and
must conduct pediatric clinical trials in accordance with that PIP, unless a deferral or waiver applies, (e.g., because the relevant disease or condition occurs
only in adults). The marketing authorization application for the product must include the results of pediatric clinical trials conducted in accordance with the
PIP, unless a waiver applies, or a deferral has been granted, in which case the pediatric clinical trials must be completed at a later date. Products that are
granted a marketing authorization on the basis of the pediatric clinical trials conducted in accordance with the PIP are eligible for a six month extension of
the protection under a supplementary protection certificate (if any is in effect at the time of approval) or, in the case of orphan medicinal products, a two
year extension of the orphan market exclusivity. This pediatric reward is subject to specific conditions and is not automatically available when data in
compliance with the PIP are developed and submitted.
Post-Approval Controls
The holder of a marketing authorization must establish and maintain a pharmacovigilance system and appoint an individual qualified person for
pharmacovigilance, or QPPV, who is responsible for oversight of that system. Key obligations include expedited reporting of suspected serious adverse
reactions and submission of periodic safety update reports, or PSURs.
All new marketing authorization applications must include a risk management plan, or RMP, describing the risk management system that the
company will put in place and documenting measures to prevent or minimize the risks associated with the product. The
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regulatory authorities may also impose specific obligations as a condition of the marketing authorization. Such risk-minimization measures or post-
authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical trials or post-
authorization safety studies. RMPs and PSURs are routinely available to third parties requesting access, subject to limited redactions. All advertising and
promotional activities for the product must be consistent with the approved summary of product characteristics, and therefore all off-label promotion is
prohibited. Direct-to-consumer advertising of prescription medicines is also prohibited in the European Union. Although general requirements for
advertising and promotion of medicinal products are established under EU directives, the details are governed by regulations in each EU Member State and
can differ from one country to another.
Pricing and Reimbursement in the European Union
Governments influence the price of medicinal products in the European Union through their pricing and reimbursement rules and control of
national healthcare systems that fund a large part of the cost of those products to consumers. Some jurisdictions operate positive and negative list systems
under which products may only be marketed once a reimbursement price has been agreed. To obtain reimbursement or pricing approval, some of these
countries may require the completion of clinical trials that compare the cost-effectiveness of a particular product candidate to currently available therapies.
Other EU Member States allow companies to fix their own prices for medicines, but monitor and control company profits. The downward pressure on
healthcare costs in general, particularly prescription medicines, has become very intense. As a result, increasingly high barriers are being erected to the
entry of new products.
Brexit and the Regulatory Framework in the United Kingdom
On June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the European Union (commonly referred to as ‘‘Brexit’’) and the
United Kingdom officially withdrew from the European Union on January 31, 2020. Pursuant to the formal withdrawal arrangements agreed between the
United Kingdom and the European Union, the United Kingdom was subject to a transition period until December 31, 2020, or the Transition Period, during
which European Union rules continued to apply. A trade and cooperation agreement, or the Trade and Cooperation Agreement, that outlines the future
trading relationship between the United Kingdom and the European Union was agreed in December 2020.
Brexit may influence the attractiveness of the United Kingdom as a place to conduct clinical trials. The European Union’s regulatory environment
for clinical trials is being harmonized as part of the Clinical Trial Regulations, which are due to enter into full effect at the end of 2021, but it is currently
unclear as to what extent the United Kingdom will seek to align its regulations with the European Union. Failure of the United Kingdom to closely align its
regulations with the EU may have an effect on the cost of conducting clinical trials in the United Kingdom as opposed to other countries and/or make it
harder to seek a marketing authorization for our product candidates on the basis of clinical trials conducted in the United Kingdom.
In the short term there will be few changes to clinical trials that only have sites in the United Kingdom. The MHRA have confirmed that the
sponsor of a clinical trial can be based in the EEA for an initial period following Brexit. Further investigational medicinal products can be supplied directly
from the EU/EEA to a trial site in Great Britain without further oversight until 1 January 2022, and to Northern Ireland beyond such date. The United
Kingdom is now a “third country” for the purpose of clinical trials that have sites in the EEA. For such trials the sponsor/legal representative must be based
in the EEA, and the trial must be registered on the EU Clinical Trials Register (including data on sites outside of the EEA).
The data exclusivity periods in the United Kingdom are currently in line with those in the European Union, but the Trade and Cooperation
Agreement provides that the periods for both data and market exclusivity are to be determined by domestic law, and so there could be divergence in the
future. It is currently unclear whether the MHRA in the United Kingdom is sufficiently prepared to handle the increased volume of marketing authorization
applications that it is likely to receive.
Orphan designation in Great Britain following Brexit is based on the prevalence of the condition in Great Britain as opposed to the current position
where prevalence in the European Union is the determinant. It is therefore possible that conditions that are currently designated as orphan conditions in
Great Britain will no longer be and that conditions that are not currently designated as orphan conditions in the European Union will be designated as such
in Great Britain.
Business Update: COVID-19 Response, Program Prioritization and Corporate Adjustments
With the global spread of the ongoing coronavirus 2019, or COVID-19, pandemic, we established a cross-functional task force and have
implemented business continuity plans designed to address and mitigate its impact on our employees and business. While we have not experienced any
significant financial impact to date, the overall disruption caused by the COVID-19 pandemic on global healthcare systems, and the other risks and
uncertainties associated with the pandemic, could cause our business, financial condition, results of operations and growth prospects to be materially
adversely affected.
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In March 2020, our global workforce transitioned to working remotely with the exception of clinical trial related activities that required
laboratory-based activity or manufacturing. We implemented protocols and procedures to ensure the safety of our employees working on site, including
requirement to wear personal protective equipment, temperature checks at entry and offered COVID-19 testing for any employee with symptoms or at
suspected risk of exposure to virus. In June 2020, we began the implementation of our workplace re-entry plan, based on a phased approach that is
principles-based and local in design, with a focus on continuity of patient treatment and working to bring its workforce back on-site safely. We have also
implemented policies to control and limit office and lab access in line with social distancing guidelines and for contact tracing if needed.
We continue to track COVID-19 developments in Europe and the United States closely for their potential impact on our clinical trial sites, logistics
and supply chain to ensure we can continue to maintain clinical trial conduct and data integrity. As the patients in our clinical trials are severely immune
suppressed as a consequence of their underlying disease and the treatment they receive in the trials, we are also monitoring other transmissible infectious
diseases, including influenza.
In January 2021, we announced the prioritization of the AUTO1 program and our intention to seek a partner for the AUTO3 program before
progressing AUTO3 into its next phase of development. We also announced an adjustment of our workforce and infrastructure footprint during the first
quarter of 2021, which will involve an overall reduction in headcount of approximately 20%.
C. Organizational structure.
The following diagram illustrates our corporate structure:
In December 2020, Autolus Limited transferred, by way of an interim distribution in kind to its immediate parent, Autolus Holdings (UK)
Limited, the entire issued share capital of its wholly owned subsidiary, Autolus Inc., our U.S. subsidiary which was incorporated under the laws of the State
of Delaware in October 2017. In anticipation of Brexit, Autolus Limited transferred all of its German assets to Autolus GmbH in December 2020.
D. Property, plant and equipment.
Our corporate headquarters are located at 58 Wood Lane, White City, London W12 7RZ, United Kingdom, where we lease approximately 14,908 square
feet of office space. The lease is non-cancellable and is scheduled to terminate in September 2025. We have a one-time right, upon six months' notice, to
terminate the lease effective in September 2020. In addition, from September 2020 onward, the landlord has the option to terminate the lease on 12 months'
notice. The landlord exercised its option to give notice in September 2020 to terminate the Forest House lease and pay the Company a break-lease payment
fee in September 2021.
We also sublease a manufacturing suite, consisting of approximately 8,750 square feet of manufacturing space, at the Cell and Gene Therapy
Catapult manufacturing center in Stevenage, United Kingdom. The lease is non-cancellable and is scheduled to terminate in September 2023, with the
option to renew or terminate the lease in May 2021.
In September 2018, we entered into a binding arrangement for a lease for a manufacturing facility, consisting of approximately 39,558 square feet,
in Enfield, United Kingdom. The lease term is 15 years, commenced in February 2019, with an
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option to terminate the lease in February 2029. We initially planned on initiating manufacturing activities at this facility in 2020; however, following a
strategic review of our manufacturing plan, we chose to discontinue the fit-out of manufacturing capability at the Enfield facility in December 2019.
In October 2018, we entered into a sublease for 27,502 square feet of office space in Rockville, Maryland. On February 27, 2020, we terminated the
sublease of this office space and concurrently entered into a direct lease with the building owner for the same premises. The lease is non-cancellable and is
scheduled to terminate in March 2025.
In November 2018, we entered into a lease for approximately 32,673 square feet of office space in White City Place, London, due to our increased
headcount. This new space will serve as our new corporate headquarters; we took occupancy in January 2019. The lease term expires in 2026.
In January 2019 we entered into a lease for 84,264 square feet of office and manufacturing space in Rockville, Maryland, under which the lease
term commenced in August 2020 and expires in June 2036.The lease agreement required us to enter into a lease provided that the landlord completed the
required leasehold improvements described in the agreement; the improvements were completed in August 2020.
In May 2020, we executed an arrangement with Catapult Limited to lease a manufacturing suite at the Cell and Gene Therapy Catapult
manufacturing center in Stevenage, United Kingdom for a term through April 2024.
We anticipate leasing additional office and manufacturing space as we add employees, and we believe that suitable additional or substitute space
will be available as needed to accommodate any such expansion of our operations.
Item 4A. Unresolved Staff Comments.
Not applicable.
Item 5. Operating and Financial Review and Prospects.
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial
statements and related notes appearing elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth
elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward-
looking statements that involve risks and uncertainties. As a result of many factors, including those set forth in the Item 3.D. “Risk Factors” section of this
Annual Report, our actual results could differ materially from the results described in or implied by these forward-looking statements. Please also see the
section titled “Cautionary Statement Regarding Forward-Looking Statements.”
We maintain our books and records in pounds sterling, our results are subsequently converted to U.S. dollars and we prepare our consolidated financial
statements in accordance with U.S. GAAP. All references in this Annual Report to “$” are to U.S. dollars and all references to “£” are to pounds sterling.
Our consolidated balance sheets as of December 31, 2020 and 2019 have been translated from pounds sterling into U.S. dollars at the rate of £1.00 to
$1.3663 and £1.00 to $1.3268. Our consolidated statements of operations and cash flows for the years ended December 31, 2020 and 2019, the three
months ended December 31, 2018, and the year ended September 30, 2018 have been translated from pounds sterling to U.S. dollars at the rate of £1.00 to
$1.2862, £1.00 to $1.2738, £1.00 to $1.2870, and £1.00 to $1.3459. These translations should not be considered representations that any such amounts
have been, could have been or could be converted into U.S. dollars at that or any other exchange rate as of that or any other date.
We have historically conducted our business through Autolus Limited, and therefore our historical consolidated financial statements previously presented
the consolidated results of operations of Autolus Limited. Following the completion of our IPO in June 2018, our consolidated financial statements present
the consolidated results of operations of Autolus Therapeutics plc.
We have adopted the amendments to Item 5.A, effective as of February 10, 2021 for the year ended December 31, 2020.
A.
Operating results.
Overview
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We are a biopharmaceutical company developing next-generation programmed T cell therapies for the treatment of cancer. Using our broad suite of
proprietary and modular T cell programming technologies, we are engineering precisely targeted, controlled and highly active T cell therapies that are
designed to better recognize cancer cells, break down their defense mechanisms and attack and kill these cells. We believe our programmed T cell therapies
have the potential to be best-in-class and offer cancer patients substantial benefits over the existing standard of care, including the potential for cure in
some patients.
Since our inception in July 2014, we have devoted substantially all of our resources to conducting preclinical studies and clinical trials, organizing
and staffing our company, business planning, raising capital and establishing our intellectual property portfolio. We do not have any products approved for
sale and have not generated any revenue from product sales. We have funded our operations to date primarily with sales of our equity securities, including
American Depositary Shares, or ADSs. As of December 31, 2020, we had received net proceeds of $516.1 million from sales of our equity securities. In
September 2020, we entered into an Open Market Sale Agreement
, or the Sales Agreement, with Jefferies LLC, or Jefferies, where we may offer and sell
ADSs having an aggregate offering price of up to $100 million from time to time through Jefferies, acting as sales agent. As of the date of this Annual
Report, we have sold an aggregate of 1.7 million of our ADSs resulting in net proceeds of $15.3 million. Further, in February 2021, we closed an
underwritten public offering of 16,428,572 ADSs, including the exercise in full by the underwriters of their option to purchase an additional 2,142,857
ADSs, at a public offering price of $7.00 per ADS. We received net proceeds of $108.1 million after underwriting discounts. We do not expect to generate
significant revenue unless and until we obtain marketing approval for and commercialize one of our product candidates.
SM
Since our inception, we have incurred significant operating losses. For the years ended December 31, 2020 and 2019, the three months ended
December 31, 2018, and the year ended September 30, 2018, we incurred net losses of $142.1 million, $123.8 million, $20.6 million, and $44.8 million,
respectively. As of December 31, 2020, we had an accumulated deficit of $379.2 million.
We expect to continue to incur significant expenses for the foreseeable future as we advance our product candidates through preclinical and clinical
development, seek regulatory approval and pursue commercialization of any approved product candidates. In addition, if we obtain marketing approval for
any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and
distribution. In addition, we may incur expenses in connection with the in-license or acquisition of additional product candidates. Furthermore, we have
incurred and expect to continue to incur, additional costs associated with operating as a public company, including significant legal, accounting, investor
relations and other expenses that we did not incur as a private company.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we
can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital
sources, including potential collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into
such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when,
needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our drug candidates or
delay our pursuit of potential in-licenses or acquisitions.
Based on our current clinical development plans, we believe our existing cash of $153.3 million at December 31, 2020, along with the additional
net proceeds of $123.4 million from sale of our ADSs under our at-the market facility program in January 2021 and our follow-on capital raise in February
2021 will be able to fund our current and planned operating expenses and capital expenditure requirements through at least the next 12 months from the
date of this Annual Report. The forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of
our expenses could vary materially and adversely as a result of a number of factors. We have based these estimates on assumptions that may prove to be
wrong, and our expenses could prove to be significantly higher than we currently anticipate. Management does not know whether additional financing will
be on terms favorable or acceptable to us when needed, if at all. If adequate additional funds are not available when required, or if we are unsuccessful in
entering into partnership agreements for further development of our product candidates, management may need to curtail its development efforts and
planned operations.
We announced an adjustment of our workforce and infrastructure footprint during the first quarter of 2021, which will involve an overall reduction
in headcount of approximately 20%. We expect to realize cash savings, on an annualized basis, of approximately $15 million per annum once the
operational changes are fully implemented. In the short-term, we expect there to be an increase in the first half of 2021 to both research and development
expenses and selling, general, and administrative expenses due to restructuring charges of approximately $2.5 million, combined.
Components of Our Results of Operations
Grant Income
Grant income consists of proceeds from government research grants used to perform specific research and development activities. We recognize
grant income over the period in which we recognize the related costs covered under the terms and conditions
91
of the grant. We have received grants from the U.K. government, which are repayable under certain circumstances, including breach or noncompliance with
the terms of the grant. For grants with refund provisions, we review the grant to determine the likelihood of repayment. If the likelihood of repayment of
the grant is determined to be remote, then the grant is recognized as grant income.
License Revenue
We account for our revenue pursuant to the provisions of Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with
Customers, or ASC Topic 606.
We have no products approved for commercial sale and have not generated any revenue from commercial product sales to date. The total revenue
to date has been generated from a license agreement with an investee company of Syncona, our principal shareholder. The terms of the agreement includes
a non-refundable license fee, payments based upon achievement of clinical development and regulatory objectives, and royalties on product sales.
In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our agreements, we perform the following
steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance
obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable
consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when
(or as) the we satisfy each performance obligation.
License Fees and Multiple Element Arrangements
If a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we
recognize revenues from non-refundable, upfront fees allocated to the license at such time as the license is transferred to the licensee and the licensee is
able to use, and benefit from, the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined
performance obligations to determine whether the combined performance obligations are satisfied over time or at a point in time and, if over time, the
appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. We evaluate the measure of progress
each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.
Appropriate methods of measuring progress include output methods and input methods. In determining the appropriate method for measuring
progress, we consider the nature of service that we promise to transfer to the customer. When we decide on a method of measurement, we will apply that
single method of measuring progress for each performance obligation satisfied over time and will apply that method consistently to similar performance
obligations and in similar circumstances.
Contingent Research Milestone Payments
ASC Topic 606 constrains the amount of variable consideration included in the transaction price in that either all, or a portion, of an amount of
variable consideration should be included in the transaction price. The variable consideration amount should be included only to the extent that it is
probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable
consideration is subsequently resolved. The assessment of whether variable consideration should be constrained is largely a qualitative one that has two
elements: the likelihood of a change in estimate, and the magnitude thereof. Variable consideration is not constrained if the potential reversal of cumulative
revenue recognized is not significant, for example.
If the consideration in a contract includes a variable amount, we will estimate the amount of consideration in exchange for transfer of promised
goods or services. The consideration also can vary if our entitlement to the consideration is contingent on the occurrence or non-occurrence of a future
event. We consider contingent research milestone payments to fall under the scope of variable consideration, which should be estimated for revenue
recognition purposes at the inception of the contract and reassessed ongoing at the end of each reporting period.
We assess whether contingent research milestones should be considered variable consideration that should be constrained and thus not part of the
transaction price. This includes an assessment of the probability that all or some of the milestone revenue could be reversed when the uncertainty around
whether or not the achievement of each milestone is resolved, and the amount of reversal could be significant.
GAAP provides factors to consider when assessing whether variable consideration should be constrained. All of the factors should be considered,
and no factor is determinate. We consider all relevant factors.
92
Royalty Revenue
For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the
predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation
to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Operating Expenses
Research and Development Expenses
Research and development expenses consist of costs incurred in connection with the research and development of our product candidates, which
are partially offset by research and development expenditure tax credits provided by Her Majesty’s Revenue & Customs, or HMRC. We expense research
and development costs as incurred. These expenses include:
•
expenses incurred under agreements with contract research organizations, or CROs, as well as investigative sites and consultants that conduct our
clinical trials, preclinical studies and other scientific development services;
• manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial materials;
•
•
•
•
•
employee-related expenses, including salaries, related benefits, travel and share-based compensation expense for employees engaged in research
and development functions;
expenses incurred for outsourced professional scientific development services;
costs for laboratory materials and supplies used to support our research activities;
allocated facilities costs, depreciation and other expenses, which include rent and utilities; and
upfront, milestone and management fees for maintaining licenses under our third-party licensing agreements.
We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by
our service providers.
Our direct research and development expenses are tracked on a program-by-program basis for our product candidates and consist primarily of
external costs, such as fees paid to outside consultants and CROs in connection with our preclinical development, manufacturing and clinical development
activities. Our direct research and development expenses by program also include fees incurred under license agreements. We do not allocate employee
costs or facility expenses, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs
and, as such, are not separately classified. We use internal resources primarily to oversee research and development as well as for managing our preclinical
development, process development, manufacturing and clinical development activities.
The following table summarizes our research and development expenses incurred by program:
Direct research and development expenses
B cell malignancies (AUTO1 & AUTO3)
Other projects (AUTO 2, 4, 5, 6, 7, & 8)
Total direct research and development expense
Research and discovery expense and unallocated costs:
Personnel related (including share-based compensation)
Indirect research and development expense
Total research and development expenses
Year Ended December 31,
2020-2019
2019-2018
2020
2019
(unaudited)
2018
(in thousands)
Change
Change
$
29,335 $
15,346 $
5,436 $
13,989 $
3,366
32,701
4,368
19,714
3,998
9,434
(1,002)
12,987
58,171
44,016
54,187
31,517
21,453
17,412
3,984
12,499
$
134,888 $
105,418 $
48,299 $
29,470 $
9,910
370
10,280
32,734
14,105
57,119
93
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. As a
result, we expect that our research and development expenses will increase substantially over the next few years as we increase personnel costs, initiate and
conduct additional clinical trials and prepare regulatory filings related to our product candidates. We also expect to incur additional expenses related to
milestone, royalty payments and maintenance fees payable to third parties with whom we have entered into license agreements to acquire the rights related
to our product candidates.
The successful development and commercialization of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or
know the nature, timing and costs of the efforts that will be necessary to complete the clinical development of any of our product candidates or when, if
ever, material net cash inflows may commence from sales of any of our product candidates. This uncertainty is due to the numerous risks and uncertainties
associated with development and commercialization activities, including the uncertainty of:
•
•
•
•
•
•
•
•
the scope, progress, outcome and costs of our clinical trials and other research and development activities, including establishing an appropriate
safety profile with IND-directed studies;
successful patient enrollment in, and the initiation and completion of, clinical trials;
the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;
establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
development and timely delivery of commercial-grade drug formulations that can be used in our clinical trials and for commercial manufacturing;
obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;
significant and changing government regulation;
launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others;
• maintaining a continued acceptable safety profile of the product candidates following approval; and
•
significant competition and rapidly changing technologies within the biopharmaceutical industry.
We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical
trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. Any changes in the outcome of any of
these variables with respect to the development of our product candidates in clinical development could mean a significant change in the costs and timing
associated with the development of these product candidates. For example, if the EMA, the FDA, or another regulatory authority were to delay our planned
start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in
enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of
clinical development of that product candidate. Commercialization of our product candidates will take several years and millions of dollars in development
costs.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, related benefits, travel and share-based compensation expense for personnel in
executive, finance, legal and administrative functions. General and administrative expenses also include allocated facility-related costs, patent filing and
prosecution costs and professional fees for marketing, insurance, legal, consulting, accounting and audit services.
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the planned
development of our product candidates. Additionally, if we believe a regulatory approval of one of our product candidates appears likely, we would
anticipate an increase in payroll and expense as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of
our product candidate.
We have experienced, and expect to continue to experience, increased expense with being a public company, including increased accounting, audit,
legal, regulatory and compliance costs associated with maintaining compliance with Nasdaq listing rules and SEC requirements, director and officer
insurance premiums, as well as higher investor and public relations costs.
94
Other Income (Expense)
Other income consists primarily of interest income earned on our cash balances held at a commercial bank and foreign currency transaction gains.
Other expense consists primarily of foreign currency transaction losses.
Income Tax Benefit
We are subject to corporate taxation in the United Kingdom and in the United States. Due to the nature of our business, we have generated losses
since inception. Our income tax credit recognized represents the sum of the research and development tax credits recoverable in the United Kingdom and
income tax payable in the United States.
As a company that carries out extensive research and development activities, we benefit from the U.K. research and development tax credit regime
under the scheme for small or medium-sized enterprises, or SMEs, and also claim a Research and Development Expenditure Credit, or RDEC, to the extent
that our projects are grant funded. Under the SME regime, we are able to surrender some of our trading losses that arise from our qualifying research and
development activities for a cash rebate ranging from 21.67% to 33.35% of such qualifying research and development expenditure. The net tax benefit of
the RDEC is expected to be 10.5% in 2021 and future periods. We meet the conditions of the SME regime, but also can make claims under the RDEC
regime to the extent that our projects are grant funded. Qualifying expenditures largely comprise employment costs for research staff, consumables,
outsourced CRO costs and utilities costs incurred as part of research projects. Certain subcontracted qualifying research and development expenditures are
eligible for a cash rebate of up to 21.67%. A large portion of costs relating to our research and development, clinical trials and manufacturing activities are
eligible for inclusion within these tax credit cash rebate claims.
We may not be able to continue to claim research and development tax credits under the SME regime in the future because we may no longer
qualify as a small or medium-sized company. However, we should continue to be able to make claims under the RDEC regime.
Un-surrendered U.K. losses may be carried forward indefinitely to be offset against future taxable profits, subject to numerous utilization criteria
and restrictions. The amount that can be offset each year is limited to £5.0 million plus an incremental 50% of U.K. taxable profits. After accounting for tax
credits receivable, there were accumulated tax losses for carry forward in the United Kingdom of $211.7 million as of December 31, 2020. We currently do
not recognize a deferred tax asset from our accumulated losses and record a full valuation allowance against the net deferred tax asset as the recoverability
due to future taxable profits is unknown.
In the event we generate revenues in the future, we may benefit from the U.K. “patent box” regime that allows profits attributable to revenues from
patents or patented products to be taxed at effective rate of 10%.
Value Added Tax, or VAT, is broadly charged on all taxable supplies of goods and services by VAT-registered businesses. Under current rates, an
amount of 20% of the value, as determined for VAT purposes, of the goods or services supplied is added to all sales invoices and is payable to HMRC.
Similarly, VAT paid on purchase invoices is generally reclaimable from HMRC.
95
Results of Operations
Comparison of Years Ended December 31, 2020 and 2019
The following table summarizes our results of operations for the years ended December 31, 2020 and 2019.
Grant income
License revenue
Operating expenses:
Research and development
General and administrative
Loss on impairment of leasehold improvements
Total operating expenses, net
Other income (expense):
Interest income
Other income (expense)
Total other income, net
Net loss before income tax
Income tax benefit
Net loss attributable to ordinary shareholders
Grant Income
Year Ended December 31,
2020
2019
Change
$
$
$
1,473
242
2,908
—
$
(134,888)
(34,972)
—
(168,145)
536
1,352
1,888
(166,257)
24,163
(142,094)
$
(105,418)
(39,452)
(4,102)
(146,064)
2,542
4,514
7,056
(139,008)
15,159
(123,849)
$
(1,435)
242
(29,470)
4,480
4,102
(22,081)
(2,006)
(3,162)
(5,168)
(27,249)
9,004
(18,245)
Grant income decreased to $1.5 million for the year ended December 31, 2020 from $2.9 million for the year ended December 31, 2019. The
decrease in grant income of $1.4 million was related to a one-time grant completed in the year ended December 31, 2019 submitted to the U.K. government
as part of the reimbursement terms of government research grants used to perform specific research and development activities.
License Revenue
The $0.2 million of license revenue relates to the grant of a license to an investee company of Syncona, our principal shareholder, in the year ended
December 31, 2020.
Research and Development Expenses
Research and development expenses increased to $134.9 million for the year ended December 31, 2020 from $105.4 million for the year ended
December 31, 2019. Cash costs, which exclude depreciation and amortization as well as share-based compensation, increased to $116.9 million from $83.4
million. The increase in research and development cash costs of $33.5 million consisted primarily of (i) an increase of $8.8 million in compensation and
employment related costs, net of lower travel costs, due to an increase in employee headcount to support the advancement of our product candidates in
clinical development, (ii) an increase of $14.4 million in project expenses as a consequence of the advancement of our clinical portfolio which includes
research and process development and manufacturing activities necessary to prepare, activate, and monitor clinical trial programs, (iii) an increase of $6.0
million in facilities costs related to the commencement of a lease for an additional manufacturing suite and the continued scaling of manufacturing
operations, (iv) an increase of $4.0 million in IT infrastructure and support for information systems related to the conduct of clinical trials and
manufacturing operations, (v) an increase of $0.5 million related to legal fees, and (vi) an increase of $1.7 million related to cell logistics, which is offset by
a reduction in materials purchases of $0.7 million and license fees of $1.1 million.
Non-cash costs decreased to $18.1 million for the year ended December 31, 2020 from $22.0 million for the year ended December 31, 2019. The
$3.9 million decrease is related to a decrease of $4.8 million share-based compensation expense as a result of a lower fair value of options recognized in the
period, offset by a $0.9 million increase in depreciation.
96
General and Administrative Expenses
General and administrative expenses decreased to $35.0 million for the year ended December 31, 2020 from $39.5 million for the year ended
December 31, 2019. Cash costs, which exclude depreciation as well as share-based compensation increased to $27.4 million from $26.6 million. There
were increases of $1.3 million of costs related to D&O insurance and intellectual property costs and $0.1 million of facilities cost, offset by decreases of
$0.5 million of compensation and other employment related costs and $0.1 million in general office expense.
Non-cash costs decreased to $7.6 million for the year ended December 31, 2020 from $12.9 million for the year ended December 31, 2019. The
decrease of $5.3 million is mainly attributed to lower share-based compensation expenses as a result of the lower fair value of stock options recognized
during the period.
Loss on Impairment of Leasehold Improvements
There was no loss on impairment of leasehold improvements for the year ended December 31, 2020 as compared to $4.1 million for the year ended
December 31, 2019 which related to the discontinuation of the fit-out of our manufacturing capacity at the Enfield, U.K. facility.
Interest Income
Interest income decreased to $0.5 million for the year ended December 31, 2020 from $2.5 million for the year ended December 31, 2019. This
decrease is due to the lower cash balances held during the year combined with lower interest rates for cash held on deposit.
Other Income (Expense)
Other income decreased to $1.4 million for the year ended December 31, 2020 from $4.5 million for the year ended December 31, 2019 primarily due to a
weakening of the U.S. dollar exchange rate relative to the pound sterling. The decrease of $4.6 million in the year ended December 31, 2020 was offset by
lease termination gains of $1.5 million.
Income Tax Benefits
Income tax benefit increased to $24.2 million for the year ended December 31, 2020 from $15.2 million for the year ended December 31, 2019 due
to additional U.K. research and development tax credits receivable from HMRC. Research and development credits are obtained at a maximum rate of
33.35% of our qualifying research and development expenses, and the increase in the net credit was primarily attributable to an increase in our eligible
research and development expenses.
Comparison of Years Ended December 31, 2019 and 2018
The following table summarizes our results of operations for the years ended December 31, 2019 and 2018. The unaudited information for the year
ended December 31, 2018 has been calculated by adding (i) our results for the nine months ended September 30, 2018, derived from our audited
consolidated financial statements for the fiscal year ended September 30, 2018 included in our Annual Report on Form 20-F with the SEC on November
23, 2018 and (ii) our results for the three month transition period ended December 31, 2018, derived from the audited consolidated financial statements
included in our Transition Report on Form 20-F with the SEC on February 25, 2019.
97
Grant income
Operating expenses:
Research and development
General and administrative
Loss on impairment of leasehold improvements
Total operating expenses, net
Other income (expense):
Interest income
Other income (expense)
Total other income, net
Net loss before income tax
Income tax benefit
Net loss attributable to ordinary shareholders
$
Grant Income
Year Ended December 31,
2019
(unaudited)
2018
Change
$
2,908
$
1,472
$
(105,418)
(39,452)
(4,102)
(146,064)
2,542
4,514
7,056
(139,008)
15,159
(123,849)
$
(48,299)
(27,299)
—
(74,126)
2,011
5,752
7,763
(66,363)
8,488
(57,875)
$
1,436
(57,119)
(12,153)
(4,102)
(71,938)
531
(1,238)
(707)
(72,645)
6,671
(65,974)
Grant income increased to $2.9 million for the year ended December 31, 2019 from $1.5 million for the year ended December 31, 2018. The
increase in grant income of $1.4 million was related to an increase in reimbursable expenditures submitted in 2019 to the UK government.
Research and Development Expenses
Research and development expenses increased to $105.4 million for the year ended December 31, 2019 from $48.3 million for the year ended
December 31, 2018. Cash costs, which exclude depreciation as well as share-based compensation, increased to $83.4 million from $41.5 million. The
increase in research and development cash costs of $41.9 million consisted primarily of an increase in compensation-related costs of $20.0 million
primarily due to an increase in headcount to support the advancement of our product candidates in clinical development and investment in manufacturing
facilities and equipment, an increase of $4.1 million in research and manufacturing consumables, in part due to the migration and expansion of our research
and process development laboratories from Forest House to our new location in the Media Works facility, preparations in advance of any potential
disruption to supply arrangements that may occur due to Brexit, as well as validation and training costs as part of the start-up at the Catapult facility, an
increase of $10.2 million in facility costs primarily related to the increased leased facilities, an increase of $3.8 million in project expenses related to the
activities necessary to prepare, activate, and monitor clinical trial programs, an increase of $1.5 million in legal and professional fees that includes a
decrease in milestone payments of $0.5 million consisting of a milestone payment payable to UCL Business plc in 2018 and a milestone payment payable
to Noile-Immune Biotech Inc. in 2019, and an increase in IT and general office expenses of $2.3 million.
Non-cash costs increased to $22.0 million for the year ended December 31, 2019 from $6.7 million for the year ended December 31, 2018. The
$15.3 million increase is related to an increase of $12.7 million share-based compensation expense as a result of an increase in headcount, and consequent
increase in the number of options granted, and an increase in the fair value of stock for options expensed during the year ended December 31, 2019, and an
increase of $2.6 million of depreciation related to the purchase of equipment to support our clinical trials and research activities and leasehold
improvements.
General and Administrative Expenses
General and administrative expenses increased to $39.5 million for the year ended December 31, 2019 from $27.3 million for the year ended
December 31, 2018. Cash costs, which exclude depreciation as well as share-based compensation increased to $26.6 million from $21.4 million. The
increase of $5.2 million consisted primarily of an increase in compensation-related costs of $2.6 million due to an overall increase in headcount, an increase
of $1.9 million in commercial costs, an increase in legal and professional fees of $1.0 million, and an increase of $0.7 million in facility costs related to
lease and maintenance costs, offset in part by a decrease of $1.0 million in IT charges, project expenses, and other office expenses.
Non-cash costs increased to $12.9 million for the year ended December 31, 2019 from $5.9 million for the year ended December 31, 2018. The
increase is primarily due to an increase of $7.3 million share-based compensation expense as a result of an
98
increase in headcount, and consequent increase in the number of options granted, and an increase in the fair value of stock for options expensed during the
period, an increase of $0.1 million of depreciation, offset in part by impairment expense of $0.4 million related to discontinued software that occurred in
2018.
Loss on Impairment of Leasehold Improvements
Loss on impairment of leasehold improvements of $4.1 million for the year ended December 31, 2019 related to the impairment of leasehold
improvements as we discontinued the fit-out of our manufacturing capacity at the Enfield, U.K. facility. No such loss of leasehold improvements occurred
in 2018.
Interest Income
Interest income increased to $2.5 million for the year ended December 31, 2019 from $2.0 million for the year ended December 31, 2018 primarily
due to a higher cash balance related to our capital raise activity in 2018 and 2019.
Other Income (Expense)
Other income decreased to $4.5 million for the year ended December 31, 2019 from $5.8 million for the year ended December 31, 2018 primarily due to
foreign currency gains related to the U.S dollar strength relative to the British pound during 2019 as compared to 2018.
Income Tax Benefits
Income tax benefits increased to $15.2 million for the year ended December 31, 2019 from $8.5 million for the year ended December 31, 2018 due
to additional U.K. research and development tax credits receivable from HMRC. Research and development credits are obtained at a maximum rate of
33.35% of our qualifying research and development expenses, and the increase in the net credit was primarily attributable to an increase in our eligible
research and development expenses.
B. Liquidity and capital resources.
Since our inception, we have not generated any product revenue and have incurred operating losses and negative cash flows from our operations. We
expect to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through preclinical and clinical
development, seek regulatory approval and pursue commercialization of any approved product candidates. We expect that our research and development
and general and administrative costs will increase in connection with our planned research activities. As a result, we will need additional capital to fund our
operations until such time as we can generate significant revenue from product sales.
We do not currently have any approved products and have never generated any revenue from product sales. We have funded our operations to date
primarily with proceeds from government grants and sales of our preferred and ordinary shares. Through December 31, 2020, we have received aggregate
net cash proceeds of $516.1 million from sales of our equity securities. As of December 31, 2020, we had cash of $153.3 million. We raised additional net
proceeds of $123.4 million from the sale of ADSs under our at-the-market facility in January 2021 and our follow-on capital raise in February 2021.
We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the
next five years, other than our lease obligations and supplier purchase commitments described below. We also do not currently have any off-balance sheet
arrangements.
ATM Facility
In September 2020, we entered into an Open Market Sale Agreement
, or the Sales Agreement, with Jefferies LLC, or Jefferies, under which we
may, at our option, offer and sell ADSs having an aggregate offering price of up to $100.0 million from time to time through Jefferies, acting as sales agent.
Any such sales, made through our sales agent can be made by any method that is deemed an “at-the-market offering” as defined in Rule 415 promulgated
under the Securities Act, or in other transactions pursuant to an effective shelf registration statement on Form F-3. We agreed to pay Jefferies a commission
of 3.0% of the gross proceeds of any sales of ADSs sold pursuant to the Sales Agreement. During the year ended December 31, 2020, we did not sell any
ADSs under the Sales Agreement.
SM
As of the date of this Annual Report, we have sold an aggregate of 1,718,506 ADSs under the Sales Agreement, for net proceeds of $15.3 million.
99
Cash Flows
The following table summarizes our cash flows for each of the periods presented:
Year Ended December 31,
(in thousands)
2020
$(117,758)
(14,681)
74,415
679
$(57,345)
2019
$(101,484)
(18,668)
108,863
5,164
$(6,125)
(unaudited)
2018
$(42,525)
(13,189)
156,487
(12,202)
$88,571
Net cash used in operating activities
Net cash used in investing activities
Net cash provided by financing activities
Effect of exchange rate changes on cash
Net (decrease) increase in cash
Net Cash Used in Operating Activities
During the year ended December 31, 2020, operating activities used $117.8 million of cash, resulting from our net loss of $142.1 million, offset by
net cash used resulting from changes in our operating assets and liabilities of $1.4 million and by non-cash charges of $22.9 million. The non-cash charges
primarily related to share based compensation of $20.1 million and depreciation of $5.7 million, offset by a gain on lease incentive of $1.3 million and a
gain on lease termination of $0.2 million. Net cash used resulting from changes in our operating assets and liabilities for the year ended December 31,
2020 consisted primarily of a $5.3 million increase in prepaid expenses and other assets, current and non-current and $0.5 million increase in long term
deposits, offset in part by a $7.0 million increase in accounts payable and accrued expenses and other liabilities.
During the year ended December 31, 2019, operating activities used $101.5 million of cash, resulting from our net loss of $123.8 million, and net
cash used resulting from changes in our operating assets and liabilities of $16.2 million, partially offset by non-cash charges of $38.6 million, primarily
related to share based compensation of $30.2 million and leasehold improvement impairment of $4.1 million. Net cash used resulting from changes in our
operating assets and liabilities for the year ended December 31, 2019 consisted primarily of a $21.0 million increase in prepaid expenses and other assets,
current and non-current offset in part by a $3.5 million increase in accounts payable and accrued expenses and other liabilities.
During the year ended December 31, 2018, operating activities used $42.5 million of cash, resulting from our net loss of $57.9 million, offset in
part by net cash provided by changes in our operating assets and liabilities of $3.7 million and non-cash charges of $11.7 million. Net cash used in changes
in our operating assets and liabilities for the year ended December 31, 2018 consisted primarily of a $9.3 million increase in prepaid expenses and other
assets, current and non-current and a $1.3 million increase in long-term deposits, partially offset by a $12.9 million increase in accrued expenses and other
liabilities and a $1.3 million increase in accounts payable.
Net Cash Used in Investing Activities
During the years ended December 31, 2020 and 2019, we used $14.7 million and $18.7 million, respectively, of cash in investing activities, which
consisted primarily of purchases of property and equipment.
During the years ended December 31, 2019 and 2018, we used $18.7 million and $13.2 million, respectively, of cash in investing activities, all of
which consisted primarily of purchases of property and equipment.
Net Cash Provided by Financing Activities
During the years ended December 31, 2020 and 2019, net cash provided by financing activities was $74.4 million and $108.9 million, respectively,
consisting of net cash proceeds from our January 2020 and April 2019 follow-on capital raises.
During the year ended December 31, 2019 and 2018, net cash provided by financing activities was $108.9 million and $156.5 million,
respectively, consisting of net cash proceeds from our April 2019 follow-on capital raise and June 2018 IPO.
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Cash Denomination
The following table reflects cash denominations in U.S. dollars and pound sterling as of:
December 31,
2020
2019
(in thousands)
Total cash held
$
153,299
$
210,643
U.S. dollars
British sterling*
* British sterling amount disclosed include immaterial amounts of Swiss franc and Euro account
balances.
62,200
66,700
29,800
136,900
$
£
$
£
Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and
clinical trials of our product candidates. Our expenses will increase as we:
• seek regulatory approvals for any product candidates that successfully complete preclinical and clinical trials;
• establish a sales, marketing and distribution infrastructure in anticipation of commercializing of any product candidates for which we may obtain
marketing approval and intend to commercialize on our own or jointly;
• hire additional clinical, medical, and development personnel;
• expand our infrastructure and facilities to accommodate our growing employee base; and
• maintain, expand and protect our intellectual property portfolio.
Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, clinical costs, external research and
development services, laboratory and related supplies, legal and other regulatory expenses, and administrative and overhead costs. Our future funding
requirements will be heavily determined by the resources needed to support development of our product candidates.
Based on our current clinical development plans, we believe our existing cash of $153.3 million at December 31, 2020, along with the net proceeds
from sale of our ADSs in January and February 2021 of $123.4 million, will enable us to fund our current and planned operating expenses and capital
expenditure requirements for at least the next 12 months. We have based these estimates on assumptions that may prove to be wrong, and we could utilize
our available capital resources sooner than we expect. If we receive regulatory approval for our other product candidates, we expect to incur significant
commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize. We may
also require additional capital to pursue in-licenses or acquisitions of other product candidates.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product
candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could
increase significantly as a result of many factors, including:
• the scope, progress, outcome and costs of our clinical trials and other research and development activities;
• the costs, timing, receipt and terms of any marketing approvals from applicable regulatory authorities;
• the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for
which we receive marketing approval;
• the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval;
• the costs and timing of hiring new employees to support our continued growth;
• the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual
property-related claims; and
• the extent to which we in-license or acquire additional product candidates or technologies.
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Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through equity
offerings. To the extent that we raise additional capital through the sale of equity, your ownership interest will be diluted. If we raise additional funds
through other third-party funding, collaborations agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we
may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that
may not be favorable to us. If we are unable to raise additional funds through equity financings when needed, we may be required to delay, limit, reduce or
terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would
otherwise prefer to develop and market ourselves.
Lease, Purchase, and Other Obligations
We have operating lease obligations related to our property, plant and equipment. The details of these leases are disclosed in Item 4D. "Property,
Plant and Equipment." within this annual report. The obligations related to the leases arrangements both short- and long-term is given in the Notes to the
Consolidated Financial Statements, specifically, Note 11, "Commitment and Contingencies."
We enter into contracts in the normal course of business with CROs and other third parties for clinical trials and preclinical research studies and
testing. These contracts are generally cancellable by us upon prior notice. Payments due upon cancellation consist only of payments for services provided
or expenses incurred, including noncancellable obligations of our service providers, up to the date of cancellation.
We have contingent payment obligations that we may incur upon achievement of clinical, regulatory and commercial milestones, as applicable, or
royalty payments that we may be required to make under our license agreements with UCLB and Noile-Immune Biotech; however, the amount, timing and
likelihood of such payments are not known as of December 31, 2020.
Critical Accounting Policies and Significant Judgments and Estimates
Our financial statements are prepared in accordance with U.S. GAAP. The preparation of our financial statements and related disclosures requires
us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and
liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates
under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2 to our financial statements appearing at the end of this Annual
Report, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial
statements.
Share-Based Compensation
We issue ordinary shares as well as options and other securities exercisable for or convertible into ordinary shares or ADSs, as incentives to our
employees and directors, and employees and consultants of our subsidiaries. To the extent such incentives are in the form of share options, the options are
granted pursuant to the terms of our 2017 Share Option Plan, or the 2017 Plan, or pursuant to the terms of our 2018 Equity Incentive Plan, or the 2018 Plan.
Options granted under the 2017 Plan and 2018 Plan, as well as shares granted as employee incentives, typically vest over a four-year service period with
25% of the award vesting on the first anniversary of the commencement date and the balance vesting monthly over the remaining three years, unless the
awards contain specific performance vesting provisions. For equity awards issued that have both a performance vesting condition and a services condition,
or performance awards, once the performance criteria is achieved, the performance awards are then subject to a four-year service vesting with 25% of the
performance award vesting on the first anniversary of the performance condition being achieved, with the balance vesting monthly over the remaining three
years. For certain members of senior management and directors, the board has approved an alternative vesting schedule for the equity awards. The options
granted under the 2017 Plan and 2018 Plan generally expire ten years from the date of grant. We expect our share-based compensation expense for awards
granted to employees, directors and other service providers to increase in future periods due to the planned increases in our headcount, particularly as we
move toward commercialization of our product candidates.
We recognize compensation expense for equity awards based on the grant date fair value of the award. For equity awards that vest based on a
service condition, the share-based compensation expense is recognized on a straight-line basis over the requisite service period. For equity awards that
contain both performance and service conditions, we recognize share-based compensation expense ratably over the requisite service period when the
achievement of a performance-based milestone is probable based on the
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relative satisfaction of the performance condition as of the reporting date. We use the fair value of our ordinary shares to determine the fair value of
restricted share awards.
Share-based compensation is recognized as an expense in the financial statements based on the grant date fair value over the requisite service
period. For awards granted to our employees and directors that vest based on service conditions, we use the accelerated method to allocate compensation
expense to reporting periods. We do not adjust share-based compensation for estimated forfeitures and account for forfeitures when they occur.
We use the Black-Scholes option pricing model to estimate the fair value of share options. This option-pricing model requires the input of various
subjective assumptions, including the option’s expected life and the price volatility of the security.
The fair value of each share option grant is estimated on the date of grant using the Black-Scholes option pricing model and applying assumptions
used in connection with option grants made during the periods covered by these financial statements. Assumptions used in the option pricing model include
the following:
Expected volatility. We lack company-specific historical and implied volatility information for our ADSs for expected terms greater than 2.5 years.
Therefore, we use a combination of the historical volatility of our ADSs and also the expected share volatility based on the historical volatility of
publicly traded peer companies and expect to continue to do so until such time as we have adequate historical data regarding the volatility of our
own traded security price.
Expected term. The expected term of options granted represents the weighted average period of time that options granted are expected to be
outstanding giving consideration to vesting schedules and our historical exercise patterns. The expected term of our share options has been
determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options.
Risk-free interest rate. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the
award for time periods that are approximately equal to the expected term of the award.
Expected dividend. Expected dividend yield of zero is based on the fact that we have never paid cash dividends on ordinary shares and do not
expect to pay any cash dividends in the foreseeable future.
Fair value of ordinary shares. Options granted after our IPO are issued at the fair market value of our ADSs at the date the grant is approved by the
Board.
Prior to the IPO, we calculated the fair value of our ordinary shares in accordance with the guidelines in the American Institute of Certified Public
Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The valuations of
ordinary shares were prepared using a market approach, based on precedent transactions in the shares, to estimate our total equity value using the option-
pricing method, or OPM, which used a combination of market approaches and an income approach to estimate our enterprise value.
The OPM derives an equity value such that the value indicated is consistent with the investment price, and it provides an allocation of this equity
value to each class of our securities. The OPM treats the various classes of shares as call options on the total equity value of a company, with exercise
prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, each class of
shares has value only if the funds available for distribution to shareholders exceed the value of the share liquidation preferences of the class or classes of
shares with senior preferences at the time of the liquidity event. Key inputs and assumptions used in the OPM calculation include the following:
Expected volatility. We applied re-levered equity volatility based on the historical unlevered and re-levered equity volatility of publicly traded
peer companies.
Expected dividend. Expected dividend yield of zero is based on the fact that the Company has never paid cash dividends on ordinary shares and
does not expect to pay any cash dividends in the foreseeable future.
Expected term. The expected term of the option or the estimated time until a liquidation event.
Risk-free interest rate. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for the period commensurate with the
expected of the exit event.
When considering the fair value of options granted in the period prior to the IPO, management considered probability-weighted scenarios based on
the relative likelihoods of completing the IPO and remaining a privately-held company. In the IPO scenarios, the fair value was calculated by dividing our
total estimated equity value by the number of fully diluted ordinary shares outstanding, and then discounting the implied per-share value at a rate intended
to approximate our cost of equity between the share option grant date and the expected IPO date. The stay-private scenario utilized an OPM "Backsolve"
calculation to estimate our equity value implied by the purchase price of the series A preference shares in September 2017.
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Accrued Research and Development Expenses
As part of the process of preparing consolidated financial statements, the Company is required to estimate accruals for research and development
expenses. This process involves reviewing and identifying services which have been performed by third parties on the Company’s behalf and determining
the value of these services. In addition, the Company makes estimates of costs incurred to date but not yet invoiced, in relation to external Clinical
Research Organizations and clinical site costs. The Company analyzes the progress of clinical trials, including levels of patient enrollment; invoices
received and contracted costs, when evaluating the adequacy of the accrued liabilities for research and development. The Company makes judgments and
estimates in determining the accrued balance in any accounting period.
Income Taxes
We account for income taxes under the asset and liability method which includes the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in our financial statements. Under this approach, deferred taxes are recorded for the
future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes
represents income taxes paid or payable for the current year plus deferred taxes. Deferred taxes result from differences between the financial statements and
tax bases of our assets and liabilities, and are adjusted for changes in tax rates and tax laws when changes are enacted. The effects of future changes in
income tax laws or rates are not anticipated.
We are subject to corporation taxes in the United Kingdom and the United States. The calculation of our tax provision involves the application of
U.K. tax law and requires judgment and estimates.
We evaluate the realizability of our deferred tax assets at each reporting date. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income of the same character and in the same jurisdiction. We consider all available positive and negative evidence in making
this assessment, including, but not limited to, the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies.
In circumstances where there is sufficient negative evidence indicating that our deferred tax assets are not more likely than not realizable, we establish a
valuation allowance.
We use a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate tax positions taken or expected to be
taken in a tax return by assessing whether they are more likely than not sustainable, based solely on their technical merits, upon examination, and including
resolution of any related appeals or litigation process. The second step is to measure the associated tax benefit of each position as the largest amount that
we believe is more likely than not realizable. Differences between the amount of tax benefits taken or expected to be taken in our income tax returns and
the amount of tax benefits recognized in our financial statements represent our unrecognized income tax benefits, which we either record as a liability or as
a reduction of deferred tax assets.
Deferred Tax and Current Tax Credits
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognized in the statement of operations, except to the extent that it
relates to items recognized directly in equity, in which case it is recognized in equity. Current tax is the expected tax payable 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 in respect of previous years. Tax
credits are accrued for the year based on calculations that conform to the U.K. research and development tax credit regime, under both the SME and large
company regimes. We meet the conditions of the SME regime, but also can make claims under the RDEC regime to the extent that our projects are grant
funded.
We may not be able to continue to claim research and development tax credits under the SME regime in the future because we may no longer
qualify as a small or medium-sized company. However, we should continue to be able to make claims under the RDEC regime.
Deferred tax is recognized 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 is based on the expected manner of realization 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 recognized only to the extent that it is
probable that future taxable profits will be available against which the asset can be utilized. No deferred tax assets are recognized on our losses carried
forward and other attributes because there is currently no indication that we will make sufficient profits to utilize these attributes.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act, or the JOBS Act, was enacted. The JOBS Act provides that, among other things, an
emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. As an emerging
growth company, we have irrevocably elected not to take advantage of the extended
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transition period afforded by the JOBS Act for implementation of new or revised accounting standards and, as a result, we will comply with new or revised
accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth public companies.
In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions
set forth in the JOBS Act, we are entitled to rely on certain exemptions as an “emerging growth company,” we are not required to, among other things,
(i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b), (ii) provide all of the
compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit
firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and
analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and
comparisons of the chief executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five years
following the completion of our IPO or until we no longer meet the requirements of being an emerging growth company, whichever is earlier.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is
disclosed in Note 2, “Summary of Significant Accounting Policies,” to our consolidated financial statements included in this Annual Report.
C. Research and development, patents and licenses, etc.
Full details of our research and development activities and expenditures are given in Item 4.B. "Information on the Company – Business Overview”
and Item 5.A. "Operating Results” within this Annual Report.
D. Trend information.
See Item 5.A. "Operating Results” and Item 5.B. "Liquidity and Capital Resources” within this Annual Report.
E. Off-balance sheet arrangements.
We have elected to voluntarily comply with Item 5.E of the Instructions to Form 20-F, as effective February 10, 2021 and are omitting this disclosure
in reliance thereon.
F. Tabular disclosure of contractual obligations.
We have elected to voluntarily comply with Item 5.F of the Instructions to Form 20-F, as effective February 10, 2021 and are omitting this disclosure
in reliance thereon. These disclosures are now incorporated into Item 5.B. "Liquidity and Capital Resources” within this Annual Report.
G. Safe harbor.
This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act and as defined in the Private Securities Litigation Reform Act of 1995. See the section titled “Cautionary Statement Regarding Forward-Looking
Statements” at the beginning of this Annual Report.
Item 6. Directors, Senior Management and Employees
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A. Directors and senior management.
The following table sets forth information regarding members of our senior management and our directors, including their ages as of March 1, 2021.
NAME
Senior Management:
Christian Itin, Ph.D.
Andrew Oakley
Martin Pulé, MBBS
Muhammad Al-Hajj, Ph.D.
Christopher Vann
Matthias Alder
David Brochu
Non-Executive Directors:
Joseph Anderson, Ph.D.
Jay Backstrom, M.D., MPH
Linda Bain
John Berriman
Cynthia Butitta
Kapil Dhingra, M.D.
Martin Murphy, Ph.D.
Senior Management
AGE
POSITION(S)
56
58
48
50
56
56
65
61
66
50
72
66
61
52
Chief Executive Officer and Chairman of the Board of Directors
Senior Vice President, Chief Financial Officer
Senior Vice President, Founder, Chief Scientific Officer
Senior Vice President, Translational Sciences
Senior Vice President, Chief Operating Officer
Senior Vice President, Chief Business Officer and Company Secretary
Senior Vice President, Chief Technical Officer
Director
Director
Director
Director
Director
Director
Director
Christian Itin, Ph.D. has served as our Chief Executive Officer since March 2016 and as Chairman of our board of directors since October 2014. Prior to
joining us, Dr. Itin served as chief executive officer and chairman of the board of directors at Cytos Biotechnology Ltd, a biotechnology company, from
November 2012 until it merged with Kuros Biosurgery Holding Ltd in January 2016. From January 2016 until June 2018, he served as chairman, and from
June 2018 to May 2019 as non-executive director, of Kuros Biosciences Ltd. Prior to that, Dr. Itin served as president, chief executive officer and director
of Micromet, Inc., a biopharmaceutical company, from 2006 until it was acquired by Amgen Inc. in 2012. From 1999 until 2006, he served in a number of
capacities with Micromet, Inc.’s subsidiary, Micromet AG, including head of IP and licensing, vice president of business and corporate development, chief
business officer and ultimately as its chief executive officer. Before joining Micromet, Dr. Itin was a co-founder of Zyomyx, a protein chip company. Dr.
Itin also serves as a non-executive director of Kymab Ltd., a privately held biopharmaceutical company. Dr. Itin received a Diploma in Biology and a Ph.D.
in Cell Biology from the University of Basel, Switzerland. In addition, he also performed post-doctoral research at the Biocenter of University of Basel and
at the Stanford University School of Medicine. We believe that Dr. Itin is qualified to serve on our board of directors because of his deep knowledge of our
company and his extensive experience serving in executive and non-executive leadership positions at other public and private biotechnology companies.
Andrew Oakley has served as our Chief Financial Officer since June 2018. Prior to joining Autolus, Mr. Oakley served as the chief financial officer for
Sosei Group from February 2017 until June 2018 and as its executive vice president from August 2017 to June 2018. From January 2015 until June 2016,
Mr. Oakley served as chief financial officer, company secretary and executive board member of Vectura group plc. From January 2003 until August 2013,
Mr. Oakley served as the chief financial officer for Actelion Ltd. He also previously served in a senior finance capacity for the global holding companies of
Accenture, held executive positions in major multinational building material companies and spent several years as an equity analyst with banks in
Australia, the United Kingdom and the United States. Mr. Oakley holds a Bachelor of Economics Degree from Macquarie University and an M.B.A. from
London Business School. Mr. Oakley is a member of the Australian Institute of Chartered Accountants.
Martin Pulé, MBBS has served as our Senior Vice President, Founder and Chief Scientific Officer since August 2014. He also served as a member
of our board of directors from August 2014 to June 2018. Dr. Pulé has served as a clinical senior lecturer in the Department of Haematology at University
College London Cancer Institute since 2010 and as an Honorary Consultant in Haematology at University College London Hospital since 2010. He entered
the T cell engineering field in 2001 as a travelling
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Fulbright Scholar at the Center for Cell and Gene Therapy at Baylor College of Medicine, Houston, Texas. Dr. Pulé holds a Bachelor of Medicine and
Bachelor of Surgery (MBBS) from University College Dublin and is a Fellow of the Royal College of Pathologists.
Muhammad Al-Hajj, Ph.D. has served as our Senior Vice President, Translational Sciences since July 2017. Prior to joining us, he served as vice
president, discovery and translational medicine at Sanford Burnham Medical Institute from July 2015 to July 2017. Prior to that, he served as senior
director, biology and translational medicine in oncology research and development at GlaxoSmithKline plc from 2009 to June 2015. His other experience at
large pharmaceutical companies includes serving as group leader in oncology research and development at AstraZeneca AB from 2007 to 2009 and as lab
head and group leader in oncology research and development at Novartis from 2003 to 2007. Dr. Al-Hajj earned his B.S. in mathematics and biology from
the American University of Beirut. He holds a Ph.D. in molecular genetics from the Wayne State University and completed a postdoctoral fellowship in
cancer and stem cell biology at the University of Michigan Medical School.
Christopher Vann has served as our Senior Vice President, Chief Operating Officer since October 2016. Prior to joining us, he worked
at Hoffmann-La Roche’s Swiss headquarters from February 1994 to September 2016, most recently serving as its commercial director from December
2011 to September 2016 where he was primarily responsible for leading the lung cancer commercial team and general management of the Tarceva brand.
Mr. Vann has significant experience of global lifecycle management of oncology products as well as implementing marketing strategy at a regional and
national level. This includes launching several oncology, immunology and transplant products in the United States, United Kingdom, Romania, Russia,
South Africa and countries in Asia, including Japan. Mr. Vann holds a B.S. in Toxicology and Pharmacology from the School of Pharmacy, University of
London.
Matthias Alder has served as our Senior Vice President, Chief Business Officer and Company Secretary since July 2017, and as our General
Counsel between July 2017 and August 2018. Prior to joining us, he served as executive vice president for business development and licensing from
October 2014 to March 2017 and as general counsel and corporate secretary from May 2015 to July 2017 at Sucampo Pharmaceuticals, Inc., a
biopharmaceutical company which was subsequently acquired by Mallinckrodt Pharmaceuticals. Prior to this, Mr. Alder served as executive vice president
of corporate development and legal affairs and corporate secretary at Cytos Biotechnology AG, a biopharmaceutical company focused on the development
of targeted immunotherapies, from 2013 to October 2014. From 2006 to 2012, Mr. Alder held various executive management roles at Micromet, Inc.,
serving as senior vice president for administration, general counsel and secretary at the time of the acquisition of Micromet by Amgen Inc. in 2012. He was
also a partner in the Life Sciences Transactions Practice at Cooley LLP from 1997 to 2006, where he represented biotech companies in strategic
transactions with pharmaceutical companies. Earlier in his career, Mr. Alder was in-house counsel at Ciba-Geigy and Novartis. Mr. Alder holds law degrees
from the University of Basel and the University of Miami and is qualified to practice law in Switzerland and the United States.
David Brochu has served as our Senior Vice President, Chief Technical Officer since January 2021, our Senior Vice President, Head of Product
Delivery between October 2019 and his promotion, and our Vice President of Technical Operations between March and October 2019. David previously
served at Kedrion USA as vice president of technical operations and program head for Kedrion SpA’s next generation IVIG development and
industrialization effort. In this position, David also established various operations functions for the company, including manufacturing, supply chain,
engineering, quality, regulatory, program management, and development in support of this effort. Prior to this, he was the vice president of plasma
collection operations for Talecris Biotherapeutics (formerly Bayer HealthCare LLC), where he led the operations buildout in the Western United States.
Earlier in his career, David was the senior director of process development and technology at Talecris leading the preparation and implementation of the
technology, process development, and facilities investment strategy for the plasma products business. In this role he led teams of scientists, engineers and
technicians in the development of new protein therapeutics from research to commercial launch. Prior to Talecris, he held engineering and technical
operations leadership roles at Bayer and Warner Lambert in the US, EU and South America. David has over 30 years of operational and development
experience. He received a B.S. in chemical engineering from Northeastern University.
Non-Executive Directors
Joseph Anderson, Ph.D. has served on our board of directors since February 2016. He is a Partner in the Sofinnova Crossover Fund, which he
joined in October 2020. Previously, he was the chief executive officer and a member of the board of directors of Arix Bioscience plc, a global life sciences
company, where he held similar positions since January 2016. He has founded and managed public equity funds and been a member of the following
boards of directors: Algeta ASA (acquired by Bayer AG) from 2009 to 2013, Amarin plc from October 2009 to 2013, Cytos Biotechnology Ltd, a
biotechnology company, from 2012 until it merged with Kuros Biosurgery Holding Ltd in January 2016 and Epigenomics AG from 2012 to 2014. He was a
partner at Abingworth LLP, an international investment group dedicated to the life sciences and healthcare sectors, from January 2004 through December
2015. From October 1999 through December 2003, Dr. Anderson was previously at First State Investments in London, part of the Commonwealth Bank of
Australia, where he was head of global healthcare equities and portfolio manager. Prior to this, he was a pharmaceuticals analyst at investment bank,
Dresdner Kleinwort Benson from June 1998 through October 1999. From 1990 to 1998, Dr. Anderson
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established and was head of the strategy unit at The Wellcome Trust, one of the world’s largest medical foundations. Dr. Anderson holds a Doctor of
Philosophy in Biochemistry from the University of Aston and a Bachelor of Science in Biological Science from Queen Mary College, University of
London. He was originally nominated to our board of directors by Arix Bioscience Holdings Limited pursuant to our March 2016 Subscription and
Shareholders’ Agreement, which granted Arix the right to appoint one individual as a director, and re-elected to a three-year term at our 2019 Annual
General Meeting of Shareholders. We believe that Dr. Anderson is qualified to serve on our board of directors because of his extensive experience serving
on boards of directors of life science companies.
Jay T. Backstrom, MD, MPH has served on our board of directors since August 2020. Dr. Backstrom has served as Executive Vice President,
Research and Development, at Acceleron Pharma since December 2019. He previously served as the Chief Medical Officer for the Celgene Corporation
since April 2016. Dr. Backstrom joined Celgene in March 2008 as vice president of clinical research and development for the MDS and AML therapeutic
area. He subsequently served as senior vice president of clinical research and development for hematology and oncology and the head of global regulatory
affairs before being appointed the Chief Medical Officer, a position he held up through the completion of the Bristol Myers Squibb-Celgene merger in
December 2019. After earning his medical degree at the Lewis Katz School of Medicine at Temple University in Philadelphia, he completed his medical
training including serving as Chief Medical Resident in the Department of Medicine at Temple University Hospital. Dr, Backstrom received a master’s
degree in public health from Saint Louis University. We believe that Dr. Backstrom is qualified to serve on our board of directors because of his extensive
experience as a pharmaceutical company executive and in the clinical development and regulation of pharmaceuticals, including CAR T therapies.
Linda Bain has served on our board of directors since June 2018. She currently serves as the chief financial officer of Codiak BioSciences, Inc., a
position she has held since December 2015. She has also served as a non-executive director of Arvinas, Inc. since June 2020. Prior to joining Codiak, Ms.
Bain served as the chief financial officer and treasurer of Avalanche Biotechnologies, Inc. from April 2014 until November 2015. Previously, Ms. Bain
served at bluebird bio, Inc., a gene therapy biotechnology company, as vice president of finance and business operations from October 2011 to March 2014,
and chief accounting officer and treasurer from June 2013 to March 2014. From September 2008 to September 2011, Ms. Bain served as vice president of
finance at Genzyme Corporation. From September 2007 to September 2008, she served as vice president at Fidelity Investments, and from May 2000 to
September 2007, she held a number of positions at AstraZeneca plc. She received her B.S. degree in Accounting and Business Administration and an
Honors Degree in Accounting and Business Administration from the University of the Free State in South Africa. Ms. Bain is a certified public accountant.
We believe that Ms. Bain is qualified to serve on our board of directors because of her extensive experience in our industry, her background in accounting
and finance and her leadership skills.
John Berriman has served on our board of directors since August 2014. He has served as chairman of the boards of directors of Confo Therapeutics
NV since December 2016, Depixus SAS since December 2015, and Autifony Therapeutics Ltd since 2011. He previously served as chairman of the board
of directors of ReNeuron Group plc between April 2015 and September 2020; as chairman of the board of directors of Heptares Therapeutics Ltd from
2007 until it was sold to Sosei Group in February 2015; as chairman of the board of directors of Algeta ASA from 2004 through its listing on the Oslo
Stock Exchange in 2007 and subsequently served as deputy chairman from 2008 until it was sold to Bayer AG in 2014; and as a director of Micromet, Inc.
from May 2006 until it was sold to Amgen Inc. in 2012. Prior to this, from 1997 to 2004, he was a director of Abingworth Management, an international
healthcare venture capital firm, where he was involved in founding, financing and serving as a director of several biotechnology companies in Europe and
the United States, many of which obtained listings on public stock exchanges. Prior to that, Mr. Berriman spent 14 years with Celltech Group plc and was a
member of its board when it listed on the London Stock Exchange in 1994. He holds a Master’s degree in Chemical Engineering from the University of
Cambridge and an M.B.A. from the London Business School. We believe that Mr. Berriman is qualified to serve on our board of directors because of his
extensive experience in our industry, including his strategic management and operational experience, his experience serving on public company boards and
his experience with public offerings, private investments and mergers.
Cynthia Butitta has served on our board of directors since March 2018. Ms. Butitta served as the executive vice president and chief financial officer
of Kite Pharma Inc., a biopharmaceutical company, from January 2014 to May 2016 and as its chief operating officer from March 2014 to September 2017.
From May 2011 to December 2012, she was senior vice president and chief financial officer at NextWave Pharmaceuticals, Inc., a specialty pharmaceutical
company. Prior to that, Ms. Butitta served as chief operating officer of Telik, Inc., a biopharmaceutical company, from March 2001 to December 2010 and
as its chief financial officer from August 1998 to December 2010. Ms. Butitta also served as principal accounting officer of Telik, Inc. until December
2010. She has served as a director of publicly held biopharmaceutical companies UroGen Pharma Ltd. since October 2017, and Olema Pharmaceuticals
Inc. since August 2020. Ms. Butitta holds a B.S. degree with honors in Business and Accounting from Edgewood College in Madison, Wisconsin and an
M.B.A. in Finance from the University of Wisconsin, Madison. We believe that Ms. Butitta is qualified to serve on our board of directors because of her
extensive financial and operational experience within the biotechnology and high-technology industries, as well as her leadership skills.
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Kapil Dhingra, M.D. has served on our board of directors since August 2014. Dr. Dhingra currently serves as the managing member of KAPital
Consulting, LLC, a healthcare consulting firm that he founded in June 2008. Dr. Dhingra has over 25 years of experience in oncology clinical research and
drug development. From 1999 to 2008, Dr. Dhingra worked at Hoffmann-La Roche,where he served in roles of increasing responsibility, most recently as
vice president, head of the oncology disease biology leadership team and head of oncology clinical development. From 2000 to 2008, he held a clinical
affiliate appointment at Memorial Sloan Kettering Cancer Center. From 1996 to 1999, Dr. Dhingra worked at Eli Lilly and Company where he served in
roles of increasing responsibility, most recently as senior clinical research physician. Dr. Dhingra also served as a clinical associate professor of medicine at
the Indiana University School of Medicine from 1997 to 1999. Prior to Eli Lilly and Company, Dr. Dhingra was a member of the faculty of the MD
Anderson Cancer Center of the University of Texas from 1989 to 1996. Dr. Dhingra has served on the boards of directors of Replimune Limited, a
biotechnology company, since July 2017, Median Technologies, a medical imaging software company, since June 2017, Five Prime Therapeutics, Inc., a
biotechnology company, since December 2015, and Black Diamond Therapeutics, Inc. since January 2021. Dr. Dhingra previously served as a member of
the boards of directors of BioVex from 2009 until its acquisition by Amgen Inc. in 2011, Micromet, Inc. from February 2009 until its acquisition by Amgen
Inc. in 2012, YM Biosciences Inc. from 2012 until its acquisition by Gilead Sciences, Inc. in February 2013, Algeta ASA from 2010 until its acquisition by
Bayer in March 2014 and EpiTherapeutics ApS from January 2014 until its acquisition by Gilead in May 2015, Advanced Accelerator Applications S.A., a
pharmaceutical company, from April 2014 until its acquisition by Novartis in January 2018, and Exosome Diagnostics from 2012 until its acquisition by
Bio-Techne Corporation in August 2018. Dr. Dhingra holds an M.D. from the All India Institute of Medical Services in New Delhi, India and has
performed postgraduate work at the All India Institute of Medical Services, the Lincoln Medical and Mental Health Center of New York Medical College
and Emory University School of Medicine. We believe that Dr. Dhingra is qualified to serve on our board of directors because of his extensive experience
in executive positions with several pharmaceutical companies and in the clinical development of pharmaceuticals in several therapeutic areas, including in
oncology, and his experience serving on the boards of several publicly traded life science companies.
Martin Murphy, Ph.D. has served on our board of directors since September 2014. He has served as the chief executive officer of Syncona
Investment Management Limited, part of the global life science company Syncona Ltd, since December 2016 and previously founded Syncona Partners
LLP and served as its chief executive officer from May 2012 to December 2016. Previously, he was a partner at MVM Life Science Partners LLP, a venture
capital company focused on life science and healthcare investments, from 2003 to 2012. During his time at MVM, Dr. Murphy was a member of the
management and investment committees and led MVM’s European operations. Before MVM, Dr. Murphy worked at 3i Group plc and McKinsey &
Company. He has a Ph.D. in Biochemistry from the University of Cambridge. Dr. Murphy was originally nominated to our board of directors by Syncona
Portfolio Limited pursuant to our September 2014 Subscription and Shareholders’ Agreement, which granted Syncona the right to appoint two individuals
as directors, and was re-elected to a three-year term at our 2019 Annual General Meeting of Shareholders. We believe that Dr. Murphy is qualified to serve
on our board of directors because of his extensive experience as an investor, particularly in the life sciences industry.
Family Relationships
There are no family relationships among any of our senior management or our directors.
B. Compensation.
The following discussion provides the amount of compensation paid, and benefits in-kind granted, by us and our subsidiaries to our directors, members of
our senior management and non-employee directors for services in all capacities to us and our subsidiaries for the year ended December 31, 2020, as well
as the amount contributed by us or our subsidiaries into money purchase plans for the year ended December 31, 2020 to provide pension, retirement or
similar benefits to, our directors, members of our senior management and non-employee directors.
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Director Compensation
For the year ended December 31, 2020, the table below sets forth the compensation paid to our directors. In the case of Dr. Itin, our chief executive
officer, the table below sets forth the compensation paid to him for services as a member of our senior management. He does not receive any compensation
for serving as an executive director. All such amounts are established and paid in pounds sterling.
Name
Christian Itin, Ph.D.
Executive Director
Joseph Anderson, Ph.D.
Non-Executive Director
Jay Backstrom, M.D, MPH
Non-Executive Director
Linda Bain
Non-Executive Director
John Berriman
Non-Executive Director
Cynthia Butitta
Non-Executive Director
Kapil Dhingra, M.D.
Non-Executive Director
Martin Murphy, Ph.D.
Non-Executive Director
Salary/Fees
Annual Bonus
Benefit
Compensation
Total
Pension
All Other
£
£
£
£
£
£
£
£
381,615 £
191,344 £
— £
2,543,717 £
3,116,676
37,050 £
— £
— £
86,766 £
123,816
16,500 £
— £
— £
73,139 £
89,639
42,750 £
— £
— £
133,006 £
175,756
48,450 £
— £
— £
104,653 £
153,103
38,475 £
— £
— £
117,873 £
156,348
45,600 £
— £
— £
104,653 £
150,253
32,775 £
— £
— £
86,766 £
119,541
Non-Executive Letters of Appointment
Non-executive directors are engaged on letters of appointment that set out their duties and responsibilities. The non-executive directors do not receive
benefits upon termination or resignation from their respective positions as directors.
Non-Executive Director Compensation Policy
In January 2020, following market research and advice from its compensation consultant, our board of directors amended our non-executive director
compensation policy.
Under this policy, we pay each of our non-executive directors a cash retainer for service on our board of directors and committees of our board of
directors. Our lead independent director also receives an additional cash retainer. These retainers are payable in arrears in twelve equal monthly
installments at the end of each calendar month, provided that the amount of such payment will be prorated for any portion of such month that the director is
not serving on our board. Non-executive directors residing outside the United Kingdom will be paid the applicable amounts converted from pounds sterling
into a currency of their request at the time of payment. We will also reimburse our directors for their reasonable out-of-pocket expenses in connection with
attending board and committee meetings.
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Non-executive directors are eligible to receive cash compensation as follows:
Annual retainer
Additional retainer for lead independent director
Additional retainer for audit committee chair
Additional retainer for audit committee member
Additional retainer for compensation committee chair
Additional retainer for compensation committee member
Additional retainer for nominating and governance committee chair
Additional retainer for nominating and governance committee member
Additional retainer for research and development committee chair
Additional retainer for research and development committee member
Equity Compensation
Annual Cash Retainer
(£)
30,000
12,000
12,000
6,000
9,000
4,500
6,000
3,000
12,000
6,000
In addition to cash compensation, each non-executive director is eligible to receive share options under our equity incentive plans. Any share options
granted under this policy shall have a term of ten years from the date of grant, subject to earlier termination in connection with a termination of service.
Vesting schedules for equity awards are subject to the non-executive director’s continuous service on each applicable vesting date.
Notwithstanding any vesting schedule, for each non-executive director who remains in continuous service with us until immediately prior to the
closing of a change in control (as such term is defined in our 2018 Plan), the shares subject to his or her then-outstanding initial or annual equity awards
that were granted pursuant to this policy will become fully vested immediately prior to the closing of such change in control.
Upon the termination of the membership of the non-executive director on the board for any reason, his or her options granted under this policy shall
remain exercisable for three months following his or her date of termination (or such longer period as the board may determine in its discretion on or after
the date of grant of such options).
Initial Award
Each new non-executive director elected to our board of directors will be granted an initial, one-time equity award of options to purchase 25,000 of our
ADSs or ordinary shares on the date of such director’s initial election or appointment to the board of directors, which will vest in equal monthly
installments through the third anniversary of the grant date.
Annual Awards
On the date of each of our annual meeting of shareholders, each non-executive director that continues to serve will be granted an option to purchase
12,500 of our ADSs or ordinary shares, which will vest in equal monthly installments through the first anniversary of the grant date.
Senior Management Compensation
The compensation for each member of our executive management comprises the following elements: base salary, annual bonus, personal benefits,
pension or 401(k) plan and long-term incentives. For the year ended December 31, 2020, the aggregate compensation accrued or paid to the members of
our senior management for services, whether or not a director, in all capacities was $10.6 million. The amount set aside or accrued by us to provide
pension, retirement or similar benefits to members of senior management amounted to a total of $8,100 in the year ended December 31, 2020.
Bonus Plan
Management Incentive Compensation Plan
On May 17, 2016, the board of directors adopted the Management Incentive Compensation Plan. The Management Incentive Compensation Plan is
designed to offer annual incentive compensation to our members of senior management and managers by
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rewarding the achievement of corporate goals and specifically measured personal goals that are consistent with and support the achievement of the
corporate goals. The key terms of the Management Incentive Compensation Plan are summarized below.
Administration and Eligibility
Our Chief Executive Officer is responsible for the administration of the Management Incentive Compensation Plan; however, the compensation
committee of the board of directors is responsible for approving any incentive awards to our Chief Executive Officer and other members of our senior
management.
In order to be eligible to receive an incentive award under the Management Incentive Compensation Plan, an individual must have been employed
with us for at least three consecutive months during a plan year, which runs from January 1 to December 31, and must achieve a rating of at least 75% of
his or her personal goal.
Form and Determination of Incentive Awards
Incentive award payments may be made in cash, or, at the discretion of the compensation committee and subject to the approval of our board of
directors, through the issuance of equity.
An individual’s potential incentive award is calculated by multiplying his or her base salary as of the end of the plan year by the participant’s
“target award multiplier,” which is a percentage ranging from 10% to 50%. The resulting amount is then divided between a corporate component and an
individual component based on the weighting assigned for the individual’s management level. After the end of the plan year, the actual achievement of the
corporate and individual goals is determined, each expressed as a percentage of complete achievement, resulting in the calculation of the individual’s total
incentive award.
Annual performance reviews for participants in the Management Incentive Compensation Plan are completed following the end of the applicable
plan year, with payment of incentive awards made as soon as practicable thereafter.
Termination of Employment
If a participant in the Management Incentive Compensation Plan gives or receives notice of termination or his or her employment is terminated
prior to the payment of an incentive award under the Management Incentive Compensation Plan, our board of directors has discretion as to whether or not
to pay an incentive award and whether to pay the full amount of the incentive award or a portion thereof.
Amendment
Our board of directors may abolish or alter the Management Incentive Compensation Plan at any time before, during or after a plan year is
completed.
Senior Management Employment Arrangements
We have entered into arrangements with members of our senior management to grant restricted shares that are subject to vesting and a repurchase
right in favor of us in the event the individual terminates his or her employment prior to the vesting date.
In order to align the interests of our executive management with our shareholders, members of our executive management are eligible to receive
share-based awards pursuant to our equity incentive plans. The amount of the awards will generally be subject to the discretion of our board of directors
and our compensation committee.
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Outstanding Equity Awards, Grants and Option Exercise
The following table summarizes the options that we granted to members of our board of directors and senior management pursuant to the terms of
the 2017 Plan or 2018 Plan during the year ended December 31, 2020.
Name
Senior Management
Nushmia Khokhar, M.D.*
Non-Executive Directors
Joseph Anderson, Ph.D.
Jay Backstrom, M.D, MPH
Linda Bain
John Berriman
Cynthia Butitta
Kapil Dhingra, M.D.
Martin Murphy, Ph.D.
Ordinary Share Underlying
Option
Exercise Price
Grant
Date
Expiration
Date
20,000
12,500
25,000
12,500
12,500
12,500
12,500
12,500
13.97
8/3/2020
8/3/2030
13.25
13.97
13.25
13.25
13.25
13.25
13.25
6/18/2020
8/3/2020
6/18/2020
6/18/2020
6/18/2020
6/18/2020
6/18/2020
6/18/2030
8/3/2030
6/18/2030
6/18/2030
6/18/2030
6/18/2030
6/18/2030
* Dr. Khokhar, our Senior Vice President, Clinical Development since August 2020, has resigned from the Company effective mid-March 2021.
As of December 31, 2020, members of our board of directors and senior management held options to purchase an aggregate of 3,247,041 ordinary
shares and restricted share awards covering an aggregate of 1,610,946 ordinary shares. No options were exercised by any members of our board of directors
and senior management during the year ended December 31, 2020.
Equity Incentive Plans
We have granted equity securities under a share option plan and an equity incentive plan, which are summarized in this section.
2017 Share Option Plan
In 2017, our board of directors and shareholders approved the 2017 Plan to provide equity incentives to certain eligible employees and directors,
consultants and advisors. The 2017 Plan provided for the grant of potentially tax-favored Enterprise Management Incentives, or EMI, options to our U.K.
employees and for the grant of options to our U.S. employees. The 2017 Plan terminated in connection with our IPO; accordingly, as of September 30,
2018, there were no shares available for future grants under the 2017 Plan. Options previously granted pursuant to the 2017 Plan and that are currently
outstanding remain subject to the terms of the 2017 Plan.
2018 Equity Incentive Plan
The 2018 Plan was approved by our board of directors and shareholders in June 2018 and became effective as of our IPO. The 2018 Plan allows for
the grant of equity-based incentive awards to our employees and directors, including directors who are also our employees. Except where the context
indicates otherwise, references hereunder to our ordinary shares shall be deemed to include a number of ADSs equal to the number of ordinary shares. The
material terms of the 2018 Plan are summarized below:
Eligibility and Administration
Our employees and directors, and employees and consultants of our subsidiaries, referred to as service providers are eligible to receive awards
under the 2018 Plan. The 2018 Plan is administered by our board of directors, which may delegate its duties and responsibilities to one or more committees
of our directors and/or officers (referred to as the plan administrator below), subject to certain limitations imposed under the 2018 Plan, and other
applicable laws and stock exchange rules. Our board of directors has delegated concurrent authority to administer the 2018 Plan to the compensation
committee. The plan administrator has the authority to take all actions and make all determinations under the 2018 Plan, to interpret the 2018 Plan and
award agreements and to adopt, amend and repeal rules for the administration of the 2018 Plan as it deems advisable. The plan administrator also has the
authority to determine which eligible service providers receive awards, grant awards, set the terms and conditions of all awards under the 2018 Plan,
including any vesting and vesting acceleration provisions, and designate whether such awards will cover our ordinary shares or ADSs, subject to the
conditions and limitations in the 2018 Plan.
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Shares Available for Awards
The maximum number of ordinary shares that may be issued under our 2018 Plan was initially 3,281,622 shares, which consists of 3,025,548 ordinary
shares under the 2018 Plan at the time of its adoption and 256,074 ordinary shares that remained available for future grants under the 2017 Plan at the time
of its termination. Additionally, the number of ordinary shares reserved for issuance under the 2018 Plan will automatically increase on October 1st of each
year, for a period of not more than ten years, commencing on October 1, 2018 and ending on (and including) October 1, 2027, by an amount equal to the
lesser of (i) 4% of the total number of ordinary shares outstanding on September 30 of the same calendar year or (ii) such fewer number of ordinary shares
as the board of directors may designate prior to the applicable October 1st date. As of December 31, 2020, an updated maximum of 8,778,719 ordinary
shares may be issued under the 2018 Plan, of which 4,071,011 were available for future grant as of that date. No more than 14,000,000 shares may be
issued under the 2018 Plan upon the exercise of incentive share options.
If an award under the 2018 Plan, or any prior equity incentive plan, expires, lapses or is terminated, exchanged for cash, surrendered, repurchased,
canceled without having been fully exercised or forfeited, any unused shares subject to the award will, as applicable, become or again be available for new
grants under the 2018 Plan. Awards granted under the 2018 Plan in substitution for any options or other equity or equity-based awards granted by an entity
before the entity’s merger or consolidation with us or our acquisition of the entity’s property or stock will not reduce the shares available for grant under the
2018 Plan, but will count against the maximum number of shares that may be issued upon the exercise of incentive options.
Awards
The 2018 Plan provides for the grant of options, share appreciation rights, or SARs, restricted shares, dividend equivalents, restricted share units, or
RSUs, and other share-based awards. All awards under the 2018 Plan will be set forth in award agreements, which will detail the terms and conditions of
awards, including any applicable vesting and payment terms, change of control provisions and post-termination exercise limitations. A brief description of
each award type follows.
Options and SARs. Options provide for the purchase of our ordinary shares in the future at an exercise price set on the grant date. SARs entitle their
holder, upon exercise, to receive from us an amount equal to the appreciation of the shares subject to the award between the grant date and the exercise
date. The plan administrator will determine the number of shares covered by each option and SAR, the exercise price of each option and SAR and the
conditions and limitations applicable to the exercise of each option and SAR.
Restricted Shares and RSUs. Restricted shares are an award of nontransferable ordinary shares that remain forfeitable unless and until specified
conditions are met and which may be subject to a purchase price. RSUs are contractual promises to deliver our ordinary shares in the future, which may
also remain forfeitable unless and until specified conditions are met and may be accompanied by the right to receive the equivalent value of dividends paid
on our ordinary shares prior to the delivery of the underlying shares. The plan administrator may provide that the delivery of the shares underlying RSUs
will be deferred on a mandatory basis or at the election of the participant. The terms and conditions applicable to restricted shares and RSUs will be
determined by the plan administrator, subject to the conditions and limitations contained in the 2018 Plan.
Other Share-Based Awards. Other share-based awards are awards of fully vested ordinary shares and other awards valued wholly or partially by
referring to, or otherwise based on, our ordinary shares or other property. Other share-based awards may be granted to participants and may also be
available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of compensation to which a participant is
otherwise entitled. The plan administrator will determine the terms and conditions of other share-based awards, which may include any purchase price,
performance goal, transfer restrictions and vesting conditions.
Performance Criteria
The plan administrator may select performance criteria for an award to establish performance goals for a performance period.
Certain Transactions
In connection with certain corporate transactions and events affecting our ordinary shares, including a change of control, another similar corporate
transaction or event, another unusual or nonrecurring transaction or event affecting us or our financial statements or a change in any applicable laws or
accounting principles, the plan administrator has broad discretion to take action under the 2018 Plan to prevent the dilution or enlargement of intended
benefits, facilitate the transaction or event or give effect to the change in applicable laws or accounting principles. This includes canceling awards for cash
or property, accelerating the vesting of awards, providing for the assumption or substitution of awards by a successor entity, adjusting the number and type
of shares subject to outstanding awards and/or with respect to which awards may be granted under the 2018 Plan and replacing or terminating awards
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under the 2018 Plan. In addition, in the event of certain non-reciprocal transactions with our shareholders, the plan administrator will make equitable
adjustments to the 2018 Plan and outstanding awards as it deems appropriate to reflect the transaction.
Plan Amendment and Termination
Our board of directors may amend or terminate the 2018 Plan at any time; however, no amendment, other than an amendment that increases the
number of shares available under the 2018 Plan, may materially and adversely affect an award outstanding under the 2018 Plan without the consent of the
affected participant and shareholder approval will be obtained for any amendment to the extent necessary to comply with applicable laws. Further, the plan
administrator cannot, without the approval of our shareholders, amend any outstanding option or SAR to reduce its price per share or cancel any
outstanding option or SAR in exchange for cash or another award under the 2018 Plan with an exercise price per share that is less than the exercise price
per share of the original option or SAR. The 2018 Plan will remain in effect until the tenth anniversary of its effective date unless earlier terminated by our
board of directors. No awards may be granted under the 2018 Plan after its termination.
Transferability and Participant Payments
Except as the plan administrator may determine or provide in an award agreement, awards under the 2018 Plan are generally non-
transferrable, except by will or the laws of descent and distribution, or, subject to the plan administrator’s consent, pursuant to a domestic relations order,
and are generally exercisable only by the participant. With regard to tax withholding obligations arising in connection with awards under the 2018 Plan, and
exercise price obligations arising in connection with the exercise of options under the 2018 Plan, the plan administrator may, in its discretion, accept cash,
wire transfer or cheque, our ordinary shares that meet specified conditions, a promissory note, a “market sell order,” such other consideration as the plan
administrator deems suitable or any combination of the foregoing.
Non-U.S. Participants
The plan administrator may modify awards granted to participants who are non-U.S. nationals or employed outside the United States or
establish sub-plans or procedures to address differences in laws, rules, regulations or customs of such foreign jurisdictions.
U.S. Taxpayers
Awards may be granted under the 2018 Plan to U.S. taxpayers.
2018 Non-Employee Sub Plan
The 2018 Non-Employee Sub Plan will govern equity awards granted to our non-executive directors and our service providers. The 2018 Non-Employee
Sub Plan was adopted under the 2018 Plan and provides for equity- and cash-based awards to be made on identical terms to awards made under our 2018
Plan. If all or any part of an award granted under the 2018 Non-Employee Sub Plan expires, lapses or is terminated, exchanged for cash, surrendered,
repurchased, canceled without having been fully exercised or forfeited, any unused shares covered by the award will become or again be available for new
grants under the 2018 Non-Employee Sub Plan.
C. Board practices.
Composition of Our Board of Directors
Our board of directors presently has eight members. As a foreign private issuer, under the listing requirements and rules of Nasdaq, we are not required to
have independent directors on our board of directors, except that our audit committee is required to consist fully of independent directors, subject to
certain phase-in schedules. However, our board of directors has determined that Drs. Anderson, Backstrom, Dhingra and Murphy, Mses. Butitta and Bain
and Mr. Berriman, representing seven of our eight directors, do not have a relationship that would interfere with the exercise of independent judgment in
carrying out the responsibilities of director and that each of these directors is “independent” as that term is defined under Nasdaq rules.
In accordance with our Articles of Association, our board of directors are divided into three classes with staggered three-year terms. At each annual
general meeting of shareholders, the directors whose terms expire will retire and are eligible for re-appointment by ordinary resolution at such annual
general meeting. At each annual general meeting, the successors to directors whose terms then expire or the directors who have been re-appointed will be
elected to serve from the time of election and qualification until the third annual meeting following election. Our directors are divided among the three
classes as follows:
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• Class I, which consists of Joseph Anderson, Jay Backstrom and Martin Murphy, whose terms will expire at our 2022 annual general meeting;
• Class II, which consists of John Berriman and Kapil Dhingra, whose terms will expire at our 2023 annual general meeting; and
• Class III, which consists of Christian Itin, Cynthia Butitta and Linda Bain, whose terms will expire at our 2021 annual general meeting.
Each director shall serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal.
Committees of Our Board of Directors
Our board of directors has four standing committees: an audit committee, a compensation committee, a nominating and corporate governance
committee, and a research and development committee. The board has adopted a written charter for each of the committees below that is available to
shareholders on our website at http://www.autolus.com/investor-relations/corporate-governance/documents-charters.
Audit Committee
The audit committee is composed of Ms. Bain (chair), Dr. Anderson and Ms. Butitta, and assists the board of directors in overseeing our accounting
and financial reporting processes. The audit committee consists exclusively of members of our board who are financially literate, and our board of directors
has determined that Ms. Bain is an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as
defined under the applicable Nasdaq rules and regulations. Our board of directors has determined that each member of the audit committee is an
independent director under Nasdaq listing rules and under Rule 10A-3 under the Exchange Act. Our audit committee meets at least four times per year and
oversees and reviews our internal controls, accounting policies and financial reporting, and provides a forum through which our independent registered
public accounting firm reports. Our audit committee meets regularly with our independent registered public accounting firm without management present.
The primary functions of the audit committee include:
• recommending the appointment of the independent auditor to shareholders for approval at the general meeting of shareholders;
• the appointment, compensation, retention and oversight of any accounting firm engaged for the purpose of preparing or issuing an audit report
or performing other audit services;
• pre-approving the audit services and non-audit services to be provided by our independent auditor before the auditor is engaged to render such
services;
• evaluating the independent auditor’s qualifications, performance and independence, and presenting its conclusions to the full board of directors
on at least an annual basis;
• reviewing and discussing with management and our independent registered public accounting firm our financial statements and our financial
reporting process; and
• reviewing, approving or ratifying any related party transactions.
Compensation Committee
The compensation committee is composed of Mr. Berriman (chairman), Ms. Butitta and Dr. Murphy. Under SEC and Nasdaq rules, there are
heightened independence standards for members of the compensation committee, including a prohibition against the receipt of any compensation from us
other than standard board member fees. Although foreign private issuers are not required to meet this heightened standard, all of our compensation
committee members meet this heightened standard.
The primary functions of the compensation committee include:
• identifying, reviewing, overseeing and proposing policies relevant to the compensation and benefits of our directors and senior management;
116
• evaluating the performance of senior management in light of such policies and reporting to the board; and
• overseeing and administering our share option plan, equity incentive plan and other benefit plans in operation from time to time.
Nominating and Corporate Governance Committee
The nominating and corporate governance committee is composed of Dr. Dhingra (chairman), Dr. Anderson and Ms. Bain.
The primary functions of the nominating and corporate governance committee include:
• drawing up selection criteria and appointment procedures for directors;
• recommending nominees for appointment to our board of directors and its corresponding committees; and
• assessing the functioning of individual members of our board of directors and management and reporting the results of such assessment to the
full board of directors.
Research and Development Committee
The research and development committee is composed of Drs. Dhingra (chairman), Backstrom, Itin and Murphy.
The primary functions of the research and development committee include:
• overseeing the Company's scientific, technical, research and development strategy, and the implementation thereof;
• advising our board of directors and management regarding program prioritization, clinical development strategy, regulatory strategy and
interactions, intellectual property, product manufacture and supply, and related matters; and
• reviewing and assessing business development opportunities related to research collaborations, licensing or strategic transactions.
D. Employees.
As of December 31, 2020, we had 376 full-time employees, 88 of whom hold Ph.D. or M.D. degrees. Of these 376 employees, 317 are engaged in research
and development activities and 59 are engaged in business development, finance, information systems, facilities, human resources or administrative
support. None of our employees is subject to a collective bargaining agreement. We consider our relationship with our employees to be good.
Function:
Administrative
Research and development
Total
Geography:
United Kingdom
Germany and Switzerland
United States
E. Share ownership.
2020
At December 31,
2019
2018
59
317
376
340
2
34
43
247
290
251
6
33
38
162
200
177
3
20
For information regarding the share ownership of our directors and members senior management, see Item 6.B—"Compensation” and Item 7.A—"Major
Shareholders.”
Item 7. Major Shareholders and Related Party Transactions
A.
Major shareholders.
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The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 12, 2021 by:
•
•
•
each beneficial owner of 5% or more of our outstanding ordinary shares;
each of our current directors and each member of our senior management; and
all of our directors and senior management as a group.
Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons
who possess sole or shared voting power or investment power with respect to those securities and include ordinary shares that can be acquired within 60
days of February 12, 2021. These ordinary shares, however, are not included in the computation of the percentage ownership of any other
person. Percentage ownership calculations are based on 70,507,309 ordinary shares outstanding (including ordinary shares in the form of ADSs) as of
February 12, 2021.
Except as otherwise indicated, all of the shares reflected in the table are ordinary shares and all persons listed below have sole voting and investment
power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative
of beneficial ownership for any other purpose.
Except as otherwise indicated, the addresses of the persons listed in the table is c/o Autolus Therapeutics plc, 58 Wood Lane, White City, London W12
7RZ, United Kingdom.
NAME OF BENEFICIAL OWNER
Number of Ordinary Shares
Beneficially Owned (#)
Percent of Ordinary Shares
Beneficially Owned (%)
5% or Greater Shareholders:
Syncona Portfolio Limited (1)
PPF Capital Partners Fund B.V. (2)
Senior Management and Directors:
Christian Itin, Ph.D. (3)
Andrew Oakley (4)
Martin Pulé, MBBS (5)
Muhammad Al-Hajj, Ph.D. (6)
Christopher Vann (7)
Matthias Alder (8)
David Brochu (9)
Nushmia Khokhar (10)
Joseph Anderson, Ph.D. (11)
Jay Backstrom, M.D., MPH (12)
Linda Bain (13)
John Berriman (14)
Cynthia Butitta (15)
Kapil Dhingra, M.D. (16)
Martin Murphy, Ph.D. (17)
All directors and senior management as a group (15 persons) (18)
19,527,162
14,251,020
1,450,403
256,657
808,332
178,481
290,549
297,260
71,664
94,054
34,374
5,555
55,959
182,805
80,676
120,011
19,561,536
23,488,316
27.7 %
20.2 %
2.0 %
*
1.1 %
*
*
*
*
*
*
*
*
*
*
*
27.7 %
32.5 %
* Represents beneficial ownership of less than one percent.
(1)The information shown is based, in part, upon disclosures filed on a Schedule 13G/A on February 12, 2020 by Syncona Portfolio Limited. The number reported consists of (i) 12,180,333 ordinary
shares and (ii) 3,775,401 ADSs. In addition, 3,571,428 ADS were purchased from the Company's February 2021 offering. Syncona Portfolio Limited is a wholly owned subsidiary of Syncona Holdings
Limited, which, in turn, is a wholly controlled subsidiary of Syncona Limited, a publicly-listed company. Each of Syncona Holdings Limited and Syncona Limited may be deemed to have voting and
dispositive power over the securities held by Syncona Portfolio Limited. Investment and voting decisions with respect to these securities are made by Syncona Portfolio Limited acting upon the
recommendation of an investment committee of Syncona Investment Management Limited, also a subsidiary of Syncona Holdings Limited. The members of this investment committee consist of Nigel
Keen, Martin Murphy and Chris Hollowood. The address for Syncona Portfolio Limited is Arnold House, St Julian's Avenue, St Peter Port, Guernsey GY1 3RD, Channel Islands.
(2) The information shown is based, in part, upon disclosures filed on a Schedule 13D/A on August 13, 2020 by PPF Capital Partners Fund B.V., PPF Group N.V. and Petr Kellner. The number reported
consists of 14,251,020 ADSs. The principal shareholder of PPF Capital Partners Fund B.V. is PPF Group N.V., which is ultimately beneficially owned by Petr Kellner. The address of the principal office
of each of PPF Group and PPF Capital is Strawinskylaan 933, 1077XX Amsterdam, The Netherlands. The address of the principal office of Petr Kellner is c/o PPF a.s., Evropská 2690/17, P.O. Box 177,
160 41 Prague 6, Czech Republic.
(3) Consists of (i) 1,066,009 ordinary shares issuable upon conversion of restricted ordinary shares and (ii) 384,394 ordinary shares underlying options that are vested and exercisable within 60 days of
February 12, 2021.
(4) Consists of ordinary shares underlying options that are vested and exercisable within 60 days of February 12, 2021.
(5) Consists of (i) 538,677 ordinary shares, (ii) 160,064 ordinary shares issuable upon conversion of restricted ordinary shares, and (iii) 109,591 ordinary shares underlying options that are vested and
exercisable within 60 days of February 12, 2021.
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(6) Consists of ordinary shares underlying options that are vested and exercisable within 60 days of February 12, 2021.
(7) Consists of (i) 112,211 ordinary shares issuable upon conversion of restricted ordinary shares and (ii) 178,338 ordinary shares underlying options that are vested and exercisable within 60 days of
February 12, 2021.
(8) Consists of (i) 125,588 ordinary shares issuable upon conversion of restricted ordinary shares and (ii) 171,672 ordinary shares underlying options that are vested and exercisable within 60 days of
February 12, 2021.
(9) Consists of ordinary shares underlying options that are vested and exercisable within 60 days of February 12, 2021.
(10) Consists of ordinary shares underlying options that are vested and exercisable within 60 days of February 12, 2021.
(11) Consists of ordinary shares underlying options that are vested and exercisable within 60 days of February 12, 2021.
(12) Consists of ordinary shares underlying options that are vested and exercisable within 60 days of February 12, 2021.
(13) Consists of ordinary shares underlying options that are vested and exercisable within 60 days of February 12, 2021.
(14) Consists of (i) 62,794 ordinary shares and (ii) 73,537 ordinary shares issuable upon conversion of restricted ordinary shares, and (iii) 46,474 ordinary shares underlying options that are vested and exercisable
within 60 days of February 12, 2021.
(15) Consists of (i) 10,000 ADSs and (ii) 70,676 ordinary shares underlying options that are vested and exercisable within 60 days of February 12, 2021
(16) Consists of (i) 73,537 ordinary shares issuable upon conversion of restricted ordinary shares and (ii) 46,474 ordinary shares underlying options that are vested and exercisable within 60 days of February 12, 2021.
(17) Consists of (i) the shares set forth in footnote (1) above. Dr. Murphy is the chief executive officer of Syncona Investment Management Limited (both Syncona Investment Management Limited and Syncona
Portfolio Limited are subsidiaries of Syncona Limited) and (ii) and 34,374 ordinary shares underlying options that are vested and exercisable within 60 days of February 12, 2021.
(18) Consists of (i) 20,138,633 ordinary shares, (ii) 1,610,946 ordinary shares issuable upon conversion of restricted ordinary shares and (ii) 1,738,737 ordinary shares underlying options that are vested and exercisable
within 60 days of February 12, 2021.
The significant changes in the beneficial ownership percentage held by our major shareholders during the past three years result from our June 2018
initial public offering of ADSs, and our April 2019, January 2020, and February 2021 follow-on offerings of ADSs and the dilution resulting from these
offerings.
As of February 12, 2021, assuming that all of our ordinary shares represented by ADSs are held by residents of the United States other than ADSs held
by the entities set forth in the table above and certain other holders that we know to be non-residents of the United States, we estimate that approximately
27.5% of our outstanding ordinary shares (including ordinary shares underlying ADSs) were held in the United States by 82 holders of record. The actual
number of holders is greater than these numbers of record holders, and includes beneficial owners whose ordinary shares are held in street name by brokers
and other nominees. This number of holders of record also does not include holders whose shares may be held in trust by other entities.
B. Related party transactions.
Policies and Procedures for Related Person Transactions
We have adopted a related person transaction policy that sets forth our procedures for the identification, review, consideration and approval or
ratification of related person transactions. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any
series of similar transactions, arrangements or relationships, in which we or any of our subsidiaries and any related person are, were or will be participants
in which the amount involved exceeds $120,000 or which is unusual in its nature or conditions. Transactions involving compensation for services provided
to us as an employee or director are not covered by this policy. A related person is any executive officer, director or beneficial owner of more than 5% of
any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons.
For so long as we qualify as a foreign private issuer, a related person will be any:
•
•
•
•
•
enterprise that directly or indirectly controls or is controlled by or is under common control with us;
enterprise over which we have a significant influence or which has significant influence over us;
individual owning, directly or indirectly, an interest in our voting power that gives them significant influence over us, and close members
of any such individual’s family;
persons having authority or responsibility for planning, directing or controlling our activities, including directors and senior management
and close members of such individuals’ families; or
enterprise in which a substantial interest in our voting power is owned, directly or indirectly, by any person described above or over
which such a person is able to exercise significant influence, including enterprises owned by our directors or major shareholders and
enterprises that have a member of key management in common with us.
If we cease to be a foreign private issuer, then, under our policy, a related person will be any:
•
•
•
•
person who is, or at any time since the beginning of our last fiscal year was, a director or member of senior management of us or a
nominee to become a director of us;
security holder known by us to be the beneficial owner of more than 5% of any class of our voting securities;
immediate family member of any of the foregoing; and
firm, corporation or other entity in which any of the foregoing persons is an executive, partner or principal or similar control position or
in which such person has a 5% or greater beneficial ownership interest.
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Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction
when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management
must present information regarding the related person transaction to our audit committee, or, if audit committee approval would be inappropriate, to another
independent body of our board of directors for review, consideration and approval or ratification. The presentation must include a description of, among
other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on
terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the
policy, we will collect information that we deem reasonably necessary from each director, member of senior management and, to the extent feasible,
significant shareholder to enable us to identify any existing or potential related person transactions and to effectuate the terms of the policy. In addition,
under our Code of Business Conduct and Ethics, our employees, members of senior management and directors have an affirmative responsibility to
disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest.
Transactions with Our Principal Shareholders, Directors and Members of our Senior Management
The following is a description of related party transactions we have entered into since January 1, 2018 with our directors, members of our senior
management and holders of more than 5% of our outstanding voting securities and their affiliates, whom we refer to as our related persons, in which the
amount involved exceeds $120,000 and that are material to us, other than the compensation arrangements we describe in Item 6.B. “Management -
Compensation of Senior Management and Directors.”
Participation in April 2019 Public Offering
In our April 2019 public offering, Syncona Portfolio Limited and Arix Bioscience Holdings Limited purchased 1,000,000 ADSs and 208,333
ADSs, respectively. This purchase was made through the underwriters at the public offering price.
Participation in January 2020 Public Offering
In our January 2020 public offering, Syncona Portfolio Limited purchased 1,363,636 ADSs. This purchase was made through the underwriters at
the public offering price.
Participation in February 2021 Public Offering
In our February 2021 public offering, Syncona Portfolio Limited purchased 3,571,428 ADSs. This purchase was made through the underwriters at the
public offering price.
Entities affiliated with Syncona
In September 2020, we entered into a license agreement with an investee company of Syncona Portfolio Limited, a holder of more than 5% of our
share capital. This agreement generated $242,000 of license revenue which is recognized in the Consolidated Statement of Operations for the year ended
December 31, 2020.
Agreements with Our Senior Management and Directors
We have entered into service agreements with the members of our senior management and non-executive directors. See Item 6.B. “Management—
Compensation of Senior Management and Directors.” These agreements contain customary provisions and representations, including confidentiality, non-
competition, non-solicitation and inventions assignment undertakings by the members of our senior management. However, the enforceability of the non-
competition provisions may be limited under applicable law.
Indemnification Agreements
We entered into a deed of indemnity with each of our directors and members of our senior management. These agreements and our Articles of
Association require us to indemnify our directors and senior management to the fullest extent permitted by law.
Registration Rights Agreement
We have entered into a registration rights agreement with certain of our existing shareholders pursuant to which we have granted them customary
registration rights for the resale of the ordinary shares held by certain of our existing shareholders.
C. Interests of experts and counsel.
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Not applicable.
Item 8. Financial Information.
A.
Consolidated Statements and Other Financial Information.
Our consolidated financial statements are appended at the end of this Annual Report, starting on page F-1.
Dividend Policy
We have never declared or paid a dividend, and we do not anticipate declaring or paying dividends in the foreseeable future. We intend to retain all
available funds and any future earnings to fund the development and expansion of our business.
Under English law, among other things, we may only pay dividends if we have sufficient distributable reserves (on a non-consolidated basis), which are
our accumulated realized profits that have not been previously distributed or capitalized less our accumulated realized losses, so far as such losses have not
been previously written off in a reduction or reorganization of capital.
Legal Proceedings
We are not currently a party to any material legal proceedings. From time to time, we may be a party to litigation or subject to claims incident to the
ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of
these ordinary course matters will not have a significant effect on our financial position or profitability. Regardless of the outcome, litigation can have an
adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
B. Significant Changes.
Not applicable.
Item 9. The Offer and Listing.
A. Offer and listing details.
Our ADS began trading on the Nasdaq Global Select Market under the symbol “AUTL” since June 22, 2018. Prior to that date, there was no public
trading market for ADSs or our ordinary shares.
B. Plan of distribution.
Not applicable.
C. Markets.
Our ADSs have been listed on the Nasdaq Global Select Market under the symbol “AUTL” since June 22, 2018. Our ordinary shares are not listed.
D. Selling shareholders.
Not applicable.
E. Dilution.
Not applicable.
F. Expenses of the issue.
Not applicable.
Item 10. Additional Information.
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A. Share capital.
Not applicable.
B. Memorandum and articles of association.
General
We are a public limited company, originally incorporated pursuant to the laws of England and Wales in February 2018 as a private company with
limited liability called Autolus Therapeutics Limited. Autolus Limited was originally incorporated under the laws of England and Wales in July 2014.
Pursuant to the terms of our corporate reorganization, the shareholders of Autolus Limited exchanged each of the shares held by them in Autolus Limited
for the same number and class of newly issued shares of Autolus Therapeutics Limited and, as a result, Autolus Limited became a wholly owned subsidiary
of Autolus Therapeutics Limited. On June 18, 2018, Autolus Therapeutics Limited re-registered as a public limited company and was renamed Autolus
Therapeutics plc. On June 22, 2018, our outstanding preferred and ordinary shares were converted into a single class of ordinary shares and various classes
of deferred shares, and we completed our initial public offering of ADSs on the Nasdaq Global Select Market.
We are registered with the Registrar of Companies in England and Wales under number 11185179, and our registered office is at Forest House, 58
Wood Lane, White City, London W12 7RZ, United Kingdom.
Certain resolutions were passed by our shareholders in connection with our initial public offering, including a special resolution approving the
adoption of new articles of association that became effective upon the admission of our ADSs to trading on Nasdaq. Our articles of association authorize
our directors, for the purposes of section 551 of the U.K. Companies Act 2006, or the Companies Act, to issue shares in the company and grant rights to
subscribe for or convert any securities into shares in the company up to a maximum aggregate nominal amount of $8,400 for a period of five years. See
“Key Provisions of Our Articles of Association” below for further information.
Issued Share Capital
Effective from June 26, 2018, the board of directors has the authority to allot new ordinary shares or to grant rights to subscribe for or to convert any
security into ordinary shares in the Company up to a maximum aggregate nominal amount of $8,400. This authority runs for five years and will expire on
June 26, 2023. Effective from June 26, 2018, the board also has the authority to allot ordinary shares for cash or to grant rights to subscribe for or to
convert any security into ordinary shares in the Company without first offering them to existing shareholders in proportion to their existing holdings up to
an aggregate maximum nominal amount of $8,400. This authority runs for five years and will expire on June 26, 2023.
As of February 12. 2021, our issued capital share consisted of 70,507,309 ordinary shares, with a nominal value of $0.000042 per share, (ii) 34,425
deferred shares, with a nominal value of £0.00001 per share, (iii) 88,893,548 B deferred shares, with a nominal value of £0.00099 per share and (iv) 1 C
deferred share, with a nominal value of £0.000008. Each issued share has been fully paid.
Ordinary Shares
Our ordinary shares have the rights and restrictions described in “Key Provisions of Our Articles of Association” below. The following summarizes
the rights of holders of our ordinary shares:
•
•
each holder of our ordinary shares is entitled to one vote per ordinary share on all matters to be voted on by shareholders generally;
the holders of the ordinary shares shall be entitled to receive notice of, attend, speak and vote at our general meetings; and
holders of our ordinary shares are entitled to receive such dividends as are recommended by our directors and declared by our
•
shareholders.
We are required by the Companies Act to keep a register of our shareholders. Under English law, the ordinary shares are deemed to be issued when
the name of the shareholder is entered in our register of members. The register of members therefore is prima facie evidence of the identity of our
shareholders, and the shares that they hold. The register of members generally provides
Registered Shares
122
limited, or no, information regarding the ultimate beneficial owners of our ordinary shares. Our register of members is maintained by our registrar,
Computershare Investor Services plc.
Holders of our ADSs will not be treated as our shareholders and their names will therefore not be entered in our share register. The Depositary, the
custodian or their nominees will be the holder of the ordinary shares underlying our ADSs. Holders of our ADSs have a right to receive the ordinary shares
underlying their ADSs. For discussion on our ADSs and ADS holder rights, see “Description of American Depositary Shares” in this Annual Report.
Under the Companies Act, we must enter an allotment of shares in our register of members as soon as practicable and in any event within two
months of the allotment. We also are required by the Companies Act to register a transfer of shares (or give the transferee notice of and reasons for refusal
as the transferee may reasonably request) as soon as practicable and in any event within two months of receiving notice of the transfer.
We, any of our shareholders or any other affected person may apply to the court for rectification of the register of members if:
•
the name of any person, without sufficient cause, is wrongly entered in or omitted from our register of members; or
there is a default or unnecessary delay in entering on the register the fact of any person having ceased to be a member or on which we
•
have a lien, provided that such delay does not prevent dealings in the shares taking place on an open and proper basis.
Registration Rights
We and the holders of certain of our ordinary shares are parties to a registration rights agreement that provides the following registration rights:
Demand Registration on Form F-1 - each holder shall be entitled to demand registrations on Form F-1, provided that these demand registration
rights may only be exercised by holders who hold, in the aggregate, not less than 25% of the aggregate number of shares then outstanding and
held by all holders who are party to the agreement, and provided further that the we shall not be required to effect a demand registration
statement after we have effected two demand registration statements, and such registration statements have been declared or ordered effective.
Demand Registration on Form F-3 - each holder shall be entitled to unlimited demand registrations on Form F-3, if we are eligible to register
shares on Form F-3, provided that these demand registration rights may only be exercised by holders who hold, in the aggregate, not less than
10% of the aggregate number of shares then outstanding and held by all holders who are party to the agreement. These demand registration
rights may not be exercised more than twice in any twelve-month period.
Piggyback Registration - each holder shall be entitled to piggyback registration rights, subject, in the case of an underwritten offering, to
customary reductions by the underwriter, provided that the aggregate number of securities of the holders included in the registration may not be
reduced to less than 30% of the total number of securities registered.
Expenses - We will pay all registration expenses relating to the exercise of the registration rights above, including the reasonable fees and
expenses of legal counsel to the participating holders up to a maximum of $50,000 in the aggregate per registration.
Preemptive Rights
English law generally provides shareholders with statutory preemptive rights when new shares are issued for cash; however, it is possible for the
articles of association, or shareholders by way of a special resolution at a general meeting, to disapply preemptive rights. Such a disapplication of
preemptive rights may be for a maximum period of up to five years from the date of adoption of the articles of association, if the disapplication is contained
in the articles of association, or from the date of the shareholder special resolution, if the disapplication is by shareholder special resolution. In either case,
this disapplication would need to be renewed by our shareholders upon its expiration (i.e., at least every five years). Our articles of association disapply
preemptive rights for a period of five years from the date of adoption, which was June 26, 2018. This disapplication will need to be renewed upon
expiration (i.e., at least every five years) to remain effective, but may be sought more frequently for additional five-year terms (or any shorter period). Such
preemption rights have been disapplied by our articles of association that became effective upon the completion of our initial public offering in June 2018
and which remain in force at the date of this Annual Report.
123
Purchase of Own Shares
English law permits a public limited company to purchase its own shares out of the distributable profits of the company or the proceeds of a fresh
issue of shares made for the purpose of financing the purchase, subject to complying with procedural requirements under the Companies Act and provided
that its articles of association do not prohibit it from doing so. Our articles of association, a summary of which is provided below, do not prohibit us from
purchasing our own shares. A public limited company must not purchase its own shares if, as a result of the purchase, there would no longer be any issued
shares of the company other than redeemable shares or shares held as treasury shares.
Any such purchase will be either a “market purchase” or “off market purchase,” each as defined in the Companies Act. A “market purchase” is a
purchase made on a “recognized investment exchange” (other than an overseas exchange) as defined in the UK Financial Services and Markets Act 2000,
or FSMA. An “off market purchase” is a purchase that is not made on a “recognized investment exchange.” Both “market purchases” and “off market
purchases” require prior shareholder approval by way of an ordinary resolution. In the case of an “off market purchase,” a company’s shareholders, other
than the shareholders from whom the company is purchasing shares, must approve the terms of the contract to purchase shares and in the case of a “market
purchase,” the shareholders must approve the maximum number of shares that can be purchased and the maximum and minimum prices to be paid by the
company.
The Nasdaq Global Select Market is an “overseas exchange” for the purposes of the Companies Act and does not fall within the definition of a
“recognized investment exchange” for the purposes of FSMA and any purchase made by us would accordingly need to comply with the procedural
requirements under the Companies Act that regulate “off market purchases.”
A share buy-back by a company of its shares will give rise to U.K. stamp duty reserve tax and stamp duty at the rate of 0.5% of the amount or value
of the consideration payable by the company (rounded up to the next £5.00), and such stamp duty reserve tax or stamp duty will be paid by the company.
The charge to stamp duty reserve tax will be cancelled or, if already paid, repaid (generally with interest), where a transfer instrument for stamp duty
purposes has been duly stamped within six years of the charge arising (either by paying the stamp duty or by claiming an appropriate relief) or if the
instrument is otherwise exempt from stamp duty.
Distributions and Dividends
Under the Companies Act, before a company can lawfully make a distribution or dividend, it must ensure that it has sufficient distributable reserves,
as determined on a non-consolidated basis. The basic rule is that a company’s profits available for the purpose of making a distribution are its accumulated,
realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so far as not previously written off in
a reduction or reorganization of capital duly made. The requirement to have sufficient distributable reserves before a distribution or dividend can be paid
applies to us and to each of our subsidiaries that has been incorporated under English law.
As a public company, it will not be sufficient that we have made a distributable profit for the purpose of making a distribution. An additional capital
maintenance requirement will be imposed on us to ensure that the net worth of the company is at least equal to the amount of its capital. A public company
can only make a distribution:
if, at the time that the distribution is made, the amount of its net assets (that is, the total excess of assets over liabilities) is not less than the total
of its called up share capital and undistributable reserves; and
if, and to the extent that, the distribution itself, at the time that it is made, does not reduce the amount of its net assets to less than that total.
Disclosure of Interest in Shares
Pursuant to Part 22 of the Companies Act, we are empowered to give by notice in writing to any person whom we know or have reasonable cause to
believe to be interested in our shares, or at any time during the three years immediately preceding the date on which the notice is issued has been so
interested, within a reasonable time to disclose to us particulars of that person’s interest and, so far as is within his or her knowledge, particulars of any
other interest that subsists or subsisted in those shares.
124
Under our articles of association, if a person defaults in supplying us with the required particulars in relation to the shares in question, or default
shares within the prescribed period, our board of directors may by notice direct that:
the relevant shareholder shall not be entitled in respect of the default shares to be present or vote, either in person or by proxy, at any general
meeting or separate meeting of the holders of a class of shares or upon any poll or to exercise any other right conferred by the membership in
relation to any such meeting;
where the default shares represent at least 0.25% of their class, (a) any dividend or other money payable in respect of the default shares shall be
retained by us without liability to pay interest, and/or (b) no transfers by the relevant shareholder of any default shares may be registered, unless
the shareholder himself or herself is not in default and the shareholder proves to the satisfaction of the board of directors that no person in default
as regards to supplying such information is interested in any of the default shares; and/or
any shares held by the relevant shareholder in uncertificated form shall be converted into certificated form.
Key Provisions of Our Articles of Association
The following is a summary of certain key provisions of our articles of association, which were adopted by a special resolution of our shareholders
passed in June 2018. Please note that this is only a summary and is not intended to be exhaustive. For further information please refer to the full version of
our articles of association, which is included as an exhibit to this Annual Report
The articles of association contain no specific restrictions on our purpose and therefore, by virtue of section 31(1) of the Companies Act, our
purpose is unrestricted.
The articles of association contain, among other things, provisions to the following effect:
Share Capital
Our share capital currently consists of ordinary shares, deferred shares, B deferred shares and C deferred shares. We may issue shares with such
rights or restrictions as may be determined by ordinary resolution, including shares which are to be redeemed, or are liable to be redeemed at our option or
the option of the holder of such shares.
Voting
Holders of ordinary shares have the right to receive notice of, and to vote at, our general meetings. Any resolution put to the vote of a general
meeting must be decided exclusively on a poll. Each shareholder who is present in person (or, being a corporation, by representative) or by proxy has one
vote in respect of every share held by him.
Variation of Rights
Whenever our share capital is divided into different classes of shares, the special rights attached to any class may be varied or abrogated either (i)
with the consent in writing of the holders of three-quarters in nominal value of the issued shares of that class, (ii) with the authority of a special resolution
passed at a separate meeting of the holders of the shares of that class or (iii) in any other way as expressly provided for in relation to such rights, and may
be so varied and abrogated while the company is a going concern.
Dividends
We may, subject to the provisions of the Companies Act and our articles of association, by ordinary resolution from time to time declare dividends
to be paid to shareholders not exceeding the amount recommended by our board of directors. Subject to the provisions of the Companies Act, in the
discretion of board of directors, on the basis that our profits justify such payments, the board of directors may pay interim dividends on any class of our
shares.
Any dividend unclaimed after a period of 12 years from the date such dividend was declared or became payable shall, if the board of directors
resolve, be forfeited, cease to remain owing and shall revert to us. No dividend or other moneys payable on or in respect of a share shall bear interest as
against us.
Transfer of Ordinary Shares
Each member may transfer all or any of his shares which are in certificated form by means of an instrument of transfer in writing in any usual form
or in any other form which the board of directors may approve.
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The board of directors may, in its absolute discretion, refuse to register a transfer of certificated shares unless:
(i) it is for a share which is fully paid up;
(ii) it is for a share upon which the company has no lien;
(iii) it is only for one class of share;
(iv) it is in favor of a single transferee or no more than four joint transferees;
(v) it is duly stamped or is duly certificated or otherwise shown to the satisfaction of the board of directors to be exempt from stamp duty; and
(vi) it is delivered for registration to the registered office of the company (or such other place as the board of directors may determine),
accompanied (except in the case of a transfer by a person to whom the company is not required by law to issue a certificate and to whom a
certificate has not been issued or in the case of a renunciation) by the certificate for the shares to which it relates and such other evidence as
the board of directors may reasonably require to prove the title of the transferor (or person renouncing) and the due execution of the transfer
or renunciation by him or, if the transfer or renunciation is executed by some other person on his behalf, the authority of that person to do
so.
Allotment of Shares and Preemption Rights
Subject to the Companies Act and to any rights attached to existing shares, any share may be issued with or have attached to it such rights and
restrictions as the company may by ordinary resolution determine, or if no ordinary resolution has been passed or so far as the resolution does not make
specific provision, as the board of directors may determine (including shares which are to be redeemed, or are liable to be redeemed at the option of the
company or the holder of such shares).
In accordance with section 551 of the Companies Act, the board of directors may be generally and unconditionally authorized to exercise for each
prescribed period all the powers of the company to allot shares up to an aggregate nominal amount equal to the amount stated in the relevant ordinary
resolution authorizing such allotment. The authorities referred to above are included in our articles of association that became effective upon the
completion of our initial public offering in June 2018 and which remain in force at the date of this Annual Report.
The provisions of section 561 of the Companies Act (which confer on shareholders rights of preemption in respect of the allotment of equity
securities which are paid up in cash) apply to the company except to the extent disapplied by special resolution of the shareholders of the company, or in
the company’s articles of association. Such preemption rights have been disapplied by our articles of association that became effective upon the completion
of our initial public offering in June 2018 and which remain in force at the date of this Annual Report.
Alteration of Share Capital
In accordance with the Companies Act, the company may by ordinary resolution consolidate its share capital into shares of larger nominal value
than its existing shares, or sub-divide its shares into shares of a smaller amount than the existing shares, and may in each case determine that the shares
resulting from such sub-division or share consolidation may have a preference or advantage or be subject to a particular restriction.
The company may, in accordance with the Companies Act, reduce or cancel its share capital or any capital redemption reserve or share premium
account in any manner and with and subject to any conditions, authorities and consents required by law.
Board of Directors
Unless otherwise determined by the company by ordinary resolution, the number of directors (other than any alternate directors) shall not be less
than two and not more than 15.
Subject to the articles of association and the Companies Act, the company may by ordinary resolution appoint a person who is willing to act as a
director and the board of directors shall have power at any time to appoint any person who is willing to act as a director, in both cases either to fill a
vacancy or as an addition to the existing board of directors, provided the total number of directors shall not exceed the maximum number of 15.
Our articles of association provide that our board of directors is divided into three classes, each of which will consist, as nearly as possible, of one-
third of the total number of directors constituting our entire board and which will serve staggered three-year terms. At each annual general meeting, the
successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following
election.
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At every subsequent annual general meeting, any director who either (i) has been appointed by the board of directors since the last annual general
meeting or (ii) was not appointed or reappointed at one of the preceding two annual general meetings, must retire from office and may offer themselves for
reappointment by the shareholders by ordinary resolution.
Subject to the provisions of the articles of association, the board of directors may regulate their proceedings as they deem appropriate. A director
may, and the secretary at the request of a director shall, call a meeting of the directors.
The quorum for a meeting of the board of directors may be determined by the board and until otherwise determined, it is set at two directors.
Questions and matters requiring resolution arising at a meeting shall be decided by a majority of votes of the participating directors, with each
director having one vote. In the case of an equality of votes, the chairman will have a casting vote or second vote, unless he or she is not entitled to vote on
the resolution in question.
Directors shall be entitled to receive such compensation as the board shall determine for their services to the company as directors, and for any other
service which they undertake for the company provided that the aggregate fees payable to the directors must not exceed $2,500,000 per annum or such
higher amount as may from time to time be decided by ordinary resolution. The directors shall also be entitled to be paid all reasonable expenses properly
incurred by them in connection with their attendance at meetings of shareholders or class meetings, board of director or committee meetings or otherwise in
connection with the exercise of their powers and the discharge of their responsibilities in relation to the company.
The board of directors may, in accordance with the requirements in the articles of association, authorize any matter proposed to them by any director
which would, if not authorized, involve a director breaching their duty under the Companies Act, to avoid conflicts of interests.
A director seeking authorization in respect of such conflict shall declare to the board of directors the nature and extent of his interest in a conflict as
soon as is reasonably practicable. The director shall provide the board with such details of the matter as are necessary for the board to decide how to
address the conflict together with such additional information as may be requested by the board.
Any authorization by the board of directors will be effective only if:
(i) to the extent permitted by the Companies Act, the matter in question shall have been proposed by any director for consideration in the same
way that any other matter may be proposed to the directors under the provisions of the articles of association;
(ii) any requirement as to the quorum for consideration of the relevant matter is met without counting the conflicted director and any other
conflicted director; and
(iii) the matter is agreed to without the conflicted director voting or would be agreed to if the conflicted director’s and any other interested
director’s vote is not counted.
Subject to the provisions of the Companies Act, every director, secretary or other officer of the company (other than an auditor) is entitled to be
indemnified against all losses and liabilities incurred in connection with his or her duties and powers.
General Meetings
The company must convene and hold annual general meetings once a year in accordance with the Companies Act. Under the Companies Act, an
annual general meeting must be called by notice of at least 21 days.
No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a
quorum shall not preclude the choice or appointment of a chairman of the meeting which shall not be treated as part of the business of the meeting. Unless
otherwise provided by the articles of association, two shareholders present in person or by proxy and entitled to vote shall be a quorum for all purposes.
Borrowing Powers
Subject to the articles of association and the Companies Act, the board of directors may exercise all of the powers of the company to:
(a) borrow money;
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(b) indemnify and guarantee;
(c) mortgage or charge the assets of the company;
(d) create and issue debentures and other securities; and
(e) give security either outright or as collateral security for any debt, liability or obligation of the company or of any third party.
Capitalization of Profits
The directors may, if they are so authorized by an ordinary resolution of the shareholders, decide to capitalize any undivided profits of the company
not required for paying any preferential dividend (whether or not they are available for distribution), or any sum standing to the credit of the company’s
share premium account, capital redemption reserve or any other reserve or fund of the company which is available for distribution. The directors may also,
subject to the aforementioned ordinary resolution, appropriate any sum which they so decide to capitalize to the persons who would have been entitled to it
if it were distributed by way of dividend and in the same proportions.
Uncertificated Shares
Subject to the Companies Act, the board of directors may permit title to shares of any class to be issued or held otherwise than by a certificate and to
be transferred by means of a “relevant system” (e.g., DTC) without a certificate.
The board of directors may take such steps as it sees fit in relation to the evidencing of and transfer of title to uncertificated shares, any records
relating to the holding of uncertificated shares and the conversion of uncertificated shares to certificated shares, or vice versa.
The company may by notice in writing to the holder of an uncertificated share, require that share to be converted into certificated form.
The board of directors may take such other action that the board considers appropriate to achieve the sale, transfer, disposal, forfeiture, re-allotment
or surrender of an uncertified share or otherwise to enforce a lien in respect of it.
Choice of Forum
Our articles of association will provide that the U.S. federal district courts will be the exclusive forum for resolving any complaint asserting a cause
of action arising under the Securities Act.
Other Relevant United Kingdom Laws and Regulations
Mandatory Bid
(i) The Takeover Code does not currently apply to the company. However if the company were to become subject to the Takeover Code in the
future, the following provisions will apply. Under Rule 9 of the Takeover Code, where:
a. any person, together with persons acting in concert with him, acquires, whether by a series of transactions over a period of time or not,
an interest in shares which (taken together with shares in which he is already interested, and in which persons acting in concert with
him are interested) carry 30% or more of the voting rights of a company; or
b. any person who, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30%
of the voting rights of a company but does not hold shares carrying more than 50% of such voting rights and such person, or any
person acting in concert with him, acquires an interest in any other shares which increases the percentage of shares carrying voting
rights in which he is interested; such person shall, except in limited circumstances, be obliged to extend offers, on the basis set out in
Rules 9.3, 9.4 and 9.5 of the Takeover Code, to the holders of any class of equity share capital, whether voting or non-voting, and
also to the holders of any other class of transferable securities carrying voting rights. Offers for different classes of equity share
capital must be comparable; the Takeover Panel should be consulted in advance in such cases.
(ii) An offer under Rule 9 of the Takeover Code must be in cash and at the highest price paid for any interest in the shares by the person required
to make an offer or any person acting in concert with him during the 12 months prior to the announcement of the offer.
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(iii) Under the Takeover Code, a “concert party” arises where persons acting together pursuant to an agreement or understanding (whether formal
or informal and whether or not in writing) actively cooperate, through the acquisition by them of an interest in shares in a company, to
obtain or consolidate control of the company. “Control” means holding, or aggregate holdings, of an interest in shares carrying 30% or more
of the voting rights of the company, irrespective of whether the holding or holdings give de facto control.
Squeeze-out
(i) Under sections 979 to 982 of the Companies Act, if an offeror were to acquire, or unconditionally contract to acquire, not less than 90% in
value of the ordinary shares of the company and 90% of the voting rights carried by the ordinary shares of the company, it could then
compulsorily acquire the remaining 10%. It would do so by sending a notice to outstanding shareholders telling them that it will
compulsorily acquire their shares, provided that no such notice may be served after the end of: (a) the period of three months beginning with
the day after the last day on which the offer can be accepted; or (b) if earlier, and the offer is not one to which section 943(1) of the
Companies Act applies, the period of six months beginning with the date of the offer.
(ii) Six weeks following service of the notice, the offeror must send a copy of it to the company together with the consideration for the ordinary
shares to which the notice relates, and an instrument of transfer executed on behalf of the outstanding shareholder(s) by a person appointed
by the offeror.
(iii) The company will hold the consideration on trust for the outstanding shareholders.
Sell-out
(i) Sections 983 to 985 of the Companies Act also give minority shareholders in the company a right to be bought out in certain circumstances by
an offeror who has made a takeover offer. If a takeover offer relating to all the ordinary shares of the company is made at any time before
the end of the period within which the offer could be accepted and the offeror held or had agreed to acquire not less than 90% of the
ordinary shares, any holder of shares to which the offer related who had not accepted the offer could by a written communication to the
offeror require it to acquire those shares. The offeror is required to give any shareholder notice of his right to be bought out within one
month of that right arising. The offeror may impose a time limit on the rights of minority shareholders to be bought out, but that period
cannot end less than three months after the end of the acceptance period, or, if longer a period of three months from the date of the notice.
(ii) If a shareholder exercises his rights, the offeror is bound to acquire those shares on the terms of the offer or on such other terms as may be
agreed.
Differences in Corporate Law
The applicable provisions of the Companies Act differ from laws applicable to U.S. corporations and their shareholders. Set forth below is a
summary of certain differences between the provisions of the Companies Act applicable to us and the General Corporation Law of the State of Delaware
relating to shareholders’ rights and protections. This summary is not intended to be a complete discussion of the respective rights and it is qualified in its
entirety by reference to Delaware law and English law.
Number of Directors
ENGLAND
the Companies Act, a
Under
public
limited company must
have at least two directors and the
number of directors may be fixed
by or in the manner provided in a
company’s articles of association.
DELAWARE
Under Delaware law, a corporation
must have at least one director and the
number of directors shall be fixed by or
in the manner provided in the bylaws.
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Removal of Directors
Vacancies of Board of Directors
ENGLAND
(which
remove
the Companies Act,
Under
shareholders may
a
director without cause by an
ordinary
is
resolution
passed by a simple majority of
those voting in person or by
proxy at a general meeting)
irrespective of any provisions of
any service contract the director
has with the company, provided
28 clear days’ notice of
the
resolution has been given to the
company and its shareholders. On
receipt of notice of an intended
resolution to remove a director,
the company must forthwith send
a copy of the notice to the director
other
concerned.
procedural requirements under the
Companies Act must also be
followed, such as allowing the
director to make representations
against his or her removal either
at the meeting or in writing.
Certain
except
(i) unless
DELAWARE
Under Delaware law, any director or
the entire board of directors may be
removed, with or without cause, by the
holders of a majority of the shares then
entitled to vote at an election of
directors,
the
certificate of incorporation provides
otherwise, in the case of a corporation
whose board of directors is classified,
stockholders may effect such removal
only for cause, or (ii) in the case of a
corporation having cumulative voting,
if less than the entire board of directors
is to be removed, no director may be
removed without cause if the votes cast
against his removal would be sufficient
to elect him if then cumulatively voted
at an election of the entire board of
directors, or, if there are classes of
directors, at an election of the class of
directors of which he is a part.
ENGLAND
Under English law, the procedure
by which directors, other than a
company’s initial directors, are
appointed is generally set out in a
company’s articles of association,
provided that where two or more
persons are appointed as directors
of a public limited company by
resolution of the shareholders,
resolutions appointing each
director must be voted on
individually.
DELAWARE
Under Delaware law, vacancies and
newly created directorships may be
filled by a majority of the directors then
in office (even though less than a
quorum) or by a sole remaining director
unless (i) otherwise provided in the
certificate of incorporation or bylaws of
the corporation or (ii) the certificate of
incorporation directs that a particular
class of stock is to elect such director,
in which case a majority of the other
directors elected by such class, or a sole
remaining director elected by such
class, will fill such vacancy.
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Annual General Meeting
General Meeting
ENGLAND
DELAWARE
Under the Companies Act, a
public limited company must hold
an annual general meeting in each
six-month period following the
company’s annual accounting
reference date.
Under Delaware law, the annual
meeting of stockholders shall be held at
such place, on such date and at such
time as may be designated from time to
time by the board of directors or as
provided in the certificate of
incorporation or by the bylaws.
DELAWARE
Under Delaware law, special meetings
of the stockholders may be called by
the board of directors or by such person
or persons as may be authorized by the
certificate of incorporation or by the
bylaws.
ENGLAND
Under the Companies Act, a
general meeting of the
shareholders of a public
limited company may be called
by the directors.
Shareholders holding at least
5% of the paid-up capital of
the company carrying voting
rights at general meetings
(excluding any paid up capital
held as treasury shares) can
require the directors to call a
general meeting and, if the
directors fail to do so within a
certain period, may themselves
convene a general meeting.
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Notice of General Meeting
Proxy
ENGLAND
Under the Companies Act, at least
21 days’ notice must be given for
an annual general meeting and
any resolutions to be proposed at
the meeting. Subject to a
company’s articles of association
providing for a longer period, at
least 14 days’ notice is required
for any other general meeting of a
public limited company. In
addition, certain matters, such as
the removal of directors or
auditors, require special notice,
which is 28 days’ notice. The
shareholders of a company may in
all cases consent to a shorter
notice period, the proportion of
shareholders’ consent required
being 100% of those entitled to
attend and vote in the case of an
annual general meeting and, in
the case of any other general
meeting, a majority in number of
the members having a right to
attend and vote at the meeting,
being a majority who together
hold not less than 95% in nominal
value of the shares giving a right
to attend and vote at the meeting.
ENGLAND
Under the Companies Act, at any
meeting of shareholders, a
shareholder may designate
another person to attend, speak
and vote at the meeting on their
behalf by proxy.
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DELAWARE
Under Delaware law, unless otherwise
provided in the certificate of
incorporation or bylaws, written notice
of any meeting of the stockholders
must be given to each stockholder
entitled to vote at the meeting not less
than ten nor more than 60 days before
the date of the meeting and shall
specify the place, date, hour and
purpose or purposes of the meeting.
DELAWARE
Under Delaware law, at any meeting of
stockholders, a stockholder may
designate another person to act for such
stockholder by proxy, but no such
proxy shall be voted or acted upon after
three years from its date, unless the
proxy provides for a longer period. A
director of a Delaware corporation may
not issue a proxy representing the
director’s voting rights as a director.
Preemptive Rights
Authority to Allot
ENGLAND
Under the Companies Act,
“equity securities,” being
(i) shares in the company other
than shares that, with respect to
dividends and capital, carry a
right to participate only up to a
specified amount in a distribution,
referred to as “ordinary shares,”
or (ii) rights to subscribe for, or to
convert securities into, ordinary
shares, proposed to be allotted for
cash must be offered first to the
existing equity shareholders in the
company in proportion to the
respective nominal value of their
holdings, unless an exception
applies or a special resolution to
the contrary has been passed by
shareholders in a general meeting
or the articles of association
provide otherwise in each case in
accordance with the provisions of
the Companies Act.
ENGLAND
Under the Companies Act, the
directors of a company must not
allot shares or grant rights to
subscribe for or convert any
security into shares unless an
exception applies or an ordinary
resolution to the contrary has
been passed by shareholders in a
general meeting or the articles of
association provide otherwise, in
each case in accordance with the
provisions of the Companies Act.
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DELAWARE
Under Delaware law, shareholders have
no preemptive rights to subscribe to
additional issues of stock or to any
security convertible into such stock
unless, and except to the extent that,
such rights are expressly provided for
in the certificate of incorporation.
DELAWARE
Under Delaware law, if the
corporation’s charter or certificate of
incorporation so provides, the board of
directors has the power to authorize the
issuance of stock. The board may
authorize capital stock to be issued for
consideration consisting of cash, any
tangible or intangible property or any
benefit to the corporation or any
combination thereof. It may determine
the amount of such consideration by
approving a formula. In the absence of
actual fraud in the transaction, the
judgment of the directors as to the
value of such consideration is
conclusive.
Liability of Directors and Officers
DELAWARE
Under Delaware law, a corporation’s
certificate of incorporation may
include a provision eliminating or
limiting the personal liability of a
director to the corporation and its
stockholders for damages arising
from a breach of fiduciary duty as a
director. However, no provision can
limit the liability of a director for:
any breach of the director’s duty
of loyalty to the corporation or its
stockholders;
acts or omissions not in good faith
or that involve intentional
misconduct or a knowing violation
of law;
intentional or negligent payment
of unlawful
ENGLAND
Under the Companies Act, any
provision, whether contained in a
company’s articles of association
or any contract or otherwise, that
purports to exempt a director of a
company, to any extent, from any
liability that would otherwise
attach to him in connection with
any negligence, default, breach of
duty or breach of trust in relation
to the company, is void. Any
provision by which a company
directly or indirectly provides an
indemnity, to any extent, for a
director of the company or of an
associated company against any
liability attaching to him in
connection with any negligence,
default, breach of duty or breach
of trust in relation to the company
of which he is a director is also
void except as permitted by the
Companies Act, which provides
exceptions for the company to
(i) purchase and maintain
insurance against such liability;
(ii) provide a “qualifying third
party indemnity,” or an indemnity
against liability incurred by the
director to a person other than the
company or an associated
company or criminal proceedings
in which he is convicted; and
(iii) provide a “qualifying pension
scheme indemnity,” or an
indemnity against liability
incurred in connection with the
company’s activities as trustee of
an occupational pension plan.
ENGLAND
DELAWARE
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Voting Rights
Delaware law provides that, unless
otherwise provided in the certificate of
incorporation, each stockholder is
entitled to one vote for each share of
capital stock held by such stockholder.
Under English law, unless a poll
is demanded by the shareholders
of a company or is required by the
chairman of the meeting or the
company’s articles of association,
shareholders shall vote on all
resolutions on a show of hands.
Under the Companies Act, a poll
may be demanded by (i) not
fewer than five shareholders
having the right to vote on the
resolution; (ii) any shareholder(s)
representing not less than 10% of
the total voting rights of all the
shareholders having the right to
vote on the resolution (excluding
any voting rights attaching to
treasury shares); or (iii) any
shareholder(s) holding shares in
the company conferring a right to
vote on the resolution (excluding
any voting rights attaching to
treasury shares) being shares on
which an aggregate sum has been
paid up equal to not less than 10%
of the total sum paid up on all the
shares conferring that right. A
company’s articles of association
may provide more extensive
rights for shareholders to call a
poll.
Under English law, an ordinary
resolution is passed on a show
of hands if it is approved by a
simple majority (more than
50%) of the votes cast by
shareholders present (in person
or by proxy) and entitled to
vote. If a poll is demanded, an
ordinary resolution is passed if
it is approved by holders
representing a simple majority
of the total voting rights of
shareholders present, in person
or by proxy, who, being
entitled to vote, vote on the
resolution. Special resolutions
require the affirmative vote of
not less than 75% of the votes
cast by shareholders present, in
person or by proxy, at the
meeting.
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Shareholder Vote on Certain Transactions
ENGLAND
The Companies Act provides for
schemes of arrangement, which
are arrangements or compromises
between a company and any class
of shareholders or creditors and
used in certain types of
reconstructions, amalgamations,
capital reorganizations or
takeovers. These arrangements
require:
the approval at a shareholders’ or
creditors’ meeting convened by
order of the court, of a majority
in number of shareholders or
creditors representing 75% in
value of the capital held by, or
debt owed to, the class of
shareholders or creditors, or class
thereof present and voting, either
in person or by proxy; and
the approval of the court.
DELAWARE
Generally, under Delaware law, unless
the certificate of incorporation
provides for the vote of a larger
portion of the stock, completion of a
merger, consolidation, sale, lease or
exchange of all or substantially all of a
corporation’s assets or dissolution
requires:
the approval of the board of directors;
and
the approval by the vote of the holders
of a majority of the outstanding stock
or, if the certificate of incorporation
provides for more or less than one vote
per share, a majority of the votes of the
outstanding stock of the corporation
entitled to vote on the matter.
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Standard of Conduct for Directors
ENGLAND
Under English law, a director
owes various statutory and
fiduciary duties to the company,
including:
to act in the way he considers, in
good faith, would be most likely
to promote the success of the
company for the benefit of its
members as a whole;
to avoid a situation in which he
has, or can have, a direct or
indirect interest that conflicts, or
possibly conflicts, with the
interests of the company;
to act in accordance with the
company’s constitution and only
exercise his powers for the
purposes for which they are
conferred;
to exercise independent judgment;
to exercise reasonable care, skill
and diligence;
not to accept benefits from a third
party conferred by reason of his
being a director or doing, or not
doing, anything as a director; and
to declare any interest that he has,
whether directly or indirectly, in a
proposed or existing transaction
or arrangement with the company.
DELAWARE
Delaware law does not contain specific
provisions setting forth the standard of
conduct of a director. The scope of the
fiduciary duties of directors is generally
determined by the courts of the State of
Delaware. In general, directors have a
duty to act without self-interest, on a
well-informed basis and in a manner
they reasonably believe to be in the
best interest of the stockholders.
Directors of a Delaware corporation
owe fiduciary duties of care and loyalty
to the corporation and to its
shareholders. The duty of care
generally requires that a director acts in
good faith, with the care that an
ordinarily prudent person would
exercise under similar circumstances.
Under this duty, a director must inform
himself of all material information
reasonably available regarding a
significant transaction. The duty of
loyalty requires that a director act in a
manner he reasonably believes to be in
the best interests of the corporation. He
must not use his corporate position for
personal gain or advantage. In general,
but subject to certain exceptions,
actions of a director are presumed to
have been made on an informed basis,
in good faith and in the honest belief
that the action taken was in the best
interests of the corporation. However,
this presumption may be rebutted by
evidence of a breach of one of the
fiduciary duties. Delaware courts have
also imposed a heightened standard of
conduct upon directors of a Delaware
corporation who take any action
designed to defeat a threatened change
in control of the corporation.
In addition, under Delaware law, when
the board of directors of a Delaware
corporation approves the sale or break-
up of a corporation, the board of
directors may, in certain circumstances,
have a duty to obtain the highest value
reasonably available to the
shareholders.
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Shareholder Litigation
ENGLAND
Under English law, generally, the
company, rather than its
shareholders, is the proper
claimant in an action in respect of
a wrong done to the company or
where there is an irregularity in
the company’s internal
management. Notwithstanding
this general position, the
Companies Act provides that (i) a
court may allow a shareholder to
bring a derivative claim (that is,
an action in respect of and on
behalf of the company) in respect
of a cause of action arising from a
director’s negligence, default,
breach of duty or breach of trust
and (ii) a shareholder may bring a
claim for a court order where the
company’s affairs have been or
are being conducted in a manner
that is unfairly prejudicial to some
of its shareholders.
DELAWARE
Under Delaware law, a stockholder
may initiate a derivative action to
enforce a right of a corporation if the
corporation fails to enforce the right
itself. The complaint must:
state that the plaintiff was a
stockholder at the time of the
transaction of which the plaintiff
complains or that the plaintiff’s
shares thereafter devolved on the
plaintiff by operation of law; and
allege with particularity the efforts
made by the plaintiff to obtain the
action the plaintiff desires from the
directors and the reasons for the
plaintiff’s failure to obtain the
action; or
state the reasons for not making
the effort.
Additionally, the plaintiff must
remain a stockholder through the
duration of the derivative suit. The
action will not be dismissed or
compromised without the approval of
the Delaware Court of Chancery.
C. Material contracts.
In addition to the contracts described elsewhere in this Annual Report, the following are summaries of each material contract to which we are a party for
the two years preceding the date of this Annual Report.
Underwriting Agreements
We entered into an underwriting agreement with Goldman Sachs & Co. LLC and Jefferies LLC as representatives of the underwriters, on June 21, 2018,
with respect to the ADSs sold in our IPO. We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities
Act, and to contribute to payments the underwriters may be required to make in respect of such liabilities.
We entered into an underwriting agreement with Goldman Sachs & Co. LLC and Jefferies LLC as representatives of the underwriters, on April 10,
2019, with respect to the ADSs sold in our April 2019 public offering. We have agreed to indemnify the underwriters against certain liabilities, including
liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect of such liabilities.
We entered into an underwriting agreement with J.P. Morgan Securities LLC and Jefferies LLC as representatives of the underwriters, on January
22, 2020, with respect to the ADSs sold in our January 2020 public offering. We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect of such liabilities.
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We entered into an underwriting agreement with J.P. Morgan Securities LLC and Wells Fargo Securities, LLC as representatives of the
underwriters, on February 9, 2021, with respect to the ADSs sold in our February 2021 public offering. We have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect
of such liabilities.
Sales Agreement
On September 18, 2020, we entered into an Open Market Sale Agreement
with Jefferies LLC, or the Sales Agreement, pursuant to which we
may issue and sell our ADSs having aggregate offering sales proceeds of up to $100,000,000, from time to time, in an at-the-market offering pursuant to
which Jefferies will act as sales agent. The Sales Agreement contains customary representations and warranties of the parties and indemnification and
contribution provisions under which we and Jefferies have agreed to indemnify each other against certain liabilities, including liabilities under the
Securities Act. Each party has right, by giving written notice as specified in the Sales Agreement, to terminate the sales agreement.
SM
University College of London Business Ltd. (UCLB) License
In September 2014, we entered into an exclusive license agreement, or the License, with UCL Business Ltd., or UCLB, the technology transfer
company of University College London, or UCL, to obtain licenses to certain technology rights in the field of cancer therapy and diagnosis. In March 2016
and March 2018, the License was amended to include additional rights. In October 2020, the License was again amended and restated to reflect our election
to have various UCLB patent rights assigned to us, as well as to provide us with access to additional licensed technologies. The License contains customary
indemnification and other risk allocation terms with respect to the licensed technologies and our uses thereof.
For additional information on our material contracts, please see “Item 4. Information on the Company,” “Item 6. Directors, Senior Management and
Employees,” and “Item 7.B. Related Party Transactions” of this Annual Report.
D. Exchange controls.
There are no governmental laws, decrees, regulations or other legislation in the United Kingdom that may affect the import or export of capital, including
the availability of cash and cash equivalents for use by us, or that may affect the remittance of dividends, interest, or other payments by us to non-resident
holders of our ordinary shares or ADSs, other than withholding tax requirements. There is no limitation imposed by the laws of England and Wales or our
articles of association on the right of non-residents to hold or vote shares.
E. Taxation.
The following summary contains a description of material U.K. and U.S. federal income tax consequences of the acquisition, ownership and disposition
of our ADSs. This summary should not be considered a comprehensive description of all the tax considerations that may be relevant to beneficial owners of
ADSs.
Material U.S. Federal Income Tax Considerations for U.S. Holders
The following is a description of the material U.S. federal income tax consequences to the U.S. Holders described below of owning and disposing of our
ADSs. It is not a comprehensive description of all tax considerations that may be relevant to a particular person’s decision to acquire securities. This
discussion applies only to a U.S. Holder that holds our ADSs as a capital asset for tax purposes (generally, property held for investment). In addition, it
does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including state and local tax
consequences, estate tax consequences, alternative minimum tax consequences, the potential application of the Medicare contribution tax, and tax
consequences applicable to U.S. Holders subject to special rules, such as:
•
•
•
•
banks, insurance companies, and certain other financial institutions;
U.S. expatriates and certain former citizens or long-term residents of the United States;
dealers or traders in securities who use a mark-to-market method of tax accounting;
persons holding ADSs as part of a hedging transaction, “straddle,” wash sale, conversion transaction or integrated transaction or persons
entering into a constructive sale with respect to ADSs;
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•
•
•
•
•
•
•
•
persons whose “functional currency” for U.S. federal income tax purposes is not the U.S. dollar;
brokers, dealers or traders in securities, commodities or currencies;
tax-exempt entities or government organizations;
S corporations, partnerships, or other entities or arrangements classified as partnerships for U.S. federal income tax purposes (and
investors therein);
regulated investment companies or real estate investment trusts;
persons who acquired ADSs pursuant to the exercise of any employee share option or otherwise as compensation;
persons that own or are deemed to own 10 percent or more of our shares including shares represented by ADSs (by vote or value); and
persons holding our ADSs in connection with a trade or business, permanent establishment, or fixed base outside the United States.
If an entity that is classified as a partnership for U.S. federal income tax purposes holds ADSs, the U.S. federal income tax treatment of a partner will
generally depend on the status of the partner and the activities of the partnership. Partnerships holding ADSs and partners in such partnerships are
encouraged to consult their tax advisers as to the particular U.S. federal income tax consequences of holding and disposing of ADSs.
U.S. Holders that own (directly, indirectly, or constructively through the application of attribution rules) 10% or more of our total combined voting
power or value could be subject to adverse U.S. federal income tax consequences pursuant to the controlled foreign corporation rules due to our ownership
of a U.S. subsidiary. Such prospective Holders should consult with their tax advisors as to the tax consequences of acquiring, owning and disposing of our
ADSs.
The discussion is based on the Internal Revenue Code of 1986, as amended, or the Code, administrative pronouncements, judicial decisions, final,
temporary and proposed Treasury Regulations, and the income tax treaty between the United Kingdom and the United States, or the Treaty, all as of the
date hereof, changes to any of which may affect the tax consequences described herein—possibly with retroactive effect.
A “U.S. Holder” is a holder who, for U.S. federal income tax purposes, is a beneficial owner of ADSs who is eligible for the benefits of the Treaty and is:
(i)
(ii)
a citizen or individual resident of the United States;
a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state
therein or the District of Columbia;
(iii)
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
(iv)
a trust if (1) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S.
persons have authority to control all substantial decisions of the trust or (2) the trust has a valid election to be treated as a U.S.
person under applicable U.S. Treasury Regulations.
U.S. Holders are encouraged to consult their tax advisers concerning the U.S. federal, state, local and foreign tax consequences of owning and disposing
of ADSs in their particular circumstances.
THESE PARAGRAPHS ARE A SUMMARY OF CERTAIN U.S. TAX CONSIDERATIONS AND ARE INTENDED AS A GENERAL GUIDE
ONLY. IT IS RECOMMENDED THAT ALL HOLDERS OF ADSs OBTAIN ADVICE AS TO THE CONSEQUENCES OF THE ACQUISITION,
OWNERSHIP AND DISPOSAL OF THE ADSs IN THEIR OWN SPECIFIC CIRCUMSTANCES FROM THEIR OWN TAX ADVISORS.
The discussion below assumes that the representations contained in the deposit agreement are true and that the obligations in the deposit agreement and
any related agreement will be complied with in accordance with their terms. A U.S. Holder of an ADS will generally be treated for U.S. federal income tax
purposes as the beneficial owner of the ordinary shares represented by the ADS, and, accordingly, no gain or loss will be recognized upon an exchange of
ADSs for ordinary shares.
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Passive Foreign Investment Company Rules
If we are classified as a passive foreign investment company, or a PFIC in any taxable year, a U.S. Holder will be subject to special rules generally
intended to reduce or eliminate any benefits from the deferral of U.S. federal income tax that a U.S. Holder could derive from investing in a non-U.S.
company that does not distribute all of its earnings on a current basis.
A non-U.S. corporation will be classified as a PFIC for any taxable year in which, after applying certain look-through rules, either:
•
•
at least 75% of its gross income is passive income (such as interest income); or
at least 50% of its gross assets (determined on the basis of a quarterly average) is attributable to assets that produce passive income or are
held for the production of passive income.
We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation, the equity
of which we own, directly or indirectly, 25% or more (by value).
Based on our current estimates of expected gross assets and income for the current taxable year, we do not believe we will be a PFIC for the year ending
December 31, 2020. However, the application of the PFIC rules is subject to uncertainty in several respects, and therefore, no assurances can be provided
with respect to our PFIC status for our taxable year ending December 31, 2020 or with regard to our PFIC status in the past or in the future.
A separate determination must be made after the close of each taxable year as to whether we are a PFIC for that year. As a result, our PFIC status may
change from year to year. The total value of our assets for purposes of the asset test generally will be calculated using the market price of the ADSs, which
may fluctuate considerably. Fluctuations in the market price of the ADSs may result in our being a PFIC for any taxable year.
If we are classified as a PFIC in any year with respect to which a U.S. Holder owns ADSs, we will continue to be treated as a PFIC with respect to such
U.S. Holder in all succeeding years during which the U.S. Holder owns the ADSs, regardless of whether we continue to meet the tests described above
unless (i) we cease to be a PFIC and the U.S. Holder has made a “deemed sale” election under the PFIC rules, (ii) we cease to be a PFIC and the U.S.
Holder has a valid mark-to- market election in effect (as described below) or (iii) the U.S. Holder makes a Qualified Electing Fund Election, or QEF
Election, with respect to all taxable years during such U.S. Holders holding period in which we are a PFIC. However, a U.S. Holder may make a QEF
Election with respect to our ADSs only if we annually provide such U.S. Holder with certain tax information, and we currently do not intend to prepare or
provide such information. As a result, the QEF Election is not expected to be available to a U.S. Holder and the remainder of this discussion assumes that
such election will not be available. If the “deemed sale” election is made, a U.S. Holder will be deemed to have sold the ADSs the U.S. Holder holds at
their fair market value and any gain from such deemed sale would be subject to the rules described below. After the deemed sale election, so long as we do
not become a PFIC in a subsequent taxable year, the U.S. Holder’s ADSs with respect to which such election was made will not be treated as shares in a
PFIC and the U.S. Holder will not be subject to the rules described below with respect to any “excess distribution” the U.S. Holder receives from us or any
gain from an actual sale or other disposition of the ADSs. U.S. Holders should consult their tax advisors as to the possibility and consequences of making a
deemed sale election if we cease to be a PFIC and such election becomes available.
For each taxable year we are treated as a PFIC with respect to U.S. Holders, U.S. Holders will be subject to special tax rules with respect to any “excess
distribution” such U.S. Holder receives and any gain such U.S. Holder recognizes from a sale or other disposition (including a pledge) of ADSs, unless (i)
such U.S. Holder makes a QEF Election with respect to all taxable years of a U.S. Holder’s holding period during which we are a PFIC or makes a purging
election to cause a deemed sale of the ADSs at their fair market value in conjunction with a QEF election (however, as discussed above, such elections are
expected and assumed not to be available) or (ii) our ADSs constitute “marketable“ securities, and such U.S. Holder makes a mark-to-market election as
discussed below. Distributions a U.S. Holder receives in a taxable year that are greater than 125% of the average annual distributions a U.S. Holder
received during the shorter of the three preceding taxable years or the U.S. Holder’s holding period for the ADSs will be treated as an excess distribution.
Under these special tax rules:
•
•
the excess distribution or gain will be allocated ratably over a U.S. Holder’s holding period for the ADSs;
the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we became a PFIC, will be
treated as ordinary income; and
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•
the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally
applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.
The tax liability for amounts allocated to years prior to the year of disposition or the year of an “excess distribution” cannot be offset by any net
operating losses for such years, and gains (but not losses) realized on the sale of the ADSs cannot be treated as capital, even if a U.S. Holder holds the
ADSs as capital assets.
If we are a PFIC, a U.S. Holder will generally be subject to similar rules with respect to distributions we receive from, and our dispositions of the stock
of, any of our direct or indirect subsidiaries that also are PFICs, as if such distributions were indirectly received by, and/or dispositions were indirectly
carried out by, such U.S. Holder. U.S. Holders should consult their tax advisors regarding the application of the PFIC rules to our subsidiaries.
U.S. Holders can avoid the interest charge on excess distributions or gain relating to the ADSs by making a mark-to-market election with respect to the
ordinary shares, provided that the ADSs are “marketable.” ADSs will be marketable if they are “regularly traded” on certain U.S. stock exchanges or on a
foreign stock exchange that meets certain conditions. For these purposes, the ordinary shares or ADSs will be considered regularly traded during any
calendar year during which they are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. Any trades that have as
their principal purpose meeting this requirement will be disregarded. Our ADSs are listed on Nasdaq, which is a qualified exchange for these purposes.
Consequently, if our ADSs remain listed on Nasdaq and are regularly traded, and you are a holder of ADSs, we expect the mark-to-market election would
be available to U.S. Holders if we are a PFIC. Each U.S. Holder should consult its tax advisor as to the whether a mark-to-market election is available or
advisable with respect to the ADSs.
A U.S. Holder that makes a mark-to-market election must include as ordinary income for each year an amount equal to the excess, if any, of the fair
market value of the ADSs at the close of the taxable year over the U.S. Holder’s adjusted tax basis in the ADSs. Accordingly, such mark-to-market election
may accelerate the recognition of income without a corresponding receipt of cash. An electing holder may also claim an ordinary loss deduction for the
excess, if any, of the U.S. Holder’s adjusted basis in the ADSs over the fair market value of the ADSs at the close of the taxable year, but this deduction is
allowable only to the extent of any net mark-to-market gains for prior years. Gains from an actual sale or other disposition of the ADSs will be treated as
ordinary income, and any losses incurred on a sale or other disposition of the ADSs will be treated as an ordinary loss to the extent of any net mark-to-
market gains for prior years. Once made, the election cannot be revoked without the consent of the Internal Revenue Service, or the IRS, unless the ADSs
cease to be marketable.
However, a mark-to-market election generally cannot be made for equity interests in any lower- tier PFICs that we own, unless shares of such lower-tier
PFIC are themselves “marketable.” As a result, even if a U.S. Holder validly makes a mark-to-market election with respect to our ADSs, the U.S. Holder
may continue to be subject to the PFIC rules (described above) with respect to its indirect interest in any of our investments that are treated as an equity
interest in a PFIC for U.S. federal income tax purposes. U.S. Holders should consult their tax advisors as to the availability and desirability of a mark-to-
market election, as well as the impact of such election on interests in any lower-tier PFICs.
Unless otherwise provided by the U.S. Treasury, each U.S. shareholder of a PFIC is required to file an annual report containing such information as the
U.S. Treasury may require. A U.S. Holder’s failure to file the annual report will cause the statute of limitations for such U.S. Holder’s U.S. federal income
tax return to remain open with regard to the items required to be included in such report until three years after the U.S. Holder files the annual report, and,
unless such failure is due to reasonable cause and not willful neglect, the statute of limitations for the U.S. Holder’s entire U.S. federal income tax return
will remain open during such period. U.S. Holders should consult their tax advisors regarding the requirements of filing such information returns under
these rules.
ADSs
A U.S. Holder of ADSs will generally be treated for U.S. federal income tax purposes as the owner of the underlying ordinary shares that such ADSs
represent. Accordingly, no gain or loss will be recognized if a U.S. Holder exchanges ADSs for the underlying shares represented by those ADSs.
The U.S. Treasury has expressed concern that parties to whom ADSs are released before shares are delivered to the Depositary or intermediaries in the
chain of ownership between holders and the issuer of the security underlying the ADSs, may be taking actions that are inconsistent with the claiming of
foreign tax credits by U.S. Holders of ADSs. These actions would also be inconsistent with the claiming of the reduced rate of tax, described below,
applicable to dividends received by certain non-corporate U.S. Holders. Accordingly, the creditability of non-U.S. withholding taxes (if any), and the
availability of the reduced tax rate for
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dividends received by certain non-corporate U.S. Holders, each described below, could be affected by actions taken by such parties or intermediaries.
Taxation of Distributions
Subject to the discussion above under “Passive Foreign Investment Company Rules,” distributions paid on ADSs, other than certain pro rata distributions
of ADSs, will generally be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal
income tax principles). Because we may not calculate our earnings and profits under U.S. federal income tax principles, we expect that distributions
generally will be reported to U.S. Holders as dividends. Subject to applicable limitations, dividends paid to certain non-corporate U.S. Holders may be
taxable at preferential rates applicable to “qualified dividend income.” However, the qualified dividend income treatment will not apply if we are treated as
a PFIC with respect to the U.S. Holder for the taxable year in which a dividend is paid or the preceding year. The amount of the dividend will be treated as
foreign-source dividend income to U.S. Holders and will not be eligible for the dividends-received deduction generally available to U.S. corporations under
the Code. Dividends will generally be included in a U.S. Holder’s income on the date of the U.S. Holder’s receipt of the dividend. The amount of any
dividend income paid in foreign currency will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of actual or
constructive receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of
receipt, a U.S. Holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign
currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt. Such gain or loss would generally be treated as U.S.-source
ordinary income or loss. The amount of any distribution of property other than cash (and other than certain pro rata distributions of ADSs or rights to
acquire ADSs) will be the fair market value of such property on the date of distribution.
For foreign tax credit limitation purposes, our dividends will generally be treated as passive category income. Because no U.K. income taxes will be
withheld from dividends on ADSs, there will be no creditable foreign taxes associated with any dividends that a U.S. Holder will receive.
Sale or Other Taxable Disposition of ADSs
Subject to the discussion above under “Passive Foreign Investment Company Rules,” gain or loss realized on the sale or other taxable disposition of
ADSs will be capital gain or loss, and will be a long-term capital gain or loss if the U.S. Holder held the ADSs for more than one year. The amount of the
gain or loss will equal the difference between the U.S. Holder’s tax basis in the ADSs disposed of and the amount realized on the disposition, in each case
as determined in U.S. dollars. This gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes. The deductibility of capital losses
is subject to limitations.
If the consideration received by a U.S. Holder is not paid in U.S. dollars, the amount realized will be the U.S. dollar value of the payment received
determined by reference to the spot rate of exchange on the date of the sale or other disposition. However, if the ADSs are treated as traded on an
“established securities market” and a U.S. Holder is either a cash basis taxpayer or an accrual basis taxpayer that has made a special election (which must
be applied consistently from year to year and cannot be changed without the consent of the IRS), such U.S. Holder will determine the U.S. dollar value of
the amount realized in a non-U.S. dollar currency by translating the amount received at the spot rate of exchange on the settlement date of the sale. If a U.S.
Holder is an accrual basis taxpayer that is not eligible to or does not elect to determine the amount realized using the spot rate on the settlement date, such
U.S. Holder will recognize foreign currency gain or loss to the extent of any difference between the U.S. dollar amount realized on the date of sale or
disposition and the U.S. dollar value of the currency received at the spot rate on the settlement date.
WE STRONGLY URGE YOU TO CONSULT YOUR TAX ADVISOR REGARDING THE IMPACT OF OUR PFIC STATUS ON YOUR
INVESTMENT IN THE ADSs AS WELL AS THE APPLICATION OF THE PFIC RULES TO YOUR INVESTMENT IN THE ADSs.
Information Reporting and Backup Withholding
Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are
subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is a corporation or other exempt recipient or (ii) in
the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding
(generally, by providing an IRS Form W-9).
Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against
the holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the IRS.
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Information with Respect to Foreign Financial Assets
Certain U.S. Holders who are individuals (and, under regulations, certain entities) may be required to report information relating to the ordinary shares or
ADSs, subject to certain exceptions (including an exception for ordinary shares or ADSs held in accounts maintained by certain U.S. financial institutions).
Such U.S. Holders who fail to timely furnish the required information may be subject to a penalty. Additionally, if a U.S. Holder does not file the required
information, the statute of limitations with respect to tax returns of the U.S. Holder to which the information relates may not close until three years after
such information is filed. U.S. Holders should consult their tax advisers regarding their reporting obligations with respect to their ownership and disposition
of the ADSs.
U.K. Taxation
The following is intended as a general guide to current U.K. tax law and HM Revenue & Customs, or HMRC, published practice applying as at the date
of this Annual Report (both of which are subject to change at any time, possibly with retrospective effect) relating to the holding of ADSs. It does not
constitute legal or tax advice and does not purport to be a complete analysis of all U.K. tax considerations relating to the holding of ADSs, or all of the
circumstances in which holders of ADSs may benefit from an exemption or relief from U.K. taxation. It is written on the basis that we do not (and will not)
directly or indirectly derive 75% or more of our qualifying asset value from U.K. land, and that we are and remain solely resident in the United Kingdom
for tax purposes and will therefore be subject to the U.K. tax regime and not the U.S. tax regime save as set out above under “Material U.S. Federal Income
Tax Considerations for U.S. Holders.”
Except to the extent that the position of non-U.K. resident persons is expressly referred to, this guide relates only to persons who are resident (and, in the
case of individuals, domiciled or deemed domiciled) for tax purposes solely in the United Kingdom and do not have a permanent establishment, branch,
agency (or equivalent) or fixed base in any other jurisdiction with which the holding of the ADSs is connected, or U.K. Holders, who are absolute
beneficial owners of the ADSs (where the ADSs are not held through an Individual Savings Account or a Self-Invested Personal Pension) and who hold the
ADSs as investments.
This guide may not relate to certain classes of U.K. Holders, such as (but not limited to):
•
•
•
•
•
•
•
•
•
persons who are connected with the company;
financial institutions;
insurance companies;
charities or tax-exempt organizations;
collective investment schemes;
pension schemes;
market makers, intermediaries, brokers or dealers in securities;
persons who have (or are deemed to have) acquired their ADSs by virtue of an office or employment or who are or have been officers or
employees of the company or any of its affiliates; and
individuals who are subject to U.K. taxation on a remittance basis.
The decision of the First-tier Tribunal (Tax Chamber) in HSBC Holdings PLC and The Bank of New York Mellon Corporation v HMRC (2012) cast
some doubt on whether a holder of a depositary receipt is the beneficial owner of the underlying shares. However, based on published HMRC guidance we
would expect that HMRC will regard a holder of ADSs as holding the beneficial interest in the underlying shares and therefore these paragraphs assume
that a holder of ADSs is the beneficial owner of the underlying ordinary shares and any dividends paid in respect of the underlying ordinary shares (where
the dividends are regarded for U.K. purposes as that person’s own income) for U.K. direct tax purposes.
THESE PARAGRAPHS ARE A SUMMARY OF CERTAIN U.K. TAX CONSIDERATIONS AND ARE INTENDED AS A GENERAL GUIDE
ONLY. IT IS RECOMMENDED THAT ALL HOLDERS OF ADSs OBTAIN ADVICE AS TO THE CONSEQUENCES OF THE
ACQUISITION, OWNERSHIP AND DISPOSAL OF THE ADSs IN THEIR OWN
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SPECIFIC CIRCUMSTANCES FROM THEIR OWN TAX ADVISORS. IN PARTICULAR, NON-U.K. RESIDENT OR DOMICILED
PERSONS ARE ADVISED TO CONSIDER THE POTENTIAL IMPACT OF ANY RELEVANT DOUBLE TAXATION AGREEMENTS.
Dividends
Withholding Tax
Dividends paid by us will not be subject to any withholding or deduction for or on account of U.K. tax.
Income Tax
An individual U.K. Holder may, depending on his or her particular circumstances, be subject to U.K. tax on dividends received from us. An individual
holder of ADSs who is not resident for tax purposes in the United Kingdom should not be chargeable to U.K. income tax on dividends received from us
unless he or she carries on (whether solely or in partnership) a trade, profession or vocation in the United Kingdom through a branch or agency to which
the ADSs are attributable. There are certain exceptions for trading in the United Kingdom through independent agents, such as some brokers and
investment managers.
All dividends received by an individual U.K. Holder from us or from other sources will form part of that U.K. Holder’s total income for income tax
purposes and will constitute the top slice of that income. A nil rate of income tax will apply to the first £2,000 of taxable dividend income received by the
individual U.K. Holder in a tax year. Income within the nil rate band will be taken into account in determining whether income in excess of the £2,000 tax-
free allowance falls within the basic rate, higher rate or additional rate tax bands. Dividend income in excess of the tax-free allowance will (subject to the
availability of any income tax personal allowance) be taxed at 7.5% to the extent that the excess amount falls within the basic rate tax band, 32.5% to the
extent that the excess amount falls within the higher rate tax band and 38.1% to the extent that the excess amount falls within the additional rate tax band.
Corporation Tax
A corporate holder of ADSs who is not resident for tax purposes in the United Kingdom should not be chargeable to U.K. corporation tax on dividends
received from us unless it carries on (whether solely or in partnership) a trade in the United Kingdom through a permanent establishment to which the
ADSs are attributable.
Corporate U.K. Holders should not be subject to U.K. corporation tax on any dividend received from us so long as the dividends qualify for exemption,
which should be the case, although certain conditions must be met. If the conditions for the exemption are not satisfied, or such U.K. Holder elects for an
otherwise exempt dividend to be taxable, U.K. corporation tax will be chargeable on the amount of any dividends (at the current rate of 19%).
Chargeable Gains
A disposal or deemed disposal of ADSs by a U.K. Holder may, depending on the U.K. Holder’s circumstances and subject to any available exemptions
or reliefs (such as the annual exemption), give rise to a chargeable gain or an allowable loss for the purposes of U.K. capital gains tax and corporation tax
on chargeable gains.
If an individual U.K. Holder who is subject to U.K. income tax at either the higher or the additional rate is liable to U.K. capital gains tax on the disposal
of ADSs, the current applicable rate will be 20%. For an individual U.K. Holder who is subject to U.K. income tax at the basic rate and liable to U.K.
capital gains tax on such disposal, the current applicable rate would be 10%, save to the extent that any capital gains, when aggregated with the U.K.
Holder’s other taxable income and gains in the relevant tax year, exceed the unused basic rate tax band. In that case, the rate currently applicable to the
excess would be 20%
If a corporate U.K. Holder becomes liable to U.K. corporation tax on the disposal (or deemed disposal) of ADSs, the main rate of U.K. corporation tax
(currently 19%) would apply.
A holder of ADSs which is not resident for tax purposes in the United Kingdom should not normally be liable to U.K. capital gains tax or corporation tax
on chargeable gains on a disposal (or deemed disposal) of ADSs unless the person is carrying on (whether solely or in partnership) a trade, profession or
vocation in the United Kingdom through a branch or agency (or, in the case of a corporate holder of ADSs, through a permanent establishment) to which
the ADSs are attributable. However, an individual holder of ADSs who has ceased to be resident for tax purposes in the United Kingdom for a period of
less than five years and who disposes of
145
ADSs during that period may be liable on his or her return to the United Kingdom to U.K. tax on any capital gain realized (subject to any available
exemption or relief).
Stamp Duty and Stamp Duty Reserve Tax
The discussion below relates to the holders of our ordinary shares or ADSs wherever resident, however it should be noted that special rules may apply to
certain persons such as market makers, brokers, dealers or intermediaries.
Issue of Ordinary Shares
No U.K. stamp duty or stamp duty reserve tax, or SDRT, is payable on the issue of the underlying ordinary shares in the company.
Transfers of Ordinary Shares
An unconditional agreement to transfer ordinary shares in certificated form will normally give rise to a charge to SDRT at the rate of 0.5% of the amount
or value of the consideration payable for the transfer. The purchaser of the shares is liable for the SDRT. Transfers of ordinary shares in certificated form
are generally also subject to stamp duty at the rate of 0.5% of the amount or value of the consideration given for the transfer (rounded up to the next £5.00).
Stamp duty is normally paid by the purchaser. The charge to SDRT will be canceled or, if already paid, repaid (generally with interest), where a transfer
instrument has been duly stamped within six years of the charge arising (either by paying the stamp duty or by claiming an appropriate relief) or if the
instrument is otherwise exempt from stamp duty.
An unconditional agreement to transfer ordinary shares to, or to a nominee or agent for, a person whose business is or includes the issue of depositary
receipts or the provision of clearance services will generally be subject to SDRT (or, where the transfer is effected by a written instrument, stamp duty) at a
higher rate of 1.5% of the amount or value of the consideration given for the transfer unless the clearance service has made and maintained an election
under section 97A of the U.K. Finance Act 1986, or a section 97A election. It is understood that HMRC regards the facilities of DTC as a clearance service
for these purposes and we are not aware of any section 97A election having been made by DTC.
However, no SDRT is generally payable where the transfer of ordinary shares to a clearance service or depositary receipt system is an integral part of an
issue of share capital.
Any stamp duty or SDRT payable on a transfer of ordinary shares to a depositary receipt system or clearance service will in practice generally be paid by
the participants in the clearance service or depositary receipt system.
Transfers of ADSs
No SDRT should be required to be paid on a paperless transfer of ADSs through the clearance service facilities of DTC, provided that no section
97A election has been made by DTC, and such ADSs are held through DTC at the time of any agreement for their transfer.
No U.K. stamp duty will in practice be payable on a written instrument transferring an ADS provided that the instrument of transfer is executed
and remains at all times outside the United Kingdom. Where these conditions are not met, the transfer of, or agreement to transfer, an ADS could,
depending on the circumstances, attract a charge to U.K. stamp duty at the rate of 0.5% of the amount or value of the consideration. If it is necessary to pay
stamp duty, it may also be necessary to pay interest and penalties.
F. Dividends and paying agents.
Not applicable.
G. Statement by experts.
Not applicable.
H. Documents on display.
We are subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers and file reports under those
requirements with the SEC. Those reports may be inspected without charge at the locations described below. As a
146
foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers,
directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.
In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S.
companies whose securities are registered under the Exchange Act.
We maintain a corporate website at www.autolus.com. Information contained in, or that can be accessed through, our website is not a part of, and shall
not be incorporated by reference into, this Annual Report. We have included our website address in this Annual Report solely as an inactive textual
reference.
The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants, such as
us, that file electronically with the SEC.
With respect to references made in this Annual Report to any contract or other document of our company, such references are not necessarily complete
and you should refer to the exhibits attached or incorporated by reference to this Annual Report for copies of the actual contract or document.
I. Subsidiary Information.
Not applicable.
Item 11. Quantitative and Qualitative Disclosures About Market Risk.
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. We maintain significant amounts of cash and cash equivalents that are in excess of federally insured limits in various currencies,
placed with one or more financial institutions for varying periods according to expected liquidity requirements.
Interest Rate Risk
As of December 31, 2020 and 2019, we had cash of $153.3 million and $210.6 million, respectively. Our exposure to interest rate sensitivity is impacted
by changes in the underlying U.S. and U.K. bank interest rates. Our surplus cash and cash equivalents have been 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 one percentage
point change in interest rates would have a material effect on the fair market value of our portfolio, and we, therefore, do not expect our operating results or
cash flows to be significantly affected by changes in market interest rates.
Foreign Currency Exchange Risk
We maintain our consolidated financial statements in our functional currency, which is pounds sterling. Monetary assets and liabilities denominated in
currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Non-
monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the date of
the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective
periods. We recorded a foreign exchange loss of $0.2 million for the year ended December 31, 2020, a foreign exchange gain of $4.6 million for the year
ended December 31, 2019, $1.1 million for the three months ended December 31, 2018, and a $4.0 million foreign exchange loss for the year ended
December 31, 2018, respectively, which are included in other income in the statements of operations and comprehensive loss.
For financial reporting purposes, our consolidated financial statements are prepared using the functional currency and translated into the U.S. dollar.
Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates
and shareholders’ equity is translated based on historical exchange rates. Translation adjustments are not included in determining net income (loss) but are
included in foreign exchange adjustment to accumulated other comprehensive income (loss), a component of shareholders’ equity.
We do not currently engage in currency hedging activities in order to reduce our currency exposure, but we may begin to do so in the future. Instruments
that may be used to hedge future risks may include foreign currency forward and swap contracts. These
147
instruments may be used to selectively manage risks, but there can be no assurance that we will be fully protected against material foreign currency
fluctuations.
Item 12. Description of Securities Other than Equity Securities.
A. Debt Securities
Not applicable.
B. Warrants and Rights.
Not applicable.
C. Other Securities.
Not applicable.
D. American Depositary Shares.
Citibank, N.A., as Depositary bank, registers and delivers our American Depositary Shares, also referred to as ADSs. Each ADS represents one ordinary
share (or a right to receive one ordinary share) deposited with Citibank, N.A., London Branch, or any successor, as custodian for the Depositary. Each ADS
will also represent any other securities, cash or other property which may be held by the Depositary in respect of the Depositary facility. The Depositary’s
corporate office at which the ADSs are administered is located at 388 Greenwich Street, New York, New York 10013. A deposit agreement among us, the
Depositary and the ADS holders sets out ADS holder rights as well as the rights and obligations of the Depositary. A form of the deposit agreement is
incorporated by reference as an exhibit to this Annual Report.
Fees and Charges
The following table shows the fees and charges that a holder of our ADSs may have to pay, either directly or indirectly. The majority of these costs are
set by the Depositary bank and are subject to change:
SERVICE
Issuance of ADSs (e.g., an issuance of ADS upon a deposit of ordinary shares or upon a change in the ADS(s)-to-
ordinary shares ratio), excluding ADS issuances as a result of distributions of ordinary shares
Cancellation of ADSs (e.g., a cancellation of ADSs for delivery of deposited property or upon a change in the
ADS(s)-to-ordinary shares ratio, or for any other reason)
Distribution of cash dividends or other cash distributions (e.g., upon a sale of rights and other entitlements)
Distribution of ADSs pursuant to (i) share dividends or other free share distributions, or (ii) exercise of rights to
purchase additional ADSs
Distribution of securities other than ADSs or rights to purchase additional ADSs (e.g., upon a spin-off)
ADS Services
FEE
Up to $0.05 per ADS issued
Up to $0.05 per ADS canceled
Up to $0.05 per ADS held
Up to $0.05 per ADS held
Up to $0.05 per ADS held
Up to $0.05 per ADS held on
the applicable record date(s)
established by the Depositary
As an ADS holder, you will also be responsible to pay certain charges such as:
•
•
taxes (including applicable interest and penalties) and other governmental charges;
the registration fees as may from time to time be in effect for the registration of ordinary shares on the share register and applicable to transfers
of ordinary shares to or from the name of the custodian, the Depositary or any nominees upon the making of deposits and withdrawals,
respectively;
• certain cable, telex and facsimile transmission and delivery expenses;
•
the expenses and charges incurred by the Depositary in the conversion of foreign currency;
148
•
•
the fees and expenses incurred by the Depositary in connection with compliance with exchange control regulations and other regulatory
requirements applicable to ordinary shares, ADSs and ADRs; and
the fees and expenses incurred by the Depositary, the custodian or any nominee in connection with the servicing or delivery of deposited
property.
149
Item 13. Defaults, Dividend Arrearages and Delinquencies.
Not applicable.
PART II
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.
A. Not applicable.
B. Not applicable.
C. Not applicable.
D. Not applicable.
E. Use of Proceeds.
Not applicable.
Item 15. Controls and Procedures.
A. Disclosure Controls and Procedures.
We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended,
or the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosure. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of
our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2020. Based on such evaluation,
our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2020, our disclosure controls and procedures were
effective.
B. Management’s Annual Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rule
13a-15(f) under the Exchange Act.
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an assessment
of the evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020 based on the criteria set forth in “Internal
Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2020.
C. Attestation Report of the Registered Public Accounting Firm.
This Annual Report does not include an attestation report of our registered public accounting firm due to a transition period established by rules of the
SEC for newly public companies. For so long as we qualify as an "emerging growth company" as defined under the JOBS Act, our independent registered
accounting firm is not required to issue an attestation report on our internal control over financial reporting.
150
D. Changes in Internal Control Over Financial Reporting.
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period
covered by this Annual Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 15T. Controls and Procedures.
Not applicable.
Item 16. [Reserved]
Item 16A. Audit Committee Financial Expert.
Our Board has determined that Ms. Bain is an “audit committee financial expert” as defined by SEC rules and has the requisite financial sophistication
under the applicable rules and regulations of the Nasdaq Stock Market. Ms. Bain is independent as such term is defined in Rule 10A-3 under the Exchange
Act and under the listing standards of the Nasdaq Stock Market.
Item 16B. Code of Ethics.
We have adopted a Code of Business Conduct and Ethics, or the Code of Ethics, that is applicable to all of our employees, officers and directors and is
available on our website at https://www.autolus.com/investor-relations/corporate-governance/documents-charters. Information contained on, or that can be
accessed through, our website does not constitute a part of this report and is not incorporated by reference herein. If we make any amendment to the Code
of Ethics or grant any waivers, including any implicit waiver, from a provision of the Code of Ethics, we will disclose the nature of such amendment or
waiver on our website to the extent required by the rules and regulations of the SEC. Under Item 16B of Form 20-F, if a waiver or amendment of the Code
of Ethics applies to our principal executive officer, principal financial officer, principal accounting officer or controller and relates to standards promoting
any of the values described in Item 16B(b) of Form 20-F, we are required to disclose such waiver or amendment on our website in accordance with the
requirements of Instruction 4 to such Item 16B.
Item 16C. Principal Accountant Fees and Services.
Ernst & Young LLP has served as our independent registered public accountant since September 2017 and has audited our consolidated financial
statements for the years ended December 31, 2020 and 2019, the three months ended December 31, 2018 and the years ended September 30, 2018, 2017
and 2016.
The following table shows the aggregate fees for services rendered by Ernst & Young LLP to us and our subsidiaries for the year ended December 31,
2020 and 2019.
Audit fees
Audit-related fees
Total
$
$
2020
2019*
Year Ended December 31,
(in thousands)
697
247
944
$
$
649
114
763
*Fees for 2019 have been reclassified for comparability due to a change in the definitions for audit fees and audit-related fees in the current year
Audit fees. Audit fees consisted of fees for the audit of our annual financial statements and other professional services provided in connection with the
statutory and regulatory filings or engagements, including fees for the review of our interim financial information.
151
Audit-related fees. Audit related fees include fees for assurance reporting on our current and historical financial information included in our SEC
registration statements in connection with our follow-on capital raises and our at-the-market facility program, including services that generally only the
independent accountant can reasonably provide such as comfort letters.
Audit Committee Pre-Approval Policies and Procedures
Our audit committee reviews and pre-approves the scope and the cost of audit services related to us and permissible non-audit services performed by the
independent auditors, other than those for de minimis services which are approved by the audit committee prior to the completion of the audit. All of the
services related to us provided by Ernst & Young LLP during the year ended December 31, 2020 have been pre-approved by the audit committee.
Item 16D. Exemptions from the Listing Standards for Audit Committees.
Not applicable
Item 16E Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
Not applicable.
Item 16F. Change in Registrant’s Certifying Accountant.
Not applicable
Item 16G. Corporate Governance.
We are a “foreign private issuer,” as defined by the SEC. As a result, in accordance with Nasdaq listing requirements, we may rely on home country
governance requirements and certain exemptions thereunder rather than complying with Nasdaq corporate governance standards. While we voluntarily
follow most Nasdaq corporate governance rules, we may choose to take advantage of the following limited exemptions:
▪
▪
▪
▪
Exemption from filing quarterly reports on Form 10-Q containing unaudited financial and other specified information or current reports on
Form 8-K upon the occurrence of specified significant events.
Exemption from Section 16 rules requiring insiders to file public reports of their share ownership and trading activities and liability for insiders
who profit from trades in a short period of time, which will provide less data in this regard than shareholders of U.S. companies that are subject to
the Exchange Act.
Exemption from the requirement that our board have a compensation committee that is composed entirely of independent directors with a written
charter addressing the committee’s purpose and responsibilities.
Exemption from the requirement to have independent director oversight of director nominations.
We intend to follow U.K. corporate governance practices in lieu of Nasdaq corporate governance requirements as follows:
▪ We do not intend to follow Nasdaq Rule 5620(c) regarding quorum requirements applicable to meetings of shareholders. Such quorum
requirements are not required under English law. In accordance with generally accepted business practice, our Articles of Association provide
alternative quorum requirements that are generally applicable to meetings of shareholders.
▪ We do not intend to follow Nasdaq Rule 5605(b)(2), which requires that independent directors regularly meet in executive sessions where only
independent directors are present. Our independent directors may choose to meet in executive sessions at their discretion.
Although we may rely on certain home country corporate governance practices, we must comply with Nasdaq’s Notification of Noncompliance
requirement (Nasdaq Rule 5625) and the Voting Rights requirement (Nasdaq Rule 5640). Further, we must have an audit committee that satisfies Nasdaq
Rule 5605(c)(3), which addresses audit committee responsibilities and authority and requires that the audit committee consist of members who meet the
independence requirements of Nasdaq Rule 5605(c)(2)(A)(ii).
152
We intend to take all actions necessary for us to maintain compliance as a foreign private issuer under the applicable corporate governance requirements of
the Sarbanes-Oxley Act, the rules adopted by the SEC and Nasdaq listing rules. Accordingly, our shareholders will not have the same protections afforded
to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.
Item 16H. Mine Safety Disclosure
Not applicable
153
Item 17. Financial Statements.
See the financial statements beginning on page F-1 of this Annual Report.
PART III
Item 18. Financial Statements.
Not applicable.
Item 19. Exhibits.
EXHIBIT
NUMBER
1.1
2.1
2.2
2.3
2.4
4.1#
4.2#
4.3+
4.4+
4.5+
DESCRIPTION OF EXHIBIT
Articles of Association of Autolus
Therapeutics plc.
Deposit Agreement by and among the
registrant, Citibank, N.A., as the Depositary
bank and the holders and beneficial owners
of American Depositary Shares issued
thereunder.
Form of American Depositary Receipt
(included in exhibit 2.1).
Autolus Therapeutics plc, Registration
Rights Agreement, dated as June 26, 2018
Description of Securities
License Agreement, dated as of September
25, 2014 by and between the registrant and
UCL Business Ltd., as amended on March
2, 2016 and March 28, 2018.
Supply Agreement, dated as of March 23,
2018, by and between the registrant and
Miltenyi Biotec GmbH.
Autolus Therapeutics plc 2018 Equity
Incentive Plan.
Non-employee Sub Plan to the Autolus
Therapeutics plc 2018 Equity Incentive
Plan.
Management Incentive Compensation Plan.
INCORPORATED BY REFERENCE
SCHEDULE/
FORM
FILE NUMBER
EXHIBIT
FILE
DATE
Form F-1/A
333-224720
3.1
6/19/18
Form F-6/A
333-224837
99.(a)
6/19/18
Form F-6/A
333-224837
99.(a)
6/19/18
Form 20-F
001-38547
2.4
3/3/20
Form F-1/A
333-224720
10.1
5/10/18
Form F-1/A
333-224720
Form F-1/A
333-224720
Form F-1/A
Form F-1/A
333-224720
333-224720
10.2
10.3
10.4
10.5
6/8/18
6/19/18
6/19/18
6/8/18
154
Form F-1/A
333-224720
10.6
6/8/18
Form 20-F
001-38547
8.1 3/3/20
4.6+
4.7*†
8.1
12.1*
12.2*
13.1**
15.1*
101.INS*
101.SCH*
101.CAL*
101.DEF*
101.LAB*
101.PRE*
Form of Deed of Indemnity between the
registrant and each of its members of senior
management and directors.
Amendment to License Agreement, dated
as of September 25, 2014 by and between
the registrant and UCL Business Ltd., dated
as of October 15, 2020.
Subsidiaries of the registrant.
Certification of Principal Executive Officer
Pursuant to Rules 13a-14(a) and 15d-14(a)
under the Securities Exchange Act of 1934,
as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer
Pursuant to Rules 13a-14(a) and 15d-14(a)
under the Securities Exchange Act of 1934,
as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of Principal Executive Officer
and Principal Financial Officer Pursuant to
18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
Consent of Ernst & Young LLP.
XBRL Instance Document
XBRL Taxonomy Extension Schema
Document
XBRL Taxonomy Extension Calculation
Linkbase Document
XBRL Taxonomy Extension Definition
Linkbase Document
XBRL Taxonomy Extension Label
Linkbase Document
XBRL Taxonomy Extension Presentation
Linkbase Document
+ Indicates management contract or compensatory plan.
# Confidential treatment has been granted as to portions of the exhibit (indicated by asterisks). Confidential materials omitted and filed separately with
the Securities and Exchange Commission.
* Filed herewith.
** Furnished herewith.
† Certain portions of this exhibit (indicated by asterisks) have been omitted because they are not material and would likely cause competitive harm to
Autolus Therapeutics plc if publicly disclosed.
155
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to
sign this annual report on its behalf.
SIGNATURES
Date: March 4, 2021
AUTOLUS THERAPEUTICS PLC
By:
/s/ Christian Itin
Christian Itin
Chief Executive Officer
156
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2020 and 2019, the three months ended
December 31, 2018, and the year ended September 30, 2018
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2020 and 2019, the three months ended December 31,
2018, and the year ended September 30, 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019, the three months ended December 31, 2018, and the
year ended September 30, 2018
Notes to Consolidated Financial Statements
F-2
F-3
F-4
F-5
F-6
F-7
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Autolus Therapeutics plc
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Autolus Therapeutics plc (the Company) as of December 31, 2020 and 2019, the related
consolidated statements of operations and comprehensive loss, shareholders' equity and cash flows for the years ended December 31, 2020 and 2019, three-
month period ended December 31, 2018, and the year ended September 30, 2018, and the related notes (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at
December 31, 2020 and 2019, and the results of its operations and its cash flows for the years ended December 31, 2020 and 2019, the three-month period
ended December 31, 2018 and the year ended September 30, 2018, in conformity with U.S. generally accepted accounting principles.
Adoption of ASU No. 2016-02
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of
Accounting Standard Update (ASU) No. 2016-02, Leases (Topic 842) and the related amendments.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over
financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2017.
Reading, United Kingdom
March 4, 2021
F-2
AUTOLUS THERAPEUTICS PLC
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
Assets
Current assets:
Cash
Restricted cash
Prepaid expenses and other current assets
Total current assets
Non-current assets:
Property and equipment, net
Prepaid expenses and other non-current assets
Right of use asset, net
Long-term deposits
Deferred tax asset
Intangible assets, net
Total assets
Liabilities and shareholders' equity
Current liabilities:
Accounts payable
Accrued expenses and other liabilities
Lease liability
Total current liabilities
Non-current liabilities:
Lease liability
Total liabilities
Shareholders' equity:
Ordinary shares, $0.000042 par value; 200,000,000 shares authorized at December 31, 2020 and 2019,
52,346,231 and 44,983,006 shares issued and outstanding at December 31, 2020 and 2019
Deferred shares,£0.00001 par value; 34,425 shares authorized, issued and outstanding at December 31, 2020
and 2019
Deferred B shares, £0.00099 par value; 88,893,548 shares authorized, issued and outstanding at December 31,
2020 and 2019
Deferred C shares, £0.000008 par value; 1 share authorized, issued and outstanding at December 31, 2020
and 2019
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated deficit
Total shareholders' equity
Total liabilities and shareholders' equity
December 31,
2020
2019
153,299 $
786
42,899
196,984
38,046
3,033
51,637
2,625
1,754
158
294,237 $
2,263
27,781
3,590
33,634
50,571
84,205
3
—
118
—
595,016
(5,861)
(379,244)
210,032
294,237 $
210,643
787
37,826
249,256
28,164
—
23,409
2,040
410
254
303,533
1,075
21,398
2,511
24,984
23,710
48,694
2
—
118
—
500,560
(8,691)
(237,150)
254,839
303,533
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
F-3
AUTOLUS THERAPEUTICS PLC
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
For the Year Ended
December 31,
2020
2019
For the
three-
months
ended
December
31,
2018
For the
Year
Ended
September
30,
2018
$
1,473 $
242
2,908 $
—
296 $
—
1,407
—
Grant income
License revenue
Operating expenses:
Research and development
General and administrative
(134,888)
(34,972)
(105,418)
(39,452)
Loss on impairment of
leasehold improvements
Total operating expenses, net
Other income (expense):
Interest income
Other income (expense)
Total other income, net
Net loss before income tax
Income tax benefit
Net loss attributable to ordinary
shareholders
Other comprehensive (loss)
income:
Foreign currency exchange
translation adjustment
Total comprehensive loss
—
(168,145)
(4,102)
(146,064)
536
1,352
1,888
(166,257)
24,163
2,542
4,514
7,056
(139,008)
15,159
(17,713)
(7,593)
—
(25,010)
660
1,097
1,757
(23,253)
2,605
(36,150)
(22,790)
—
(57,533)
1,532
3,970
5,502
(52,031)
7,280
(142,094)
(123,849)
(20,648)
(44,751)
2,830
(139,264)
6,797
(117,052)
(5,568)
(26,216)
(6,071)
(50,822)
Basic and diluted net loss per
ordinary share
Weighted-average basic and diluted
ordinary shares
$
(2.76) $
(2.88) $
(0.52) $
(1.42)
51,558,075 43,065,542
39,366,634 31,557,034
The accompanying notes are an integral part of these consolidated financial statements.
F-4
AUTOLUS THERAPEUTICS PLC
Consolidated Statements of Shareholders’ Equity
(In thousands, except share amounts)
Ordinary shares
Deferred Shares
Deferred B shares
Deferred C Shares
Shares
29,962,742 $
Amount
1
Shares Amount
— $ —
Shares
Amount
— $ —
Shares
—
Balance at September 30, 2017
Issuance of ordinary shares,
net of issuance costs
Issuance of deferred shares
Share-based compensation
expense
Unrealized loss on foreign
currency translation
Net loss
Balance at September 30, 2018
Share-based compensation
expense
Restricted shares - forfeited
Unrealized gain on foreign
currency translation
Net loss
Balance at December 31, 2018
Issuance of ordinary shares,
net of issuance costs
Share-based compensation
expense
Restricted shares - forfeited
Exercise of stock options
Unrealized gain on foreign
currency translation
Net loss
Balance at December 31, 2019
Issuance of ordinary shares,
net of issuance costs
Share-based compensation
expense
Restricted shares - forfeited
Exercise of stock options
Unrealized gain on foreign
currency translation
Net loss
10,183,440
—
—
—
40,146,182 $
—
(565)
—
—
40,145,617 $
4,830,000
—
(4,335)
11,724
—
—
44,983,006 $
7,250,000
—
(1,969)
115,194
—
Balance at December 31, 2020
52,346,231 $
1
—
—
—
—
2
—
—
—
—
2
—
—
—
—
—
—
2
1
—
—
—
—
—
3
—
34,425
—
—
—
—
—
—
—
—
34,425 $ —
—
—
—
—
—
—
—
—
34,425 $ —
—
—
—
—
—
—
34,425
—
—
—
—
—
—
34,425
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
88,893,548
118
—
—
—
88,893,548 $
118
—
—
—
—
88,893,548 $
—
—
—
—
—
—
88,893,548 $
—
—
—
—
—
—
88,893,548 $
—
—
—
—
118
—
—
—
—
—
—
118 $
—
—
—
—
—
—
118
—
1
—
—
—
1
—
—
—
—
1
—
—
—
—
—
—
1
—
—
—
—
—
—
1
Additional
Paid in
Capital
— $ 194,351 $
Amount
$
Accumulated
other
comprehensive
loss
Accumulated
deficit
(3,849) $
(47,902) $
—
—
—
156,802
—
6,765
—
—
—
—
—
Total
142,601
156,803
118
6,765
—
—
— $ 357,918 $
—
—
(6,071)
—
(9,920) $
—
(44,751) $
(92,653) $
(6,071)
(44,751)
255,465
—
—
3,393
—
—
—
—
—
3,393
—
—
—
— $ 361,311 $
—
—
(5,568)
—
(15,488) $
—
(20,648) $
(113,301) $
(5,568)
(20,648)
232,642
$
$
—
—
—
—
108,815
30,386
—
48
—
—
—
—
—
—
—
—
108,815
30,386
—
48
—
—
— $ 500,560 $
—
—
6,797
—
(8,691) $
—
(123,849)
(237,150) $
6,797
(123,849)
254,839
—
—
—
—
73,952
20,021
—
483
—
—
—
—
—
—
—
—
73,953
20,021
—
483
—
—
— $ 595,016 $
—
—
2,830
—
(5,861) $
—
(142,094)
(379,244) $
2,830
(142,094)
210,032
The accompanying notes are an integral part of these consolidated financial statements.
F-5
AUTOLUS THERAPEUTICS PLC
Consolidated Statements of Cash Flows
(In thousands)
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
Loss on disposal of fixed assets and intangible assets
Non-cash share-based compensation (net of amount capitalized)
Gain on lease incentive and reassessment
Loss on impairment of leasehold improvements
Gain on termination of operating lease
Deferred income tax
Changes in operating assets and liabilities
Prepaid expenses and other current assets
Prepaid expenses and other non-current assets
Long-term deposits
Accounts payable
Right of use assets, net
Accrued expenses and other liabilities
Lease liabilities
Net cash used in operating activities
Cash flows from investing activities:
Purchases of property and equipment
Purchase of intangible assets
Net cash used in investing activities
Cash flows from financing activities:
Proceeds of issuance of ordinary shares, net of issuance costs
Net cash provided by financing activities
Effect of exchange rate changes on cash
Net (decrease) increase in cash
Cash and restricted cash, beginning of period
Cash and restricted cash, end of period
Supplemental cash flow information
Cash paid for taxes
Supplemental non-cash flow information
Property and equipment purchases included in accounts payable or accrued
Leased assets terminated and obtained in exchange for operating lease liabilities, net
Reduction in right of use asset
Leased assets obtained in exchange for operating lease liabilities
Capitalized share-based compensation, net of forfeitures
Capitalized implementation costs included in accrued expenses
Reconciliation of cash and restricted cash reported within the consolidated balance sheets
Cash
Short-term restricted cash
Total cash and restricted cash
Year Ended December 31,
2019
2020
Three Months
Ended December
31,
2018
Year Ended
September 30,
2018
$
(142,094) $
(123,849)
$
(20,648)
$
(44,751)
5,658
—
20,107
(1,335)
—
(160)
(1,344)
(2,660)
(2,637)
(508)
1,439
3,670
5,608
(3,502)
(117,758)
(14,681)
—
(14,681)
74,415
74,415
679
(57,345)
211,430
154,085
4,611
43
30,212
—
4,102
—
(399)
(21,008)
—
(702)
(1,451)
2,551
4,958
(552)
(101,484)
(18,341)
(327)
(18,668)
108,863
108,863
5,164
(6,125)
217,555
211,430
645
394
3,393
—
—
—
—
(3,521)
—
(1,285)
(723)
—
1,960
—
(19,785)
(4,422)
—
(4,422)
—
—
(5,327)
(29,534)
247,089
217,555
1,841
1,535
—
2,499
2,487
—
26,956
(86)
144
153,299
786
154,085
2,818
—
1,919
—
174
—
210,643
787
211,430
3,343
—
—
—
—
—
217,450
105
217,555
1,709
8
6,765
—
—
—
—
(7,132)
—
—
838
—
11,026
—
(31,537)
(9,119)
(412)
(9,531)
156,920
156,920
(5,833)
110,019
137,070
247,089
—
328
—
—
—
—
—
246,984
105
247,089
The accompanying notes are an integral part of these consolidated financial statements.
F-6
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements
Note 1. Nature of the Business
Autolus Therapeutics plc (the “Company”) is a biopharmaceutical company developing next-generation programmed T cell therapies for the treatment of
cancer. Using its broad suite of proprietary and modular T cell programming technologies, the Company is engineering precisely targeted, controlled and
highly active T cell therapies that are designed to better recognize cancer cells, break down their defense mechanisms and attack and kill these cells. The
Company believes its programmed T cell therapies have the potential to be best-in-class and offer cancer patients substantial benefits over the existing
standard of care, including the potential for cure in some patients.
The Company is a public limited company incorporated in England and Wales. On June 22, 2018, the Company completed its initial public offering
("IPO") of American Depositary Shares (“ADSs”). In the IPO, the Company sold an aggregate of 10,147,059 ADSs representing the same number of
ordinary shares, including 1,323,529 ADSs pursuant to the underwriters’ option to purchase additional ADSs, at a public offering price of $17.00 per ADS.
Net proceeds were $156.5 million, after deducting underwriting discounts and commissions and offering expenses paid by the Company.
On April 15, 2019, the Company completed an underwritten public offering of 4,830,000 ADSs representing 4,830,000 ordinary shares, at a public
offering price of $24.00 per ADS, which includes an additional 630,000 ADSs issued upon the exercise in full of the underwriters’ option to purchase
additional ADSs. Aggregate net proceeds to the Company, after underwriting discounts and offering expenses, were $108.8 million.
On January 27, 2020, the Company completed an underwritten public offering of 7,250,000 ADSs representing 7,250,000 ordinary shares, at a public
offering price of $11.00 per ADS. Aggregate net proceeds to the Company, after underwriting discounts, were $75.0 million.
The Company is a continuation of Autolus Limited and its subsidiaries. In connection with the IPO, the Company completed a corporate
reorganization, which has been accounted for as a combination of entities under common control. The corporate reorganization has been given
retrospective effect in these financial statements and such financial statements represent the financial statements of Autolus Therapeutics plc. In connection
with the corporate reorganization, outstanding restricted share awards and option grants of Autolus Limited were exchanged for share awards and option
grants of Autolus Therapeutics plc with identical restrictions.
The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to,
development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with
government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require
significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These
efforts require significant amounts of capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s
product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from its product sales.
The Company has funded its operations primarily with proceeds from the sale of its equity securities. The Company has incurred recurring losses since
its inception, including net losses of $142.1 million and $123.8 million for the years ended December 31, 2020 and 2019, $20.6 million for the three
months ended December 31, 2018, and $44.8 million for the year ended September 30, 2018, respectively. In addition, as of December 31, 2020 and 2019,
the Company had an accumulated deficit of $379.2 million and $237.2 million, respectively. The Company expects to continue to generate operating losses
for the foreseeable future. The future viability of the Company beyond that point is dependent on its ability to raise additional capital to finance its
operations. The Company’s inability to raise additional capital as and when needed could have a negative impact on its financial condition and ability to
pursue its business strategies. There can be no assurances, however, that the current operating plan will be achieved or that additional funding will be
available on terms acceptable to the Company, or at all. The Company believes the cash on hand at December 31, 2020 of $153.3 million, with the
additional net proceeds from sale of ADSs under the Company’s at-the market facility program in January 2021 and its follow-on capital raise in February
2021 of $123.4 million, will be sufficient to fund the Company’s operations for at least 12 months from the issuance date of these financial statements.
F-7
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include those of the Company, Autolus Limited, and its U.S. subsidiary, Autolus Inc., and have
been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany accounts and
transactions have been eliminated upon consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the
reported amounts of income and expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial
statements include, but are not limited to, the accrual for research and development expenses, the fair value of ordinary shares, share-based compensation
and income taxes. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the
period in which they become known. Actual results could differ materially from those estimates.
Cash and Cash Equivalents
The Company considers cash and cash equivalents in the consolidated financial statements to include cash at banks with a maturity of less than three
months, which is subject to an insignificant risk of changes in value.
Restricted Cash
The Company entered into a lease that requires a letter of credit supported by $0.6 million deposit held by the Company's bank for the duration of the
lease and a credit card arrangement that requires a security deposit of $0.2 million. The Company includes the restricted cash balance in cash and cash
equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the Company's consolidated statements of cash flows.
Fair Value Measurements
The carrying amounts reported in the balance sheets for cash, prepaid expenses and other assets, accounts payable and accrued expenses and other
liabilities approximate their fair value because of the short-term nature of these instruments.
Concentration of Credit Risk
Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents. The Company places cash and cash
equivalents in established financial institutions. The Company has no significant off-balance-sheet risk or concentration of credit risk, such as foreign
exchange contracts, options contracts, or other foreign hedging arrangements.
Implementation Costs in a Cloud Computing Arrangement
The Company’s cloud computing arrangements primarily comprise hosting arrangements which are service contracts, whereby the Company gains
remote access to use enterprise software hosted by the vendor or another third party on an as-needed basis for a period of time in exchange for a
subscription fee. Implementation costs for cloud computing arrangements are capitalized if certain criteria are met and consist of internal and external costs
directly attributable to developing and configuring cloud computing software for its intended use. These capitalized implementation costs are presented in
the condensed consolidated balance sheet in prepaid expenses and other assets, current and non-current, and are generally amortized over the fixed, non-
cancellable term of the associated hosting arrangement on a straight-line basis.
Property and Equipment
Property and equipment are recorded at cost and depreciated or amortized using the straight-line method over the estimated useful lives of the
respective assets. As of December 31, 2020 and 2019, the Company’s property and equipment consisted of office equipment, lab equipment, furniture and
fixtures, and leasehold improvements. The office equipment has an estimated useful life of three years, lab equipment has an estimated useful life of five or
ten years, and furniture and fixtures have an estimated useful life of five years. Leasehold improvements are depreciated over the shorter of the lease term
or the estimated useful life of the asset. Assets under construction consist of costs incurred with leasehold improvements and, once placed into service, will
be depreciated over the
F-8
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
shorter of the lease term or the estimated useful life of the asset. Upon retirement or sale, the cost of assets disposed of, and the related accumulated
depreciation, are removed from the accounts and any resulting gain or loss is included in the statement of operations and other comprehensive loss. Repairs
and maintenance expenditures, which are not considered improvements and do not extend the useful life of property and equipment, are expensed as
incurred.
The Company evaluates an asset for potential impairment when events or changes in circumstances indicate the carrying value of the asset may not
be recoverable. Recoverability is measured by comparing the book value of the asset to the expected future net undiscounted cash flows that the asset is
expected to generate. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the book value of the
asset exceeds the fair value. The Company did not recognize an impairment nor a disposal for the year ended December 31, 2020, but did recognize a loss
on impairment of $4.1 million for the year ended December 31, 2019 related to leasehold improvements, as the Company chose to discontinue the fit-out of
the Company's manufacturing capacity at the Enfield, U.K. facility. There were no impairments or disposals for the three months ended December 31,
2018, and an asset disposal of less than $10,000 for the year ended September 30, 2018.
The Company routinely evaluates the useful life attributed to its assets. During the second quarter ended June 30, 2019, the Company determined that the
useful lives of certain lab equipment should be increased from five-years to ten-years based on expectation of future usability. The Company accounted for
this as a change in estimate that was applied prospectively, effective April 1, 2019. This change in useful life resulted in a reduction of depreciation expense
of $0.3 million, and an increase in basic and diluted earnings per share of $0.01, for the year ended December 31, 2019.
Leases
Effective January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”), Topic 842, Leases (“ASC 842”), using the required
modified retrospective approach and utilizing the effective date as its date of initial application, for which prior periods are presented in accordance with
the previous guidance in ASC 840, Leases.
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances
present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-
term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. Operating lease liabilities and
their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. However, certain
adjustments to the right-of-use asset may be required for items such as incentives received, initial direct costs, or prepayments. The interest rate implicit in
lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to
borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.
In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g., land, building, etc.),
non-lease components (e.g., common area maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and
in-substance fixed contract consideration (including any related to non-components) must be allocated based on the respective relative fair values to the
lease components and non-lease components.
Although separation of lease and non-lease components is required, certain practical expedients are available. Entities may elect the practical expedient
to not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a
single component. For new and amended leases beginning in 2019, the Company elected the practical expedients to account for the lease and non-lease
components for leases for classes of all underlying assets and allocate all of the contract consideration to the lease component only. The Company
determined the underlying lease to be the predominant component, and therefore, the entire agreement was accounted for under ASC 842.
Intangible Assets Subject to Amortization
The Company’s intangible assets have been related to acquired software licenses with finite lives are amortized over their useful lives and reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If any indicators were
present, the Company would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be
generated from the asset. If those net undiscounted cash flows do not exceed the carrying amount (i.e., the asset is not recoverable), the Company would
perform the next step, which is to determine the fair value of the asset and record an impairment loss, if any. The Company evaluates the useful lives for
these intangible assets each reporting period to determine whether events and circumstances warrant a revision in their remaining useful lives. The
Company did not recognize an impairment loss in the years ended December 31, 2020 and 2019. The Company recognized an impairment loss of $0.4
million for the three months ended December 31, 2018 related to software which the Company elected to discontinue. The Company did not recognize an
impairment loss in the year ended September 30, 2018.
F-9
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief
operating decision maker in deciding how to allocate resources and assess performance. The Company and the Company’s chief operating decision maker,
the Company’s Chief Executive Officer, view the Company’s operations and manages its business as a single operating segment, which is the business of
developing and commercializing gene therapies. The Company operates in two geographic regions: the United Kingdom and the United States. A majority
of the Company’s assets are held in the United Kingdom.
Deferred Rent and Lease Incentives
Prior to the adoption of ASC 842, rent expense and lease incentives from operating leases were recognized on a straight-line basis over the lease term.
The Company has operating leases that include rent escalation payment terms and a rent-free period. Deferred rent represents the difference between actual
operating lease payments and straight-line rent expense over the term of the lease. Upon adoption of ASC 842, the Company no longer records or presents
deferred rent.
Research and Development Costs
Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and
development activities, including salaries, share-based compensation and benefits, depreciation expense, third-party license fees, external costs of outside
vendors engaged to conduct clinical development activities, clinical trials, costs to manufacture clinical trial materials and certain tax credits associated
with research and development activities. The Company recorded the U.K.'s research and development expenditure credit ("RDEC") of $0.1 million and
$0.2 million for the years ended December 31, 2020 and 2019, $37,000 for the three months ended December 31, 2018, and $0.2 million for the year ended
September 30, 2018, respectively, as reductions of research and development expenses within the Company’s statement of operations and comprehensive
loss.
Accrued Research and Development Expenses
As part of the process of preparing consolidated financial statements, the Company is required to estimate accruals for research and development
expenses. This process involves reviewing and identifying services which have been performed by third parties on the Company’s behalf and determining
the value of these services. In addition, the Company makes estimates of costs incurred to date but not yet invoiced, in relation to external clinical research
organizations and clinical site costs. The Company analyzes the progress of clinical trials, including levels of patient enrollment; invoices received and
contracted costs, when evaluating the adequacy of the accrued liabilities for research and development. The Company makes judgments and estimates in
determining the accrued balance in any accounting period.
Share-Based Compensation
The Company recognizes compensation expense for equity awards based on the grant date fair value of the award. The Company recognizes share-based
compensation expense for awards granted to employees that have a graded vesting schedule based on a service condition only on a straight-line basis over
the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards (the “graded-vesting
attribution method”), based on the estimated grant date fair value for each separately vesting tranche. For equity awards with a graded vesting schedule and
a combination of service and performance conditions, the Company recognizes share-based compensation expense using a graded-vesting attribution
method over the requisite service period when the achievement of a performance-based milestone is probable, based on the relative satisfaction of the
performance condition as of the reporting date. The Company accounts for forfeitures as they occur.
For share-based awards granted to consultants and non-employees, compensation expense is recognized using the graded-vesting attribution method over
the period during which services are rendered by such consultants and non-employees until completed. The measurement date for employee awards is the
date of grant, and share-based compensation costs are recognized as expense over the employees’ requisite service period, which is the vesting period, on
an accelerated basis. In the year ended December 31, 2019 the Company adopted Accounting Standards Update (“ASU”) No. 2018-07, “Compensation —
Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting” (“ASU No. 2018-07”), prior to which the
measurement date for non-employee awards was generally the date the services were completed, resulting in financial reporting period adjustments to
share-based compensation during the vesting terms for changes in the fair value of the awards. After the adoption of
F-10
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
ASU No. 2018-07, the measurement date for non-employee awards is the later of the adoption date of ASU No. 2018-07 or the date of grant, without
changes in the fair value of the award.
The fair value of each share option grant is estimated on the date of grant using the Black-Scholes option pricing model. See Note 8 for the Company’s
assumptions used in connection with option grants made during the periods covered by these consolidated financial statements. Assumptions used in the
option pricing model include the following:
Expected volatility. We lack company-specific historical and implied volatility information for our ADSs for expected terms greater than 2.5 years.
Therefore, we use a combination of the historical volatility of our ADSs and also the expected share volatility based on the historical volatility of
publicly traded peer companies and expect to continue to do so until such time as we have adequate historical data regarding the volatility of our
own traded security price
Expected term. The expected term of the Company’s share options has been determined utilizing the “simplified” method for awards that qualify
as “plain-vanilla” options.
Risk-free interest rate. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the
award for time periods that are approximately equal to the expected term of the award.
Expected dividend. Expected dividend yield of zero is based on the fact that the Company has never paid cash dividends on ordinary shares and
does not expect to pay any cash dividends in the foreseeable future.
Fair value of ordinary shares. Options granted after the Company’s IPO are issued at the fair market value of the Company’s ADS at the date the
grant is approved by the Board.
Prior to the IPO, the Company calculated the fair value of its ordinary shares in accordance with the guidelines in the American Institute of Certified Public
Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The Company’s
valuations of ordinary shares were prepared using a market approach, based on precedent transactions in the shares, to estimate the Company’s total equity
value using the option-pricing method (“OPM”), which used a combination of market approaches and an income approach to estimate the Company’s
enterprise value.
The OPM derives an equity value such that the value indicated is consistent with the investment price, and it provides an allocation of this equity value
to each class of the Company’s securities. The OPM treats the various classes of shares as call options on the total equity value of a company, with exercise
prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, each class of
shares has value only if the funds available for distribution to shareholders exceed the value of the share liquidation preferences of the class or classes of
shares with senior preferences at the time of the liquidity event. Key inputs and assumptions used in the OPM calculation include the following:
Expected volatility. The Company applied re-levered equity volatility based on the historical unlevered and re-levered equity volatility of publicly
traded peer companies.
Expected dividend. Expected dividend yield of zero is based on the fact that the Company has never paid cash dividends on ordinary shares and
does not expect to pay any cash dividends in the foreseeable future.
Expected term. The expected term of the option or the estimated time until a liquidation event.
Risk-free interest rate. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for the period commensurate with the
expected of the exit event.
When considering the fair value of options granted in the period prior to the IPO, the Company considered probability-weighted scenarios based on the
relative likelihoods of completing the IPO and remaining a privately-held company. In the IPO scenarios, the fair value was calculated by dividing the total
estimated equity value by the number of fully diluted ordinary shares outstanding, and then discounting the implied per-share value at a rate intended to
approximate the Company's cost of equity between share option grant date and the expected IPO date. The stay-private scenario utilized an OPM
"Backsolve" calculation to estimate its equity value implied by the purchase price of the series A preference shares in September 2017. In March and May
2018, the Company issued share option grants to employees that applied a 50% and 80% probability weighting of an IPO, respectively, to the fair value of
the underlying ordinary share utilized in the Black-Scholes option pricing model.
Foreign Currency Translation
The Company maintains its financial statements in its functional currency, which is the pounds sterling. Monetary assets and liabilities denominated
in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Non-
monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the date of
the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective
periods. The Company recorded foreign
F-11
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
exchange loss of $0.2 million for the year ended December 31, 2020, foreign exchange gains of $4.6 million, $1.1 million, and $4.0 million for the year
ended December 31, 2019, the three months ended December 31, 2018, and the year ended September 30, 2018, respectively, which are included in other
income in the statements of operations and comprehensive loss.
For financial reporting purposes, the financial statements of the Company have been translated into U.S. dollars. Assets and liabilities have been
translated at the exchange rates at the balance sheet dates, while revenue and expenses are translated at the average exchange rates over the reporting period
and shareholders’ equity amounts are translated based on historical exchange rates as of the date of each transaction. Translation adjustments are not
included in determining net income (loss) but are included in foreign exchange adjustment to other comprehensive loss, a component of shareholders’
equity.
Patent Costs
The Company expenses patent prosecution and related legal costs as they are incurred and classifies such costs as general and administrative
expenses in the accompanying statements of operations and comprehensive loss. The Company recorded patent expenses of $2.1 million and $2.0 million
for the years ended December 31, 2020 and 2019, $0.2 million for the three months ended December 31, 2018, and $1.0 million for the year ended
September 30, 2018, respectively.
Grant Income
The Company has received research grants under which it is reimbursed for specific research and development activities. Payments received are
recognized as income in the statements of operations and comprehensive loss over the period in which the Company recognizes the related costs. At the
time the Company recognizes grant income, it has complied with the conditions attached to it and the receipt of the reimbursement is reasonably assured.
The Company has received grants from the U.K. government, which are repayable under certain circumstances, including breach or noncompliance. For
grants with refund provisions, the Company reviews the grant to determine the likelihood of repayment. If the likelihood of repayment of the grant is
determined to be remote, then the grant is recognized as grant income. The Company has determined that the likelihood of any repayment events included
in its current grants is remote.
License Revenue
The Company accounts for its revenues pursuant to the provisions of Accounting Standards Codification (“ASC”) Topic 606, Revenue from
Contracts with Customers (“ASC Topic 606”).
The Company has no products approved for commercial sale and has not generated any revenue from commercial product sales. The total revenue
to date has been generated from a license agreement with an investee company of one our affiliates. The terms of the agreement include a non-refundable
license fee, payments based upon achievement of clinical development and regulatory objectives, and royalties on product sales.
In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under its agreements, the Company
performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or
services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including
the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v)
recognition of revenue when (or as) the Company satisfies each performance obligation.
License Fees and Multiple Element Arrangements
If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the
arrangement, the Company recognizes revenues from non-refundable, upfront fees allocated to the license at such time as the license is transferred to the
licensee and the licensee is able to use, and benefit from, the license. For licenses that are bundled with other promises, the Company utilizes judgment to
assess the nature of the combined performance obligations to determine whether the combined performance obligations are satisfied over time or at a point
in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. The
Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.
Appropriate methods of measuring progress include output methods and input methods. In determining the appropriate method for measuring
progress, the Company considers the nature of service that the Company promises to transfer to the customer. When the Company decides on a method of
measurement, the Company will apply that single method of measuring progress for each performance obligation satisfied over time and will apply that
method consistently to similar performance obligations and in similar circumstances.
F-12
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
Contingent Research Milestone Payments
ASC Topic 606 constrains the amount of variable consideration included in the transaction price in that either all, or a portion, of an amount of
variable consideration should be included in the transaction price. The variable consideration amount should be included only to the extent that it is
probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable
consideration is subsequently resolved. The assessment of whether variable consideration should be constrained is largely a qualitative one that has two
elements: the likelihood of a change in estimate, and the magnitude thereof. Variable consideration is not constrained if the potential reversal of cumulative
revenue recognized is not significant, for example.
If the consideration in a contract includes a variable amount, the Company will estimate the amount of consideration in exchange for transfer of
promised goods or services. The consideration also can vary if the Company’s entitlement to the consideration is contingent on the occurrence or non-
occurrence of a future event. The Company considers contingent research milestone payments to fall under the scope of variable consideration, which
should be estimated for revenue recognition purposes at the inception of the contract and reassessed ongoing at the end of each reporting period.
The Company assesses whether contingent research milestones should be considered variable consideration that should be constrained and thus
not part of the transaction price. This includes an assessment of the probability that all or some of the milestone revenue could be reversed when the
uncertainty around whether or not the achievement of each milestone is resolved, and the amount of reversal could be significant.
GAAP provides factors to consider when assessing whether variable consideration should be constrained. All of the factors should be considered,
and no factor is determinate. The Company considers all relevant factors.
For the year ended December 31, 2020, the Company has not recognized any variable consideration with regards to the development milestones
which are included in the license agreement that was executed in the third quarter of the year. This is due to the fact that those development milestones have
not yet been met and the recognition of the related revenue is not yet probable.
Income Taxes
The Company accounts for income taxes under the asset and liability method which includes the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been included in the Company’s financial statements. Under this approach, deferred taxes are
recorded for the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for
income taxes represents income taxes paid or payable for the current year plus deferred taxes. Deferred taxes result from differences between the financial
statements and tax bases of the Company’s assets and liabilities, and are adjusted for changes in tax rates and tax law when changes are enacted. The effects
of future changes in income tax laws or rates are not anticipated.
The Company is subject to income taxes in the United Kingdom and the United States. The calculation of the Company’s tax provision involves the
application of United Kingdom tax law and requires judgement and estimates.
The Company evaluates the realizability of its deferred tax assets at each reporting date, and establishes a valuation allowance when it is more
likely than not that all or a portion of its deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of the same character and in the same
jurisdiction. The Company considers all available positive and negative evidence in making this assessment, including, but not limited to, the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. In circumstances where there is sufficient negative evidence
indicating that the Company’s deferred tax assets are not more likely than not realizable, the Company establishes a valuation allowance.
The Company uses a two-step approach for recognizing and measuring uncertain tax positions. The first step is to evaluate tax positions taken or
expected to be taken in a tax return by assessing whether they are more likely than not sustainable, based solely on their technical merits, upon
examination, and including resolution of any related appeals or litigation process. The second step is to measure the associated tax benefit or each position
as the largest amount that the Company believes is more likely than not realizable. Differences between the amount of tax benefits taken or expected to be
taken in the Company’s income tax returns and the amount of tax benefits recognized in the its financial statements represent the Company’s unrecognized
income tax benefits, which it either records as a liability or reduction of deferred tax assets.
F-13
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
Income Tax Credit
The Company benefits from the U.K. research and development tax credit regime under both the small and medium sized enterprise, or SME,
scheme and by claiming an RDEC in respect of grant funded projects. Under the SME regime, a portion of the Company’s losses can be surrendered for a
cash rebate of up to 33.35% of eligible expenditures. Such credits are accounted for within the tax provision in the year in which the expenditures were
incurred.
Comprehensive Loss
The Company follows the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic
220, Comprehensive Income, which establishes standards for the reporting and display of comprehensive income and its components. Comprehensive gain
or loss is defined to include all changes in equity during a period except those resulting from investments by owners and distributions to owners. The
Company recorded a gain of $2.8 million and $6.8 million for the years ended December 31, 2020 and 2019, a loss of $5.6 million for the three months
ended December 31, 2018, and a loss $6.1 million for the year ended September 30, 2018, respectively to foreign currency translation.
Net Loss per Share
Basic and diluted net loss per ordinary share is determined by dividing net loss by the weighted average number of ordinary shares outstanding
during the period. For all periods presented, the preferred shares and outstanding but unvested restricted shares and share options have been excluded from
the calculation, because their effects would be anti-dilutive. Therefore, the weighted average shares outstanding used to calculate both basic and diluted
loss per share are the same for all periods presented.
The following potentially dilutive securities have been excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:
Unvested restricted shares and units
Incentive share options
Total
Ordinary Share Conversion
Year Ended December 31,
2020
2019
505,383
5,611,429
6,116,812
814,744
5,963,239
6,777,983
Three Months Ended
December 31,
2018
Years Ended
September 30,
2018
708,834
3,711,274
4,420,108
815,632
2,065,481
2,881,113
On the date of the IPO, the Company converted its outstanding preferred and ordinary shares as discussed in Note 7. All share and per share information
has been retroactively adjusted to reflect the share conversion.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”) and may take advantage of
certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. The
Company may take advantage of these exemptions until the Company is no longer an emerging growth company. Section 107 of the JOBS Act provides
that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised
accounting standards. The Company has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
These exemptions provided by the JOBS Act will apply up until the last day of the fiscal year following the fifth anniversary of the IPO or such
earlier time that the Company is no longer meets the requirements of being an emerging growth company. The Company would cease to be an emerging
growth company if it has more than $1.07 billion in annual revenue, has more than $700 million in market value of its securities held by non-affiliates (and
it has been a public company for at least 12 months, and has filed one annual report on Form 20-F), or it issues more than $1 billion of non-convertible debt
securities over a three-year period.
F-14
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act, or the JOBS Act, was enacted. The JOBS Act provides that, among other things, an emerging
growth company can take advantage of an extended transition period for complying with new or revised accounting standards. As an emerging growth
company, the Company has irrevocably elected not to take advantage of the extended transition period afforded by the JOBS Act for the implementation of
new or revised accounting standards and, as a result, the Company will comply with new or revised accounting standards on the relevant dates on which
adoption of such standards is required for non-emerging growth public companies.
In addition, the Company intends to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain
conditions set forth in the JOBS Act, the Company is entitled to rely on certain exemptions as an “emerging growth company.” As an emerging growth
company, the Company is not required to, among other things, (i) provide an auditor’s attestation report on the Company’s system of internal controls over
financial reporting pursuant to Section 404(b), (ii) provide all of the compensation disclosure that may be required of non-emerging growth public
companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public
Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information
about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the
correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee
compensation. These exemptions will apply for a period of five years following the completion of the IPO or until the Company no longer meets the
requirements of being an emerging growth company, whichever is earlier.
Recently issued accounting pronouncements adopted
In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is
a Service Contract, a new standard on a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing
arrangement ("CCA") that aligns the requirements for capitalizing implementation costs in a CCA service contract with existing internal-use software
guidance. The standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted, and can be adopted
prospectively or retrospectively. The Company adopted the new standard on January 1, 2020 on a prospective basis. The Company’s CCAs are service
contracts for the hosting of software primarily related to recording and tracking information related to its clinical trials, including but not limited to patient
data and clinical manufacturing. The capitalized implementation costs are presented in the condensed consolidated balance sheet in prepaid expenses and
other assets, current and non-current. The deferred implementation costs will be expensed over the term of the hosting arrangement, which is the non-
cancelable term of the arrangement plus any reasonably certain renewal periods. As of December 31, 2020, $1.0 million was recorded in prepaid expenses
and other assets, current and $1.1 million was recorded to prepaid expenses and other assets, non-current as deferred implementation costs. During the year
ended December 31, 2020, $0.3 million of deferred implementation costs were expensed.
Recently issued accounting pronouncements not adopted
Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are
not expected to have a material impact on the Company's financial statements upon adoption.
F-15
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
Note 3. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
Research and development claims receivable
Prepayments
VAT receivable
Lease incentive receivable
Other asset
Grant income receivable
Other receivable
Deferred cost
Total prepaid expenses and other current assets
December 31,
2020
2019
$
$
24,711 $
10,206
3,124
1,237
—
414
199
3,008
42,899 $
27,567
7,023
1,928
—
279
547
482
—
37,826
The decrease to research and development claims receivable is due the fact that as of December 31, 2020 the research and development claim receivable
is solely for the year ended December 31, 2020; however, the research and development claims receivable as of December 31, 2019 were related to a claim
receivable for both the 15-month period ended December 31, 2019 and the year ended September 30, 2018.
The increase in prepayments in the year ended December 31, 2020 is primarily related to $1.9 million of prepayments for facilities and manufacturing and
$1.4 million for prepayments of clinical trial costs.
The increase in deferred cost in the year ended December 31, 2020 is related to $1.0 million in capitalized implementation costs related to hosting
arrangements and $2.0 million of non-refundable upfront costs related to payments for future manufacturing slots related to our clinical programs.
Note 4. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
Lab equipment
Office equipment
Furniture and fixtures
Leasehold improvements
Assets under construction
Less: accumulated depreciation
Total property and equipment, net
December 31,
2020
2019
$
$
23,491 $
2,928
1,340
10,629
14,321
(14,663)
38,046 $
18,214
2,211
1,301
10,316
4,687
(8,565)
28,164
Depreciation expense recorded for the years ended December 31, 2020 and 2019 was $5.7 million and $4.6 million, the three months ended December
31, 2018 was $0.6 million and, for the year ended September 30, 2018 was $1.7 million, respectively. The increase in assets under construction and lab
equipment relates to the build out of manufacturing facilities as we continue scaling our manufacturing operations.
Note 5. Intangible Asset
The following table summarizes the carrying amount of the Company's intangible assets, net of accumulated amortization (in thousands):
F-16
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
Software license
Estimated Life
(years)
3
December 31, 2020
Cost
Accumulated
Amortization
Net
$
291 $
(133)
$
158
Amortization expense for the years ended December 31, 2020 and 2019 was $91,000 and $47,000, respectively. Assuming no changes in the gross cost
basis of intangible assets, the total estimated amortization expense for finite-lived intangible assets is approximately $92,000 and $66,000 for each of the
years ending December 31, 2021 through December 31, 2022.
Note 6. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
Compensation and benefits
Research and development costs
UCLB milestone
Professional fees
Corporate tax
Other liabilities
Total accrued expenses and other liabilities
$
December 31,
2020
2019
8,732 $
15,343
205
3,005
—
496
27,781 $
6,568
10,449
663
2,611
391
716
21,398
Other liabilities primarily consisted of the business rates for UK property in the amount of $0.4 million and $0.2 million as of December 31, 2020
and 2019, respectively. As of December 31, 2019, other liabilities also consisted of the current portion of the lease incentive liability of $0.3 million.
Note 7. Shareholders’ Equity
Ordinary Shares
Each holder of ordinary shares is entitled to one vote per ordinary share and to receive dividends when and if such dividends are recommended by the
board of directors and declared by the shareholders. As of December 31, 2020, the Company has not declared any dividends.
Effective from June 26, 2018, the board of directors has the authority to allot new ordinary shares or to grant rights to subscribe for or to convert any
security into ordinary shares in the Company up to a maximum aggregate nominal amount of $8,400. This authority runs for five years and will expire on
June 26, 2023. Effective from June 26, 2018, the board also has the authority to allot ordinary shares for cash or to grant rights to subscribe for or to
convert any security into ordinary shares in the Company without first offering them to existing shareholders in proportion to their existing holdings up to
an aggregate maximum nominal amount of $8,400. This authority runs for five years and will expire on June 26, 2023.
As of December 31, 2020, the Company’s issued capital share consisted of 52,346,231 ordinary shares, with a nominal value of $0.000042 per share, (ii)
34,425 deferred shares, with a nominal value of £0.00001 per share, (iii) 88,893,548 B deferred shares, with a nominal value of £0.00099 per share and (iv)
1 C deferred share, with a nominal value of £0.000008. Each issued share has been fully paid.
Initial Public Offering and Impact of Corporate Reorganization
On June 18, 2018, Autolus Therapeutics Limited re-registered as a public limited company and its name was changed from Autolus Therapeutics
Limited to Autolus Therapeutics plc (see Note 1).
F-17
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
On June 26, 2018, the Company closed its IPO. In the IPO, the Company sold an aggregate of 10,147,059 ADSs representing the same number of
ordinary shares at a public offering price of $17.00 per ADS, which included the full exercise by the underwriters of their option to purchase additional
ADSs. Net proceeds were approximately $156.5 million, after deducting underwriting discounts, and commissions and offering expenses paid by the
Company of $16.0 million. Upon the closing of the IPO, each separate class of ordinary shares of Autolus Therapeutics plc was converted into a single
class of ordinary shares of Autolus Therapeutics plc as described further below.
Prior to the Company’s June 2018 reorganization and IPO, the Company had issued series A preferred shares, ordinary B shares, and ordinary C shares
to fund its operations and upon the completion of the IPO, the different classes of shares were converted into a single class of ordinary shares on a 3.185-
for-1 basis and created various classes of deferred shares.
The following deferred share classes were created:
Deferred Shares - The 34,425 deferred shares, aggregate nominal value less than $1.00, existed in Autolus Limited and were re-created in Autolus
Therapeutics plc as part of the share exchange to place Autolus Therapeutics as the ultimate parent entity. The Company was required to replicate the
shares to ensure the existing share has the correct nominal value to ensure stamp duty mirroring relief is available on the subsequent share for share
exchange. These deferred shares have no voting rights.
Deferred B Shares - The deferred shares were the product of the reorganization of the series A preferred shares and ordinary B shares into ordinary
shares. The nominal residual value was utilized by management as the required £50,000 of share capital to re-register Autolus Therapeutics Limited as
Autolus Therapeutics plc. The resulting 88,893,548 deferred shares, aggregate nominal value of $118,000, is presented as a separate class of equity on the
balance sheet and statement of shareholder’s equity. These deferred B shares have no voting rights.
Deferred C Share - The deferred share, nominal value less than $1.00, was created when the shares in the Company were redenominated from
pounds sterling to U.S. Dollars as part of the capital reduction to deal with rounding issues that would otherwise have unbalanced the company’s nominal
share capital. This deferred C share has no voting rights.
Open Market Sale Agreement
In September 2020, the Company entered into an Open Market Sale Agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, under
which the Company may, at its option, offer and sell ADSs having an aggregate offering price of up to $100.0 million from time to time through Jefferies,
acting as sales agent. Any such sales made through Jefferies can be made by any method that is deemed an “at-the-market offering” as defined in Rule 415
promulgated under the Securities Act, or in other transactions pursuant to an effective shelf registration statement on Form F-3. The Company agreed to
pay Jefferies a commission of 3.0% of the gross proceeds of any sales of ADSs sold pursuant to the Sales Agreement. During the year ended December 31,
2020, the Company did not sell any ADSs under the Sales Agreement.
Note 8. Share Based Compensation
In February 2017, the Company’s board of directors adopted the 2017 Share Option Plan, or the 2017 Plan. The 2017 Plan was set to expire on
February 21, 2027. The 2017 Plan provided for the grant of potentially tax-favored Enterprise Management Incentives, or EMI, options to the Company's
U.K. employees and for the grant of options to its U.S. employees.
In June 2018, as part of the Company's reorganization and IPO, the Company’s board of directors and shareholders approved the 2018 Equity Incentive
Plan, or the 2018 Plan. The initial maximum number of ordinary shares that may be issued under the 2018 Plan was 3,281,622. This number consists of
3,025,548 new ordinary shares and 256,074 ordinary shares that would have otherwise remained available for future grants under the 2017 Plan. The
number of ordinary shares reserved for issuance under the 2018 Plan will automatically increase on October 1st of each year, for a period of not more than
ten years, commencing on October 1, 2018 and ending on (and including) October 1, 2027, by an amount equal to the lesser of (i) 4% of the total number
of ordinary shares outstanding on September 30th of the same calendar year or (ii) such fewer number of ordinary shares as the board of directors may
designate prior to the applicable October 1st date. The updated maximum number of ordinary shares that may be issued under the 2018 Plan is 8,778,719 as
of December 31, 2020. The total Shares issued under the 2018 Plan may be authorized but unissued shares, shares purchased on the open market, treasury
shares or ADSs. No more than 14,000,000 shares may be issued under the 2018 Plan upon the exercise of incentive share options.
Options granted under the 2018 Plan and 2017 Plan, as well as restricted shares granted as employee incentives, typically vest over a four-year service
period with 25% of the award vesting on the first anniversary of the commencement date and the balance
F-18
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
vesting monthly over the remaining three years, unless the award contains specific performance vesting provisions. For equity awards issued that have both
a performance vesting condition and a services condition, once the performance criteria is achieved, the awards are then subject to a four-year service
vesting with 25% of the award vesting on the first anniversary of the performance condition being achieved and the balance vesting monthly over the
remaining three years. Options granted under the 2018 Plan and 2017 Plan generally expire 10 years from the date of grant. For certain senior members of
management and directors, the board of directors has approved an alternative vesting schedule. Restricted stock units awarded in December 2019 vest over
a 3-year service period with 50% of the award vesting one-and-half years from commencement date and the remaining 50% of the award vesting at the end
of the third year. No restricted stock units were awarded in the year ended December 31, 2020.
Share Option Valuation
The assumptions (see Note 2) used in the Black-Scholes option pricing model to determine the fair value of the share options granted to employees
and directors during the years ended December 31, 2020 and 2019, the three months ended December 31, 2018, and the year ended September 30, 2018
were as follows:
Expected option life (years)
Risk-free interest rate
Expected volatility
Expected dividend yield
Year Ended December 31,
2020
5.27 to 6.08
0.31% to 1.66%
76.38% to 81.45%
—%
2019
5.27 to 6.08
1.39% to 2.66%
72.30% to 76.22%
—%
Three Months Ended
December 31,
2018
6.08
2.70% to 3.09%
69.52% to 71.26%
—%
Year Ended
September 30,
2018
6.08
2.61% to 3.00%
68.15% to 72.99%
—%
Share Options
The table below summarizes activity for the years ended December 31, 2020 and 2019.
Outstanding as of December 31, 2018
Granted
Exercised
Forfeited
Outstanding as of December 31, 2019
Granted
Exercised
Forfeited
Outstanding as of December 31, 2020
Exercisable as of December 31, 2020
Vested and expected to vest as of December 31, 2020
Number of
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
(Years)
Aggregate
Intrinsic
Value
3,711,274 $
2,438,145
(11,724)
(201,456)
5,936,239 $
474,225
(115,194)
(683,841)
5,611,429
2,664,362 $
5,611,429 $
19.25
15.22
3.94
19.72
17.71
11.61
4.07
20.06
17.19
17.36
17.19
9.47 $
—
— $
—
9.02 $
—
—
—
7.96 $
7.36 $
7.96 $
51,464
—
198
—
11,873
—
—
—
4,262
3,432
4,262
The aggregate intrinsic value of share options is calculated as the difference between the exercise price of the share options and the fair value of the
Company’s restricted ordinary shares for those share options that had exercise prices lower than the fair value of the Company’s restricted ordinary shares.
F-19
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
The weighted average grant-date fair value of share options granted was $7.82, $10.07, $20.04, and $8.55 per share for the years ended
December 31, 2020 and 2019, for the three months ended December 31, 2018, and for the year ended September 30, 2018, respectively.
As of December 31, 2020, the total unrecognized compensation expense related to unvested options was $13.2 million, which the Company expects to
recognize over a weighted average vesting period of 2.57 years.
Restricted Ordinary Shares
The assumptions (Note 2) used in the OPM to determine the fair value of the ordinary shares for the following dates are as follows:
Expected term
Risk-free interest rate
Expected volatility
Expected dividend yield
March 2,
2016
2.8 years
1.0 %
73.2 %
0.0 %
April 26,
2017
1.2 years
1.0 %
76.6 %
0.0 %
September 25,
2017
0.8 years
1.3 %
71.0 %
0.0 %
March 31,
2018
1.8 years
2.1 %
71 %
0.0 %
May 31, 2018
1.8 years
2.1 %
71 %
0.0 %
A summary of the changes in the Company’s restricted ordinary shares during the years ended December 31, 2020 and 2019 are as follows and reflect
the conversion of ordinary shares in the current and previous years.
Unvested and outstanding at December 31, 2018
Granted
Vested
Forfeited
Unvested and outstanding at December 31, 2019
Granted
Vested
Forfeited
Unvested and outstanding at December 31, 2020
Number of
restricted
shares
Weighted average
grant date
fair value
708,834 $
0
(389,755)
(4,335)
314,744
—
(222,392)
(1,969)
90,383
4.10
0.00
4.31
4.43
4.22
0
4.24
4.44
4.17
As of December 31, 2020, there was unrecognized compensation of $0.04 million, which will be recognized over 0.59 years.
Restricted Stock Units
A restricted stock unit (“RSU”) represents the right to receive one of the Company’s ADSs upon vesting of the RSU. The fair value of each RSU is
based on the closing price of the Company’s ADSs on the date of grant. The Company grants RSUs with service conditions that vest over 3-year service
period with 50% of the award vesting one-and-half years from commencement date and the remaining 50% of the award vesting at the end of the third year.
F-20
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
During the year ended December 31, 2020, the Company did not grant RSUs under the 2018 Plan. The following is a summary of RSU activity for the
2018 Plan for the years ended December 31, 2020 and 2019, respectively:
Unvested and outstanding at December 31, 2018
Granted
Vested
Forfeited
Unvested and outstanding at December 31, 2019
Granted
Vested
Forfeited
Unvested and outstanding at December 31, 2020
Number of
restricted
units
Weighted average
grant date
fair value
—
500,000
—
—
500,000
—
—
(85,000)
415,000
$
$
—
12.09
—
—
12.09
—
—
12.09
12.09
As of December 31, 2020, there was $2.4 million of unrecognized compensation costs related to unvested RSUs, which are expected to be recognized
over a weighted average period of 1.96 years.
Share-based Compensation Expense
Share-based compensation expense recorded as research and development and general and administrative expenses is as follows (in thousands):
Year Ended December 31,
2020
2019
Three Months December 31,
2018
Years Ended September
30,
2018
Research and development
General and administrative
Capitalized to fixed assets
Total share-based compensation
$
$
$
$
12,992
7,115
(86)
20,021
$
$
17,761 $
12,451
174
30,386 $
1,906 $
1,487
—
3,393 $
3,116
3,649
—
6,765
Note 9. License Agreements
University College of London Business Ltd. (UCLB) License
In September 2014, the Company entered into an exclusive license agreement (the “License”) with UCL Business Ltd. (“UCLB”), the technology
transfer company of University College London (“UCL”), to obtain licenses to certain technology rights in the field of cancer therapy and diagnosis. In
March 2016, the License was amended to include additional rights.
As part of the consideration for the License in September 2014, the Company issued 1,497,643 ordinary shares to UCLB. The Company paid
upfront fees of $0.3 million and issued an additional 313,971 ordinary shares to UCLB when the License was amended in March 2016.
In March 2018, the License was further amended and restated to include a license to the Company's product candidate, AUTO1, for which UCL is
conducting Phase 1 clinical trials of AUTO1 in pediatric and adult ALL patients. The Company paid an upfront fee of £1.5 million for consideration for the
amended and restated License and paid the additional £0.35 million in connection with UCLB's transfer of clinical data to the Company in December 2020.
No equity was issued as part of the upfront fee consideration.
F-21
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
Additionally, the Company may be obligated to make payments to UCLB under the amended and restated License upon the initiation of certain
clinical activities in an aggregate amount of £0.18 million, the receipt of specified regulatory approvals in an aggregate amount of £37.5 million, the start of
commercialization in an aggregate amount of £18 million, and the achievement of net sales levels in an aggregate amount of £51 million, as well as royalty
payments based on possible future sales resulting from the utilization of the licensed technologies. On a per-product basis, these milestone payments range
from £1 million to £18.5 million, depending on which T cell programming modules are used in the product achieving the milestone.
Upon commercialization of any of the Company’s products that use the in-licensed patent rights, the Company will be obligated to pay UCLB a
flat royalty for each licensed product ranging from the low- to mid-single digits, depending on which technologies are deployed in the licensed product,
based on worldwide annual net sales of each licensed product, subject to certain reductions, including for the market entry of competing products and for
loss of patent coverage of licensed products. The Company may deduct from the royalties payable to UCLB one-half of any payments made to a third party
to obtain a license to such third party’s intellectual property that is necessary to exploit any licensed products. Once net sales of a licensed product have
reached a certain specified threshold, the Company may exercise an option to buy out UCLB’s rights to the remaining milestone payments, royalty
payments, and sublicensing revenue payments for such licensed product, on terms to be negotiated at the time.
The License expires on a product-by-product and country-by-country basis upon the expiration of the royalty term with respect to each product in
each country. The Company may unilaterally terminate the license agreement for any reason upon advance notice to UCLB. Either party may terminate the
License for the uncured material breach by the other party or for the insolvency of the other party. If UCLB terminates the License following the
Company’s insolvency or the Company’s material breach of the License, or if the Company terminates the License unilaterally, all rights and licenses
granted to the Company will terminate, and all patent rights and know-how transferred to the Company pursuant to the License will revert back to UCLB,
unless and to the extent the Company has exercised its option to acquire ownership of the licensed patent rights. In addition, UCLB has the right to
negotiate with the Company for the grant of an exclusive license to the Company’s improvements to the T cell programming modules the Company has
licensed on terms to be agreed upon at the time.
Noile-Immune Biotech Inc.
In November 2019, the Company entered into an exclusive license agreement with Noile-Immune Biotech Inc. ("Noile") under which the
Company will have the right to develop CAR T cell therapies incorporating Noile’s PRIME (proliferation-inducing and migration-enhancing) technology.
The PRIME technology is designed to improve proliferation and trafficking into solid tumors of both engineered CAR T cells as well as the patient’s own T
cells.
The Company paid an upfront fee and may be obligated to make additional payments to Noile upon the achievement of development milestones
and receipt of regulatory approvals product sale milestones, as well as royalty payments based on possible future sales resulting from the utilization of the
licensed technology.
Note 10. Income Taxes
The Company recorded an income tax benefit of $24.2 million, $15.2 million, $2.6 million, and $7.3 million for the years ended December 31,
2020 and 2019, the three months ended December 31, 2018, and the year ended September 30, 2018, respectively.
F-22
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
A reconciliation of income tax expense (benefit) at the statutory corporate income tax rate to the income tax expense (benefit) at the Company’s
effective income tax rates is as follows (in thousands):
Net loss before taxes
U.K. statutory tax rate
Income tax benefit at U.K. statutory tax rate
Tax incentives / credits
Non-deductible expenses
Adjustments in respect of prior years
Operating losses
Tax on property, plant, equipment and
intangibles
Other, net
Foreign rate differential
Total income tax benefit
Current income tax benefit
Deferred income tax benefit
$
Year ended December 31,
2020
(166,257)
$
2019
(139,008)
$
Three months ended
December 31,
2018
(23,253)
$
19.0 %
19.0 %
19.0 %
(31,589)
(23,076)
797
(1,088)
28,672
547
1,552
22
(24,163)
(22,819)
(1,344)
$
$
(26,411)
(16,312)
4,048
96
21,643
267
1,510
—
(15,159)
(14,749)
(410)
$
(4,423)
(3,234)
127
265
3,605
140
915
—
(2,605)
(2,605)
—
Year ended September 30,
2018
$
$
$
(52,031)
19.0 %
(9,886)
(7,296)
1,553
(13)
7,317
233
812
—
(7,280)
(7,280)
—
Effective rate of income tax
14.5 %
10.9 %
11.2 %
14.0 %
The effective tax rates in the above table for the years ended December 31, 2020 and 2019, the three months ended December 31, 2018, and the
year ended September 30, 2018 is lower than the main rate of U.K. tax primarily due to administration of the U.K. research and development tax credit,
which is included within the tax incentive/credits line in the table above.
Deferred tax assets and liabilities consisted of the following at December 31, 2020 and 2019 (in thousands):
Deferred tax assets:
Other differences
Tax losses
Fixed assets
Total deferred tax assets
Valuation allowances
Net deferred tax asset (liability)
December 31,
2020
2019
$
$
14,135 $
40,221
3,934
58,290
(56,536)
1,754 $
1,522
19,624
896
22,042
(21,632)
410
Deferred tax assets resulting from loss carry forwards, fixed assets and retirement benefits, with total deferred tax assets increasing by $1.3 million
in 2020. The Company has recorded a valuation allowance against the net deferred tax asset where the recoverability due to future taxable profits is
unknown. The $1.8 million deferred tax asset balance is related to the Company's U.S. entity.
At December 31, 2020, the Company had U.K. trading losses carry forward of $211.7 million. These losses are carried forward indefinitely under
local law, but are subject to numerous utilization criteria and restrictions.
As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets at each
reporting date. Accounting for income taxes guidance requires that a valuation allowance be established when it is more likely than not that all or a portion
of the deferred tax assets will not be realized. In circumstances where this is sufficient negative evidence indicating that the deferred tax assets are not more
likely than not realizable, the Company establishes a valuation allowance. The Company recorded valuation allowances in the amounts of $56.5 million
and $21.6 million at December 31, 2020 and 2019, respectively.
F-23
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
Note 11. Commitments and Contingencies
License Agreement
The Company has entered into an exclusive license agreement, as amended, with UCLB (see Note 9). In connection with the UCLB license
agreement, the Company is required to make annual license payments and may be required to make payments upon the achievement of specified
milestones. The Company has estimated the probability of the Company achieving each potential milestone in accordance with ASC 450, Contingencies.
The Company concluded that, as of December 31, 2020, there were no other milestones for which the likelihood of achievement was probable.
Legal Proceedings
From time to time, the Company may be a party to litigation or subject to claims incident to the ordinary course of business. Regardless of the
outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other
factors. The Company was not a party to any litigation and did not have contingency reserves established for any liabilities as of December 31, 2020.
Leases
The Company leases certain office space, laboratory space, and equipment. At the inception of an arrangement, the Company determines whether the
arrangement is or contains a lease based on the unique facts and circumstances present. The Company does not recognize right-of-use assets or lease
liabilities for leases determined to have a term of 12 months or less. Many of the Company's leases contain variable non-lease components such as
maintenance, taxes, insurance, and similar costs for the spaces it occupies. For new and amended leases beginning in 2019, the Company has elected the
practical expedient not to separate these non-lease components of leases for classes of all underlying assets and instead account for them as a single lease
component for all leases. The Company recognizes on a straight-lines basis the net fixed payments of operating leases over the lease term. Variable
executory costs, as it relates to net leases, are excluded from the calculation of the lease liability and the Company expenses the variable lease payments in
the period in which it incurs the obligation to pay such variable amounts and will be included in variable lease costs in the leases footnote disclosure.
These variable lease payments are not included in the Company's calculation of its right-of-use assets or lease liabilities.
In adopting ASC 842, in the year ended December 31, 2019, the Company elected the package of practical expedients which, among other things,
allowed it to retain the classification of its leases in place at the effective date of ASC 842.
The Company’s corporate headquarters are located in London, United Kingdom. As of December 31, 2020, and 2019, the Company leased space at
this location from Imperial (Forest House) Limited under a ten year lease, the term of which commenced in September 2015. The lease included an option
for the Company to lease additional space within a 15-month period, which the Company exercised in October 2016. The exercise of the option resulted in
a separate new lease with a concurrent term through August 2025. The Company and the landlord has the option to early terminate both leases in
September 2020 and the landlord has the option to give notice to terminate the lease from September 2020 onward. The Company has measured its right-
of-use assets and lease liabilities based on lease terms ending in September 2025. The landlord exercised its option to give notice in September 2020 to
terminate the Forest House lease and pay the Company a break-lease payment fee in September 2021. The Company recorded a $1.3 million gain upon the
notice of lease termination and lease incentive receivable of $1.2 million in the third quarter of 2020. In addition to base rent, the Company is obligated to
pay its proportionate share of building operating expenses and real estate taxes in excess of base year amounts. These costs are considered to be variable
lease payments and are not included in the determination of the lease’s right-of-use asset or lease liability.
Prior to the lease commencement date of the Forest House leases, the Company, in conjunction with the landlord, made improvements to the leased
space. The total cost of these improvements was funded by the landlord, a portion of the cost will be reimbursed by the Company over the term of the
leases. The total cost of the improvements was capitalized as leasehold improvements on the Company’s balance sheet, with an offset to long-term lease
incentive obligation for the portion funded by the landlord and other long-term payables for the portion to be repaid to the landlord. The lease related to this
facility is classified as an operating lease.
In September 2017, the Company executed an arrangement with Catapult Limited to lease a manufacturing suite at the Cell and Gene Therapy
Catapult manufacturing center in Stevenage, United Kingdom for a term through May 2021, at which time the
F-24
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
Company has the option to renew or terminate the lease. The lease related to this facility is classified as an operating lease. The lease has a six-month rent-
free period. In addition to base rent, the Company is obligated to pay its proportionate share of building operating expenses and real estate taxes in excess
of base year amounts. These costs are considered to be variable lease payments and are not included in the determination of the lease’s right-of-use asset or
lease liability. In December 2018, the Company executed an additional lease arrangement for additional manufacturing space for a term through September
2023, at which time the Company has the option to renew or terminate the lease.
In June 2018, the Company signed a binding letter of intent to enter into a lease for office and laboratory space in White City, London. The letter of
intent required the Company to enter into a ten-year lease provided that the landlord completed the required leasehold improvements described in the
agreement. The leasehold improvements were completed and the lease commenced in January 2019. The Company has the option to terminate the lease in
November 2026. In addition to base rent, the Company is obligated to pay its proportionate share of building operating expenses and real estate taxes in
excess of base year amounts. These costs are considered to be variable lease payments and are not included in the determination of the lease’s right-of-use
asset or lease liability. The lease agreement includes an option to lease additional space. As of December 31, 2020, the Company capitalized $6.7 million as
leasehold improvements.
In September 2018, the Company signed a binding letter of intent to enter into a lease for manufacturing space in Enfield, United Kingdom. The letter of
intent required the Company to enter into a 15-year lease provided that the landlord completed the required leasehold improvements described in the
agreement. The Company executed lease agreements for three manufacturing space units, each for 15-year lease terms. The leases commenced in February
2019 with option to terminate the lease in February 2029. In addition to base rent, the Company is obligated to pay its proportionate share of building
operating expenses and real estate taxes in excess of base year amounts. These costs are considered to be variable lease payments and are not included in
the determination of the lease’s right-of-use asset or lease liability. The Company expensed $4.1 million of leasehold improvements from assets under
construction as of December 31, 2019 as a result of discontinuing the fit-out of the manufacturing facility. The Company reduced the right-of-use asset and
lease liability based on the contractual option termination date. The Company is actively seeking to sub-lease or assign the lease arrangements to a third
party. The Company completed an asset impairment analysis of the right-of-use lease concluding the undiscounted cash flows exceeded the carrying value
as of December 31, 2020.
In October 2018, the Company executed an agreement to sublease office space in Rockville, Maryland for a term through October 2021. The Company
then terminated the sublease in February 2020 and immediately entered into a five-year lease for the same space with the landlord. As a result of the
sublease termination, the Company recognized a $0.2 million gain in other income (expense) in the first quarter of 2020. The lease related to this facility is
classified as an operating lease. The Company is obligated to pay its proportionate share of building operating expenses and real estate taxes in excess of
base year amounts. These costs are considered to be variable lease payments and are not included in the determination of the lease’s right-of-use asset or
lease liability.
In January 2019, the Company executed a lease agreement to lease additional office and manufacturing space in Rockville, Maryland. The lease
agreement required the Company to enter into a lease provided that the landlord completes the required leasehold improvements described in the
agreement. The lease commenced in August 2020 for a term through June 2036. The lease related to this facility is classified as an operating lease. The
Company has capitalized $2.4 million in leasehold improvements as assets under construction as of December 31, 2020.
In May 2020, the Company executed an arrangement with Catapult Limited to lease a manufacturing suite at the Cell and Gene Therapy Catapult
manufacturing center in Stevenage, United Kingdom for a term through April 2024. The lease related to this facility is classified as an operating lease. In
addition to base rent, the Company is obligated to pay its proportionate share of building operating expenses and real estate taxes in excess of base year
amounts. These costs are considered to be variable lease payments and are not included in the determination of the lease’s right-of-use asset or lease
liability.
The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities
during the adoption of ASC 842, in the year ended December 31, 2019:
• As the Company's leases do not provide an implicit rate, it estimated the incremental borrowing rate for each lease based on a yield curve analysis,
utilizing the interest rate derived from the fair value analysis of its existing leases and adjusting it for factors that appropriately reflect the profile
of secured borrowing over the lease term. For leases existing as of the adoption date, the Company has utilized its incremental borrowing rate
based on the remaining lease term as of the adoption date. For leases that commenced after the adoption date, the Company determined the
incremental borrowing rate based on the lease term as determined at the commencement date of the lease.
F-25
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
•
•
The expected lease terms include both contractual lease periods and, when applicable, cancellable option periods where failure to exercise such
options would result in an economic penalty.
Since the Company elected to account for each lease component and its associated non-lease components as a single combined lease component,
all contract consideration was allocated to the combined lease component.
Leases (in thousands)
Balance Sheet Classification
Assets
Operating lease assets
Liabilities
Current
Operating lease liabilities
Noncurrent
Operating lease liabilities
Total lease liabilities
Operating right-of-use assets
Current liabilities: Operating lease liabilities
Non-current liabilities: Operating lease liabilities
Lease cost (in thousands)
Operating lease cost
Variable lease cost
Statement of Operations Classification
Operating expenses: research and development
Operating expenses: research and development
Operating lease cost
Variable lease cost
Operating expenses: general and administrative
Operating expenses: general and administrative
Short term lease costs
Total lease cost
As of December 31,
2020
2019
51,637 $
23,409
3,590 $
50,571 $
54,161 $
Year Ended December 31,
2019
2020
$
5,266
1,212
1,380
270
282
8,410
$
2,511
23,710
26,221
3,156
1,222
1,241
250
270
6,139
$
$
$
$
$
$
Other information (in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
Right-of-use assets obtained in exchange for new operating lease liabilities
Weighted-average remaining lease term — operating leases (years)
Weighted-average discount rate — operating leases
December 31,
2020
2019
$
$
4,896
30,786
$
$
11.2
9.0 %
2,415
26,124
7.7
6.8 %
F-26
AUTOLUS THERAPEUTICS PLC
Notes to Consolidated Financial Statements — Continued
Future fixed payments for non-cancellable operating leases in effect as of December 31, 2020 are payable as follows:
Maturity of lease liabilities for the years ending December 31,
2021
2022
2023
2024
2025
Thereafter
Total lease payments
Less: imputed interest
Present value of lease liabilities
Operating Leases
(in thousands)
7,026
9,112
8,644
8,150
7,044
51,259
91,235
(37,074)
54,161
$
$
The Company recognized rent expense on a straight-line basis over the respective lease period and has recorded deferred rent for rent expense incurred
but not yet paid prior to the adoption of ASC 842.
The Company recorded rent expense totaling $0.5 million for the three months ended December 31, 2018, and $0.9 million for the year ended
September 30, 2018, respectively.
Note 12. Employee Benefit Plans
In the United Kingdom, the Company makes contributions to private defined benefit pension schemes on behalf of its employees. The Company
expensed $1.3 million, $1.0 million, $0.2 million, and $0.5 million in contributions in the years ended December 31, 2020 and 2019, three months ended
December 2018, and the year ended September 30, 2018, respectively.
In the United States, the Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code subsequent to
September 30, 2018. The plan covers substantially all U.S. employees who meet minimum age and service requirements and allows participants to defer a
portion of their annual compensation on a pre-tax basis. The Company matches employee contributions up to four percent of the employee’s annual salary.
The Company expensed $0.3 million, $0.2 million and $18,000 in contributions in the years ended December 31, 2020 and 2019 and the three months
ended December 31, 2018, respectively. No matching contributions were recorded for the year ended September 30, 2018. The Company pays all
administrative fees related to the Plan.
Note 13. Subsequent Events
The Company evaluated subsequent events through March 4, 2021 the date on which these financial statements were issued.
In January 2021, the Company announced the prioritization of the AUTO1 program and its intention to seek a partner for the AUTO3 program
before progressing AUTO3 into the next phase of development. The Company also announced an adjustment of its workforce and infrastructure footprint
during the first quarter of 2021, which will involve an overall reduction in headcount of approximately 20%. The company expects to realize cash savings,
on an annualized basis, of approximately $15 million per annum once the operational changes are fully implemented. In the short-term, we expect there to
be an increase in the first half of 2021 to both research and development expenses and selling, general, and administrative expenses due to restructuring
charges of approximately $2.5 million, combined.
In January 2021, the Company sold an aggregate of 1.7 million ADSs under the Sales Agreement, resulting in net proceeds of $15.3 million.
On February 12, 2021, the Company completed an underwritten public offering of 14,285,715 ADSs, which includes the full exercise by the
underwriters to purchase an additional 2,142,857 ADSs, at a public offering price of $7.00 per ADS. Aggregate net proceeds to the Company, after
underwriting discounts, were $108.1 million. .
F-27
Exhibit 2.4
DESCRIPTION OF THE REGISTRANT'S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
The following description sets forth certain material terms and provisions of the securities of Autolus Therapeutics plc (“Autolus,” the “Company,” “we,”
“us,” and “our”) that are registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This description also
summarizes relevant provisions of English law, including the U.K. Companies Act 2006 (the “Companies Act”). The following summary does not purport
to be complete and is subject to, and is qualified in its entirety by reference to, the applicable provisions of English law and our articles of association, a
copy of which is incorporated by reference as an exhibit to the Annual Report on 20-F of which this Exhibit is a part. We encourage you to read our articles
of association and the applicable provisions of English law for additional information.
General
Our securities include (a) our ordinary shares, nominal value $0.000042 per share, and (b) our American Depositary Shares (the “ADSs”), each
representing one ordinary share, nominal value $0.000042 per share. Our ordinary shares are registered under the Exchange Act not for trading, but only in
connection with the listing of the ADSs on The Nasdaq Global Select Market.
Our ADSs are listed on The Nasdaq Global Select Market under the trading symbol “AUTL.”
The following is a description of the rights of (i) the holders of ordinary shares and (ii) ADS holders. Ordinary shares underlying the outstanding ADSs are
held by Citibank N.A., as depositary.
Ordinary Shares
The following is a summary of the rights of our holders of our ordinary shares as specified in our articles of association which was adopted by a special
resolution of our shareholders passed in June 2018.
Type and Class of Securities
Each ordinary share has a nominal value of $0.000042.
Preemptive Rights
English law generally provides shareholders with statutory preemptive rights when new shares are issued for cash; however, it is possible for the articles of
association, or shareholders by way of a special resolution at a general meeting, to disapply preemptive rights. Such a disapplication of preemptive rights
may be for a maximum period of up to five years from the date of adoption of the articles of association, if the disapplication is contained in the articles of
association, or from the date of the shareholder special resolution, if the disapplication is by shareholder special resolution. In either case, this
disapplication would need to be renewed by our shareholders upon its expiration (i.e., at least every five years). Our articles of association disapply
preemptive rights for a period of five years from the date of adoption, which was June 26, 2018. This disapplication will need to be renewed upon
expiration (i.e., at least every five years) to remain effective, but may be sought more frequently for additional five-year terms (or any shorter period).
Limits of Qualifications
Not applicable.
Registration Rights
We and the holders of certain of our ordinary shares are parties to a registration rights agreement that provides the following registration rights:
• Demand Registration on Form F-1 - each holder is entitled to demand registrations on Form F-1, provided that these demand registration rights
may only be exercised by holders who hold, in the aggregate, not less than 25% of the aggregate number of shares then outstanding and held by
all holders who are party to the agreement, and provided further that the we shall not be required to effect a demand registration statement after
we have effected two demand registration statements, and such registration statements have been declared or ordered effective.
Exhibit 2.4
• Demand Registration on Form F-3 - each holder is entitled to unlimited demand registrations on Form F-3, if we are eligible to register shares on
Form F-3, provided that these demand registration rights may only be exercised by holders who hold, in the aggregate, not less than 10% of the
aggregate number of shares then outstanding and held by all holders who are party to the agreement. These demand registration rights may not be
exercised more than twice in any twelve-month period.
Piggyback Registration - each holder is entitled to piggyback registration rights, subject, in the case of an underwritten offering, to customary
reductions by the underwriter, provided that the aggregate number of securities of the holders included in the registration may not be reduced to
less than 30% of the total number of securities registered.
Expenses - We will pay all registration expenses relating to the exercise of the registration rights above, including the reasonable fees and
expenses of legal counsel to the participating holders up to a maximum of $50,000 in the aggregate per registration.
•
•
Memorandum and Articles of Association
Our ordinary shares have the rights and restrictions described in “Key Provisions of Our Articles of Association” below. The following summarizes the
rights of holders of our ordinary shares:
•
•
•
each holder of our ordinary shares is entitled to one vote per ordinary share on all matters to be voted on by shareholders generally;
the holders of the ordinary shares shall be entitled to receive notice of, attend, speak and vote at our general meetings; and
holders of our ordinary shares are entitled to receive such dividends as are recommended by our directors and declared by our shareholders.
Key Provisions of Our Articles of Association
The following is a summary of certain key provisions of our articles of association. Please note that this is only a summary and is not intended to be
exhaustive.
The articles of association contain no specific restrictions on our purpose and therefore, by virtue of section 31(1) of the Companies Act, our purpose is
unrestricted. The articles of association contain, among other things, provisions to the following effect:
Share Capital
Our share capital currently consists of ordinary shares, deferred shares, B deferred shares and C deferred shares. We may issue shares with such rights or
restrictions as may be determined by ordinary resolution, including shares which are to be redeemed, or are liable to be redeemed at our option or the
option of the holder of such shares.
Voting
Holders of ordinary shares have the right to receive notice of, and to vote at, our general meetings. Any resolution put to the vote of a general meeting must
be decided exclusively on a poll. Each shareholder who is present in person (or, being a corporation, by representative) or by proxy has one vote in respect
of every share held by such holder.
Variation of Rights
Exhibit 2.4
Whenever our share capital is divided into different classes of shares, the special rights attached to any class may be varied or abrogated either (i) with the
consent in writing of the holders of three-quarters in nominal value of the issued shares of that class, (ii) with the authority of a special resolution passed at
a separate meeting of the holders of the shares of that class or (iii) in any other way as expressly provided for in relation to such rights, and may be so
varied and abrogated while the company is a going concern.
Dividends
We may, subject to the provisions of the Companies Act and our articles of association, by ordinary resolution from time to time declare dividends to be
paid to shareholders not exceeding the amount recommended by our board of directors. Subject to the provisions of the Companies Act, in the discretion of
board of directors, on the basis that our profits justify such payments, the board of directors may pay interim dividends on any class of our shares.
Any dividend unclaimed after a period of 12 years from the date such dividend was declared or became payable shall, if the board of directors resolve, be
forfeited, cease to remain owing and shall revert to us. No dividend or other moneys payable on or in respect of a share shall bear interest as against us.
Transfer of Ordinary Shares
Each member may transfer all or any of his shares which are in certificated form by means of an instrument of transfer in writing in any usual form or in
any other form which the board of directors may approve.
The board of directors may, in its absolute discretion, refuse to register a transfer of certificated shares unless:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
it is for a share which is fully paid up;
it is for a share upon which the company has no lien;
it is only for one class of share;
it is in favor of a single transferee or no more than four joint transferees;
it is duly stamped or is duly certificated or otherwise shown to the satisfaction of the board of directors to be exempt from
stamp duty; and
it is delivered for registration to the registered office of the company (or such other place as the board of directors may
determine), accompanied (except in the case of a transfer by a person to whom the company is not required by law to issue a
certificate and to whom a certificate has not been issued or in the case of a renunciation) by the certificate for the shares to
which it relates and such other evidence as the board of directors may reasonably require to prove the title of the transferor
(or person renouncing) and the due execution of the transfer or renunciation by him or, if the transfer or renunciation is
executed by some other person on his behalf, the authority of that person to do so.
Allotment of Shares and Preemption Rights
Subject to the Companies Act and to any rights attached to existing shares, any share may be issued with or have attached to it such rights and restrictions
as the company may by ordinary resolution determine, or if no ordinary resolution has been passed or so far as the resolution does not make specific
provision, as the board of directors may determine (including shares which are to be redeemed, or are liable to be redeemed at the option of the company or
the holder of such shares).
In accordance with section 551 of the Companies Act, the board of directors may be generally and unconditionally authorized to exercise for each
prescribed period all the powers of the company to allot shares up to an aggregate nominal amount equal to the amount stated in the relevant ordinary
resolution authorizing such allotment. The authorities referred to above are
Exhibit 2.4
included in our articles of association that became effective upon the completion of our initial public offering in June 2018 and which remain currently in
force as of December 31, 2019.
The provisions of section 561 of the Companies Act (which confer on shareholders rights of preemption in respect of the allotment of equity securities
which are paid up in cash) apply to the company except to the extent disapplied by special resolution of the shareholders of the company, or in the
company’s articles of association. Our articles of association disapply preemptive rights for a period of five years from the date of adoption, which was
June 26, 2018. This disapplication will need to be renewed upon expiration (i.e., at least every five years) to remain effective, but may be sought more
frequently for additional five-year terms (or any shorter period).
Alteration of Share Capital
In accordance with the Companies Act, the company may by ordinary resolution consolidate its share capital into shares of larger nominal value than its
existing shares, or sub-divide its shares into shares of a smaller amount than the existing shares, and may in each case determine that the shares resulting
from such sub-division or share consolidation may have a preference or advantage or be subject to a particular restriction.
The company may, in accordance with the Companies Act, reduce or cancel its share capital or any capital redemption reserve or share premium account in
any manner and with and subject to any conditions, authorities and consents required by law.
Uncertificated Shares
Subject to the Companies Act, the board of directors may permit title to shares of any class to be issued or held otherwise than by a certificate and to be
transferred by means of a “relevant system” (e.g., DTC) without a certificate.
The board of directors may take such steps as it sees fit in relation to the evidencing of and transfer of title to uncertificated shares, any records relating to
the holding of uncertificated shares and the conversion of uncertificated shares to certificated shares, or vice versa.
The company may by notice in writing to the holder of an uncertificated share, require that share to be converted into certificated form.
The board of directors may take such other action that the board considers appropriate to achieve the sale, transfer, disposal, forfeiture, re-allotment or
surrender of an uncertified share or otherwise to enforce a lien in respect of it.
Choice of Forum
Our articles of association provide that the U.S. federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action
arising under the Securities Act.
Board of Directors
Our articles of association provide that our board of directors is divided into three classes, each of which will consist, as nearly as possible, of one-third of
the total number of directors constituting our entire board and which will serve staggered three-year terms. At each annual general meeting, the successors
to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election.
At every subsequent annual general meeting, any director who either (i) has been appointed by the board of directors since the last annual general meeting
or (ii) was not appointed or reappointed at one of the preceding two annual general meetings, must retire from office and may offer themselves for
reappointment by the shareholders by ordinary resolution.
American Depositary Shares
Depositary
Exhibit 2.4
We have appointed Citibank, N.A. (“Citibank”) as the depositary for the ADSs pursuant to a deposit agreement (the “Deposit Agreement”). Citibank’s
depositary offices are located at 388 Greenwich Street, New York, New York 10013.
Provisions
ADSs represent ownership interests in securities that are on deposit with the depositary. ADSs may be represented by certificates that are commonly known
as American Depositary Receipts (“ADRs”). The depositary typically appoints a custodian to safekeep the securities on deposit. In this case, the custodian
is Citibank, N.A., London Branch located at 25 Canada Square, Canary Wharf, London, E14 5LB, United Kingdom.
The following is a summary of the material provisions of the Deposit Agreement. For more complete information, you should read the Deposit Agreement
and Form of ADR. The Deposit Agreement has been filed with the SEC as an exhibit to the Form F-6/A filed on June 19, 2018. A copy of the Deposit
Agreement may be obtained from the SEC’s website (www.sec.gov). Please refer to File No. 333-224837.
Each ADS represents the right to receive, and to exercise the beneficial ownership interests in, one ordinary share that is on deposit with the depositary
and/or custodian. An ADS also represents the right to receive, and to exercise the beneficial interests in, any other property received by the depositary or
the custodian on behalf of the owner of the ADS but that has not been distributed to the owners of ADSs because of legal restrictions or practical
considerations. We and the depositary may agree to change the ADS-to-ordinary share ratio by amending the Deposit Agreement. This amendment may
give rise to, or change, the depositary fees payable by ADS owners. The custodian, the depositary and their respective nominees will hold all deposited
property for the benefit of the holders and beneficial owners of ADSs. The deposited property does not constitute the proprietary assets of the depositary,
the custodian or their nominees. Beneficial ownership in the deposited property will under the terms of the Deposit Agreement be vested in the beneficial
owners of the ADSs. The depositary, the custodian and their respective nominees are the record holders of the deposited property represented by the ADSs
for the benefit of the holders and beneficial owners of the corresponding ADSs. A beneficial owner of ADSs may or may not be the holder of ADSs.
Beneficial owners of ADSs are able to receive, and to exercise beneficial ownership interests in, the deposited property only through the registered holders
of the ADSs, the registered holders of the ADSs (on behalf of the applicable ADS owners) only through the depositary, and the depositary (on behalf of the
owners of the corresponding ADSs) directly, or indirectly, through the custodian or their respective nominees, in each case upon the terms of the Deposit
Agreement.
Beneficial owners of ADSs, or holders, are parties to the Deposit Agreement and therefore are bound to its terms and to the terms of any ADR that
represents the ADSs. The Deposit Agreement and the ADR specify our rights and obligations as well as holders’ rights and obligations as owner of ADSs
and those of the depositary. Holders appoint the depositary to act on their behalf in certain circumstances. The Deposit Agreement and the ADRs are
governed by New York law. However, our obligations to the holders of ordinary shares will continue to be governed by the laws of England and Wales,
which may be different from the laws in the United States.
In addition, applicable laws and regulations may require holders to satisfy reporting requirements and obtain regulatory approvals in certain circumstances.
Neither the depositary, the custodian, us or any of their or our respective agents or affiliates shall be required to take any actions whatsoever on behalf of
the holders to satisfy such reporting requirements or obtain such regulatory approvals under applicable laws and regulations.
Holders will not be treated as one of our shareholders and will not have direct shareholder rights. The depositary will hold on the behalf of holders the
shareholder rights attached to the ordinary shares underlying the ADSs. Holders are able to exercise the shareholders rights for the ordinary shares
represented by their ADSs through the depositary only to the extent contemplated in the Deposit Agreement. To exercise any shareholder rights not
contemplated in the Deposit Agreement holders will need to arrange for the cancellation of their ADSs and become a direct shareholder. The manner in
which ADSs are owned (e.g., in brokerage account vs. as registered holder, or as holder of certificated vs. uncertificated) may affect the holder’s rights and
obligations, and the manner in which the depositary’s services are made available.
Holders may hold ADSs either by means of an ADR registered in their name, through a brokerage or safekeeping account, or through an account
established by the depositary in their name reflecting the registration of uncertificated ADSs directly on the books of the depositary (commonly referred to
as the direct registration system or DRS). The direct registration system reflects the uncertificated (book-entry) registration of ownership of ADSs by the
depositary. Under the direct registration system, ownership of ADSs is evidenced by periodic statements issued by the depositary to the holders. The direct
registration system includes automated transfers between the depositary and The Depository Trust Company, or DTC, the
Exhibit 2.4
central book-entry clearing and settlement system for equity securities in the United States. If a holder decides to hold their ADSs through a brokerage or
safekeeping account, they must rely on the procedures of their broker or bank to assert their rights as ADS owner. Banks and brokers typically hold
securities such as the ADSs through clearing and settlement systems such as DTC. The procedures of such clearing and settlement systems may limit the
holder’s ability to exercise their rights as an owner of ADSs. All ADSs held through DTC are registered in the name of a nominee of DTC. This summary
description assumes the holder has opted to own the ADSs directly by means of an ADS registered in their name at the relevant time.
The registration of the ordinary shares in the name of the depositary or the custodian shall, to the maximum extent permitted by applicable law, vest in the
depositary or the custodian the record ownership in the applicable ordinary shares with the beneficial ownership rights and interests in such ordinary shares
being at all times vested with the beneficial owners of the ADSs representing the ordinary shares. The depositary or the custodian shall at all times be
entitled to exercise the beneficial ownership rights in all deposited property, in each case only on behalf of the holders and beneficial owners of the ADSs
representing the deposited property.
Dividends and Other Distributions
Holders generally have the right to receive the distributions we make on the securities deposited with the custodian. Receipt of these distributions may be
limited, however, by practical considerations and legal limitations. Holders will receive such distributions under the terms of the Deposit Agreement in
proportion to the number of ADSs held as of the specified record date, after deduction the applicable fees, taxes and expenses.
Distributions of Cash
Whenever we make a cash distribution for the securities on deposit with the custodian, we will deposit the funds with the custodian. Upon receipt of
confirmation of the deposit of the requisite funds, the depositary will arrange for the funds received in a currency other than U.S. dollars to be converted
into U.S. dollars and for the distribution of the U.S. dollars to the holders, subject to the laws and regulations of England and Wales.
The conversion into U.S. dollars will take place only if practicable and if the U.S. dollars are transferable to the United States. The depositary will apply the
same method for distributing the proceeds of the sale of any property (such as undistributed rights) held by the custodian in respect of securities on deposit.
The distribution of cash will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the Deposit
Agreement. The depositary will hold any cash amounts it is unable to distribute in a non-interest bearing account for the benefit of the applicable holders
and beneficial owners of ADSs until the distribution can be effected or the funds that the depositary holds must be escheated as unclaimed property in
accordance with the laws of the relevant states of the United States.
Distributions of Shares
Whenever we make a free distribution of ordinary shares for the securities on deposit with the custodian, we will deposit the applicable number of ordinary
shares with the custodian. Upon receipt of confirmation of such deposit, the depositary will either distribute to holders new ADSs representing the ordinary
shares deposited or modify the ADS-to-ordinary shares ratio, in which case each ADS held will represent rights and interests in the additional ordinary
shares so deposited. Only whole new ADSs will be distributed. Fractional entitlements will be sold and the proceeds of such sale will be distributed as in
the case of a cash distribution.
The distribution of new ADSs or the modification of the ADS-to-ordinary share ratio upon a distribution of ordinary shares will be made net of the fees,
expenses, taxes and governmental charges payable by holders under the terms of the Deposit Agreement. In order to pay such taxes or governmental
charges, the depositary may sell all or a portion of the new ordinary shares so distributed.
No such distribution of new ADSs will be made if it would violate a law (e.g., the U.S. securities laws) or if it is not operationally practicable. If the
depositary does not distribute new ADSs as described above, it may sell the ordinary shares received upon the terms described in the Deposit Agreement
and will distribute the proceeds of the sale as in the case of a distribution of cash.
Exhibit 2.4
Distributions of Rights
Whenever we intend to distribute rights to purchase additional ordinary shares, we will give prior notice to the depositary and we will assist the depositary
in determining whether it is lawful and reasonably practicable to distribute rights to purchase additional ADSs to holders.
The depositary will establish procedures to distribute rights to purchase additional ADSs to holders and to enable such holders to exercise such rights if it is
lawful and reasonably practicable to make the rights available to holders of ADSs, and if we provide all of the documentation contemplated in the Deposit
Agreement (such as opinions to address the lawfulness of the transaction). Holders may have to pay fees, expenses, taxes and other governmental charges
to subscribe for the new ADSs upon the exercise of rights. The depositary is not obligated to establish procedures to facilitate the distribution and exercise
by holders of rights to purchase new ordinary shares other than in the form of ADSs.
The depositary will not distribute the rights if:
•
•
•
we do not timely request that the rights be distributed to the holders or we request that the rights not be distributed to the holders;
we fail to deliver satisfactory documents to the depositary; or
it is not reasonably practicable to distribute the rights.
The depositary will sell the rights that are not exercised or not distributed if such sale is lawful and reasonably practicable. The proceeds of such sale will
be distributed to holders as in the case of a cash distribution. If the depositary is unable to sell the rights, it will allow the rights to lapse.
Elective Distributions
Whenever we intend to distribute a dividend payable at the election of shareholders either in cash or in additional shares, we will give prior notice thereof
to the depositary and will indicate whether we wish the elective distribution to be made available to the holders. In such case, we will assist the depositary
in determining whether such distribution is lawful and reasonably practicable.
The depositary will make the election available to the holders only if it is reasonably practicable and if we have provided all of the documentation
contemplated in the Deposit Agreement. In such case, the depositary will establish procedures to enable the holders to elect to receive either cash or
additional ADSs, in each case as described in the Deposit Agreement.
If the election is not made available to the holders, they will receive either cash or additional ADSs, depending on what a shareholder in England and Wales
would receive upon failing to make an election, as more fully described in the Deposit Agreement.
Other Distributions
Whenever we intend to distribute property other than cash, ordinary shares or rights to purchase additional ordinary shares, we will notify the depositary in
advance and will indicate whether we wish such distribution to be made to the holders. If so, we will assist the depositary in determining whether such
distribution to holders is lawful and reasonably practicable.
If it is reasonably practicable to distribute such property to the holders and if we provide all of the documentation contemplated in the Deposit Agreement,
the depositary will distribute the property to the holders in a manner it deems practicable.
The distribution will be made net of fees, expenses, taxes and governmental charges payable by holders under the terms of the Deposit Agreement. In order
to pay such taxes and governmental charges, the depositary may sell all or a portion of the property received.
The depositary will not distribute the property and will sell the property if:
Exhibit 2.4
•
•
•
we do not request that the property be distributed to the holders or if we ask that the property not be distributed to the holders;
we do not deliver satisfactory documents to the depositary; or
the depositary determines that all or a portion of the distribution is not reasonably practicable.
The proceeds of such a sale will be distributed to holders as in the case of a cash distribution.
Redemption
Whenever we decide to redeem any of the securities on deposit with the custodian, we will notify the depositary in advance. If it is practicable and if we
provide all of the documentation contemplated in the Deposit Agreement, the depositary will provide notice of the redemption to the holders.
The custodian will be instructed to surrender the shares being redeemed against payment of the applicable redemption price. The depositary will convert
the redemption funds received into U.S. dollars upon the terms of the Deposit Agreement and will establish procedures to enable holders to receive the net
proceeds from the redemption upon surrender of their ADSs to the depositary. Holders may have to pay fees, expenses, taxes and other governmental
charges upon the redemption of ADSs. If less than all ADSs are being redeemed, the ADSs to be retired will be selected by lot or on a pro rata basis, as the
depositary may determine.
Changes Affecting Ordinary Shares
The ordinary shares held on deposit for the holders’ ADSs may change from time to time. For example, there may be a change in nominal or par value,
split-up, cancellation, consolidation or any other reclassification of such ordinary shares or a recapitalization, reorganization, merger, consolidation or sale
of assets of the company.
If any such change were to occur, the holder’s ADSs would, to the extent permitted by law and the Deposit Agreement, represent the right to receive the
property received or exchanged in respect of the ordinary shares held on deposit. The depositary may in such circumstances deliver new ADSs to the
holders, amend the Deposit Agreement, the ADRs and the applicable Registration Statement(s) on Form F-6, call for the exchange of existing ADSs for
new ADSs and take any other actions that are appropriate to reflect as to the ADSs the change affecting the ordinary shares. If the depositary may not
lawfully distribute such property to the holders, the depositary may sell such property and distribute the net proceeds to the holders as in the case of a cash
distribution.
Transfer, Combination and Split Up of ADRs
ADR holders are entitled to transfer, combine or split up their ADRs and the ADSs evidenced thereby. For transfers of ADRs, holders will have to
surrender the ADRs to be transferred to the depositary and also must:
•
•
•
•
ensure that the surrendered ADR is properly endorsed or otherwise in proper form for transfer;
provide such proof of identity and genuineness of signatures as the depositary deems appropriate;
provide any transfer stamps required by the State of New York or the United States; and
pay all applicable fees, charges, expenses, taxes and other government charges payable by ADR holders pursuant to the terms of the
Deposit Agreement, upon the transfer of ADRs.
To have ADRs either combined or split up, holders must surrender the ADRs in question to the depositary with their request to have them combined or split
up, and must pay all applicable fees, charges and expenses payable by ADR holders, pursuant to the terms of the Deposit Agreement, upon a combination
or split up of ADRs.
Withdrawal of Ordinary Shares Upon Cancellation of ADSs
Holders are entitled to present their ADSs to the depositary for cancellation and then receive the corresponding number of underlying ordinary shares at the
custodian’s offices. The ability to withdraw the ordinary shares held in respect of the ADSs may be limited by the legal considerations in the United States
and in England and Wales applicable at the time of withdrawal. In order to withdraw the ordinary shares represented by the ADSs, holders will be required
to pay to the depositary the fees for cancellation of ADSs and any charges and taxes payable upon the transfer of the ordinary shares.
Exhibit 2.4
Holders assume the risk for delivery of all funds and securities upon withdrawal. Once canceled, the ADSs will not have any rights under the Deposit
Agreement.
If a holder’s ADSs are registered in the holder’s name, the depositary may ask the holder to provide proof of identity and genuineness of any signature and
such other documents as the depositary may deem appropriate before it will cancel ADSs. The withdrawal of the ordinary shares represented by the
holder’s ADSs may be delayed until the depositary receives satisfactory evidence of compliance with all applicable laws and regulations. Please keep in
mind that the depositary will only accept ADSs for cancellation that represent a whole number of securities on deposit.
Holders have the right to withdraw the securities represented by their ADSs at any time except as a result of:
•
•
•
•
temporary delays that may arise because (i) the transfer books for the ordinary shares or ADSs are closed, or (ii) ordinary shares are
immobilized on account of a shareholders’ meeting or a payment of dividends;
obligations to pay fees, taxes and similar charges;
restrictions imposed because of laws or regulations applicable to ADSs or the withdrawal of securities on deposit; and/or
other circumstances specifically contemplated by Section I.A.(l) of the General Instructions to Form F-6 (as such General Instructions may
be amended from time to time).
The Deposit Agreement may not be modified to impair a holder’s right to withdraw the securities represented by their ADSs except to comply with
mandatory provisions of law.
Voting Rights
Holders generally have the right under the Deposit Agreement to instruct the depositary to exercise the voting rights for the ordinary shares represented by
their ADSs.
At our request, the depositary will distribute to the holders any notice of shareholders’ meeting received from us together with information explaining how
to instruct the depositary to exercise the voting rights of the securities represented by ADSs. In lieu of distributing such materials, the depositary may
distribute to holders of ADSs instructions on how to retrieve such materials upon request.
If the depositary timely receives voting instructions from a holder of ADSs, it will endeavor to vote (or cause the custodian to vote) the securities (in person
or by proxy) represented by the holder’s ADSs as follows: the depositary will vote (or cause the custodian to vote) the securities represented by ADSs in
accordance with the voting instructions received from the holders of ADSs. If the depositary does not receive voting instructions from a holder of ADSs as
of the applicable ADS record date on or before the date established by the depositary for such purpose, such holder will be deemed, and the depositary will
deem such holder, to have instructed the depositary to give a discretionary proxy to a person designated by us to vote the securities represented by ADSs;
provided, however, that no such discretionary proxy will be given by the depositary with respect to any matter to be voted upon as to which we inform the
depositary that (a) we do not wish such proxy to be given, (b) substantial opposition exists or (c) the rights of holders of securities represented by ADSs
may be adversely affected.
Securities for which no voting instructions have been received will not be voted (except as otherwise contemplated in the Deposit Agreement). Please note
that the ability of the depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the securities on deposit.
We cannot assure holders that they will receive voting materials in time to enable holders to return voting instructions to the depositary in a timely manner.
Amendments and Termination
We may agree with the depositary to modify the Deposit Agreement at any time without the holders’ consent. We undertake to give holders 30 days’ prior
notice of any modifications that would materially prejudice any of their substantial rights under the Deposit Agreement. We do not consider to be
materially prejudicial to the holders’ substantial rights any modifications or supplements that are reasonably necessary for the ADSs to be registered under
the Securities Act or to be eligible for book-entry settlement, in each case without imposing or increasing the fees and charges holders are required to pay.
In addition, we may not be able to provide holders with prior notice of any modifications or supplements that are required to accommodate compliance
with applicable provisions of law.
Exhibit 2.4
Holders are bound by the modifications to the Deposit Agreement if they continue to hold their ADSs after the modifications to the Deposit Agreement
become effective. The Deposit Agreement cannot be amended to prevent holders from withdrawing the ordinary shares represented by their ADSs (except
as permitted by law).
We have the right to direct the depositary to terminate the Deposit Agreement. Similarly, the depositary may in certain circumstances on its own initiative
terminate the Deposit Agreement. In either case, the depositary must give notice to the holders at least 30 days before termination. Until termination,
holders’ rights under the Deposit Agreement will be unaffected.
Termination
After termination, the depositary will continue to collect distributions received (but will not distribute any such property until holders request the
cancellation of their ADSs) and may sell the securities held on deposit. After the sale, the depositary will hold the proceeds from such sale and any other
funds then held for the holders of ADSs in a non-interest bearing account. At that point, the depositary will have no further obligations to holders other than
to account for the funds then held for the holders of ADSs still outstanding (after deduction of applicable fees, taxes and expenses).
Books of Depositary
The depositary will maintain ADS holder records at its depositary office. Holders may inspect such records at such office during regular business hours but
solely for the purpose of communicating with other holders in the interest of business matters relating to the ADSs and the Deposit Agreement.
The depositary will maintain in New York facilities to record and process the issuance, cancellation, combination, split-up and transfer of ADSs. These
facilities may be closed from time to time, to the extent not prohibited by law.
Transmission of Notices, Reports and Proxy Soliciting Material
The depositary makes available for holders’ inspection at its office all communications that it receives from us as a holder of deposited securities that we
make generally available to holders of deposited securities. Subject to the terms of the Deposit Agreement, the depositary will send holders copies of those
communications or otherwise make those communications available to the holders if we ask it to.
Limitations on Obligations and Liabilities
The Deposit Agreement limits our obligations and the depositary’s obligations to holders. Please note the following:
Exhibit 2.4
•
•
•
•
•
•
•
•
•
•
•
We and the depositary are obligated only to take the actions specifically stated in the Deposit Agreement without negligence or bad
faith.
The depositary disclaims any liability for any failure to carry out voting instructions, for any manner in which a vote is cast or for the
effect of any vote, provided it acts in good faith and without negligence and in accordance with the terms of the Deposit Agreement.
The depositary disclaims any liability for any failure to determine the lawfulness or practicality of any action, for the content of any
document forwarded to holders on our behalf or for the accuracy of any translation of such a document, for the investment risks
associated with investing in ordinary shares, for the validity or worth of the ordinary shares, for any tax consequences that result from
the ownership of ADSs, for the credit-worthiness of any third party, for allowing any rights to lapse under the terms of the Deposit
Agreement, for the timeliness of any of our notices or for our failure to give notice.
We and the depositary will not be obligated to perform any act that is inconsistent with the terms of the Deposit Agreement.
We and the depositary disclaim any liability if we or the depositary are prevented or forbidden from or subject to any civil or criminal
penalty or restraint on account of, or delayed in, doing or performing any act or thing required by the terms of the Deposit Agreement,
by reason of any provision, present or future of any law or regulation, or by reason of present or future provision of any provision of
our articles of association, or any provision of or governing the securities on deposit, or by reason of any act of God or war or other
circumstances beyond our control.
We and the depositary disclaim any liability by reason of any exercise of, or failure to exercise, any discretion provided for in the
Deposit Agreement or in our articles of association or in any provisions of or governing the securities on deposit.
We and the depositary further disclaim any liability for any action or inaction in reliance on the advice or information received from
legal counsel, accountants, any person presenting ordinary shares for deposit, any holder of ADSs or authorized representatives thereof,
or any other person believed by either of us in good faith to be competent to give such advice or information.
We and the depositary also disclaim liability for the inability by a holder to benefit from any distribution, offering, right or other
benefit that is made available to holders of ordinary shares but is not, under the terms of the Deposit Agreement, made available to
any applicable holder.
We and the depositary may rely without any liability upon any written notice, request or other document believed to be genuine and
to have been signed or presented by the proper parties.
We and the depositary also disclaim liability for any consequential or punitive damages for any breach of the terms of the Deposit
Agreement.
No disclaimer of any Securities Act liability is intended by any provision of the Deposit Agreement.
Nothing in the Deposit Agreement gives rise to a partnership or joint venture, or establishes a fiduciary relationship, among us, the depositary bank and
ADS holders.
Nothing in the Deposit Agreement precludes Citibank (or its affiliates) from engaging in transactions in which parties adverse to us or the ADS owners
have interests, and nothing in the Deposit Agreement obligates Citibank to disclose those transactions, or any information obtained in the course of those
transactions, to us or to the ADS owners, or to account for any payment received as part of those transactions.
Pre-Release Transactions
Subject to the terms and conditions of the Deposit Agreement, the depositary may issue to broker/dealers ADSs before receiving a deposit of ordinary
shares or release ordinary shares to broker/dealers before receiving ADSs for cancellation. These transactions are commonly referred to as “pre-release
transactions,” and are entered into between the depositary and the applicable broker/dealer. The Deposit Agreement limits the aggregate size of pre-release
transactions (not to exceed 30% of the ordinary shares on deposit in the aggregate, but such limit may be changed or disregarded from time to time as the
depositary deems appropriate) and imposes a number of conditions on such transactions (e.g., the need to receive collateral, the type of collateral required,
the representations required from brokers, etc.). The depositary may retain the compensation received from the pre-release transactions.
Taxes
Holders are responsible for the taxes and other governmental charges payable on the ADSs and the securities represented by the ADSs. We, the depositary
and the custodian may deduct from any distribution the taxes and governmental charges
Exhibit 2.4
payable by holders and may sell any and all property on deposit to pay the taxes and governmental charges payable by holders.
The depositary may refuse to issue ADSs, to deliver, transfer, split and combine ADRs or to release securities on deposit until all taxes and charges are paid
by the applicable holder. The depositary and the custodian may take reasonable administrative actions to obtain tax refunds and reduced tax withholding for
any distributions on behalf of the holders. However, holders may be required to provide to the depositary and to the custodian proof of taxpayer status and
residence and such other information as the depositary and the custodian may require to fulfill legal obligations. Holders are required to indemnify us, the
depositary and the custodian for any claims with respect to taxes based on any tax benefit obtained for holders.
Foreign Currency Conversion
The depositary will arrange for the conversion of all foreign currency received into U.S. dollars if such conversion is practical, and it will distribute the
U.S. dollars in accordance with the terms of the Deposit Agreement. Holders may have to pay fees and expenses incurred in converting foreign currency,
such as fees and expenses incurred in complying with currency exchange controls and other governmental requirements.
If the conversion of foreign currency is not practical or lawful, or if any required approvals are denied or not obtainable at a reasonable cost or within a
reasonable period, the depositary may take the following actions in its discretion:
•
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•
Convert the foreign currency to the extent practical and lawful and distribute the U.S. dollars to the holders for whom the conversion and
distribution is lawful and practical.
Distribute the foreign currency to holders for whom the distribution is lawful and practical.
Hold the foreign currency (without liability for interest) for the applicable holders.
Governing Law/Waiver of Jury Trial
The Deposit Agreement and the ADRs will be interpreted in accordance with the laws of the State of New York. The rights of holders of ordinary shares
(including ordinary shares represented by ADSs) are governed by the laws of England and Wales.
The Deposit Agreement provides that, to the fullest extent permitted by law, ADS holders waive the right to a jury trial in any legal proceeding against us
or the depositary arising out of or relating to the ADSs, the Deposit Agreement and any transactions contemplated therein. If we or the depositary opposed
a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable in the facts and circumstances of that case in
accordance with applicable case law.
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
LICENCE Agreement
As amended on 15 October 2020
(1) AUTOLUS LIMITED
(2) UCL BUSINESS LTD
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Contents
Clause Page
1. DEFINITIONS AND INTERPRETATION 2
2. LICENCE GRANT 22
3. SUB-LICENSING 25
4. RETAINED RIGHTS, ACADEMIC RESEARCH & RESTRICTIONS 27
5. ACCESS TO IMPROVEMENTS AND NEW INVENTIONS 33
6. ACCESS TO [***] PROGRAM 35
7. ACCESS TO [***] 37
8. INFORMATION AND ACCESS TO MARTIN PULE’S OTHER PROGRAMS & OTHER RESTRICTIONS 38
9. MATERIALS TRANSFER AND ENABLEMENT OF THE LICENSED RIGHTS 40
10. OPTION TO ACQUIRE PROGRAM IP 41
11. DILIGENCE OBLIGATIONS 42
12. UCLB MANAGEMENT FEE AND SHARES 46
13. MILESTONE PAYMENTS 47
14. ROYALTIES 51
15. SUB-LICENSEE PAYMENTS 55
16. REPORTING AND PAYMENT PROVISIONS 58
17. BUY-OUT OPTION 61
18. INTELLECTUAL PROPERTY PROSECUTION AND MAINTENANCE 61
19. INTELLECTUAL PROPERTY ENFORCEMENT 64
20. CONFIDENTIALITY 65
21. WARRANTIES AND COVENANTS 67
22. LIMITATION OF LIABILITY 67
23. INDEMNITY AND INSURANCE 68
24. TERMINATION 69
25. CONSEQUENCES OF TERMINATION 70
26. FORCE MAJEURE 72
1
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
27. FURTHER ASSURANCE 72
28. PUBLICITY 72
29. ASSIGNMENT 73
30. NOTICES 73
31. MISCELLANEOUS PROVISIONS 74
32. COUNTERPARTS 75
33. DISPUTE RESOLUTION, GOVERNING LAW AND JURISDICTION 75
Schedule 1: The Programs 77
Schedule 2: Program IP 87
Schedule 3: UCL Background 172
Part A : UCL Know-How 172
Part B : UCL Background Materials 178
Schedule 4: Manufacturing Know-How 183
Schedule 5: Disclosure Process 185
Schedule 6 186
Part A : Existing Licences 186
Part B : Commercial Agreements 188
Schedule 7: Permitted Studies 189
Schedule 8 191
Part A : Net Sales Definition 191
Part B : Net Receipts Definition 193
Part C : Expert Procedure 194
Schedule 9: Warranties and Covenants 195
Part A : Mutual Warranties & Representations 195
Part B : UCLB Warranties & Covenants at the Effective Date 195
Part C : UCLB Warranties & Covenants at the Amendment Date 196
PART d : uclb warranties & covenants at the second amendment date 197
PART E : uclb warranties & covenants at the THIRD amendment date 198
Schedule 10: Royalty and Net Receipts Statements 200
Schedule 11: Release of Patient Clinical Data 201
2
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Schedule 12: CD19 SEQUENCE 203
Schedule 13 204
Schedule 14: ASSIGNED PATENTS 205
3
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
THIS AGREEMENT was made as of 25 September 2014 (the “Effective Date”), was amended as of 2 March 2016 (the “Amendment
Date”), was amended and restated as of 28 March 2018 (the “Second Amendment Date”), and is hereby amended and restated as of 15
October 2020 (the “Third Amendment Date”)
BY AND BETWEEN:
(1)
AUTOLUS Limited, a company duly organised and validly existing under the laws of England (company number 09115837) with its
registered office at Forest House, 58 Wood Lane, London, W12 7RZ (“Autolus”); and
UCL BUSINESS LTD, a public company duly organised and validly existing under the laws of England (company number
02776963), previously named UCL Business Plc, with its registered office at The Network Building, 97 Tottenham Court Road,
London, W1T 4TP (“UCLB”).
(2)
WHEREAS:
(A)
Autolus has been established for the purposes of exploitation of certain of the Technology (as defined hereunder) in the field of
cancer therapy and diagnosis;
UCLB is a public company established by UCL to assist in the commercialisation of technology arising from UCL’s faculties and is
responsible for technology development and commercialisation transactions for UCL;
Dr Martin Pule is a leading academic and expert in the development of T-cell therapies for the treatment of cancer and is an
employee and academic at UCL and leads and supervises the MP Laboratory (as defined below), and is also the Senior Vice
President and Chief Scientific Officer of Autolus;
Through his own research and the research undertaken at the MP Laboratory, certain inventions, discoveries and know-how have
been developed concerning the modification and utilisation of T-cells for cancer therapy, in particular focusing on the identification
and development of certain chimeric antigen receptors that are engineered into human T-cells;
Pursuant to his employment conditions, and the conditions of employment or studentship existing amongst those who work or
collaborate in the MP Laboratory and UCL’s governance, all Intellectual Property generated by MP or by, at or within the MP
Laboratory (irrespective of the individual or their status within the MP Laboratory) are initially owned by UCL and UCLB has the
automatic exclusive right to assign and/or license all such Intellectual Property by virtue of its arrangements with UCL;
MP has assigned all right to the technology to be licensed and/or assigned hereunder to UCLB;
Autolus was granted a licence to the Original Programs with effect from the Effective Date and now with effect from the Amendment
Date the Additional Programs (except for the TRBC2 Dx Program) are to be added to this Agreement;
Autolus is granted rights to the Technology, including an option to acquire certain of the Technology, in each case upon the terms of
this Agreement, and UCLB wishes to grant such rights to Autolus and does so with the consent and support of UCL and MP;
Autolus obtained rights and licenses to certain additional Technology relating to the CAT19 Program with effect from the Second
Amendment Date pursuant to the terms of this Agreement;
Autolus is further interested in obtaining rights and licenses to certain additional Technology relating to the TRBC2 Dx Program with
effect from the Third Amendment Date pursuant to the terms of this Agreement; and
Autolus is further interested in obtaining rights and licenses to certain additional Technology relating to the CAROUSEL Study with
effect from the Third Amendment Date pursuant to the terms of this Agreement.
(B)
(C)
(D)
(E)
(F)
(G)
(H)
(I)
(J)
(K)
NOW, THEREFORE, the Parties, in consideration of the mutual covenants and undertakings herein and for other good and valuable
consideration, intending to be legally bound, HEREBY AGREE as follows:
1.
a.
In this Agreement, each of the capitalised words and expressions set out below shall have the meanings set forth against that
DEFINITIONS AND INTERPRETATION
capitalised word or expression, unless expressly provided otherwise:
“Academic Information” has the meaning set out in Clause 4.5;
<#>
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
“Academic Collaborator(s)” means any Academic Organisation which is actively collaborating with UCL or CRUK on Academic
Research permitted pursuant to Clause 4;
“Academic Organisation” means an organisation engaged in the conduct of academic research or the non-commercial funding of
academic research, comprising academic institutions, charities, non-for-profit organisations and government bodies including the
national health service and equivalent organisations anywhere in the world;
“Academic Research” means academic research which is undertaken by UCL alone or in collaboration with another Academic
Organisation and, without limiting the foregoing, excluding any Commercial Research;
“Academic Reports” has the meaning set out in Clause 4.5.2;
“Academic Rights” has the meaning set out in Clause 4.1;
“Additional LG Milestone Payment” has the meaning set out in Clause 13.3;
“Additional Licensed Patents” means the ccCAR Patent Rights, iCAR Patent Rights, Epitope Tag Patent Rights, Retrostim Patent
Rights, RapaiCASP9 Patents Rights, TetCAR Patent Rights and ZAP-CAR Patent Rights;
“Additional Milestone” means the achievement of a milestone triggering an Additional LG Milestone Payment or Additional ZC
Milestone Payment in accordance with Clause 13.3 or Clause 13.4 respectively;
“Additional Program” means one of the ccCAR Program, iCAR Program, Epitope Tag Program, Retrostim Program,
RapaiCASP9 Program, TetCAR Program, the ZAP-CAR Program, or TRBC2 Dx Program, and “Additional Programs” means any
combination of two or more of the foregoing, as the context requires;
“Additional Program IP” means the ccCAR Program IP, iCAR Program IP. Epitope Tag Program IP, Retrostim Program IP,
RapaiCASP9 Program IP, TetCAR Program IP, the ZAP-CAR Program IP and TRBC2 Dx Program IP;
“Additional Program Licence” means any one of the ccCAR Licence, iCAR Licence, Epitope Tag Licence, Retrostim Licence,
RapaiCASP9 Licence, TetCAR Licence, the ZAP-CAR Licence, and the TRBC2 Dx Licence and “Additional Program Licences” means any
two or more of the foregoing;
“Additional Royalty Product” means any one of the ccCAR Product, iCAR Product, Epitope Tag Product, Retrostim Product,
RapaiCASP9 Product, TetCAR Product, or ZAP-CAR Product, and the TRBC2 Dx Product and “Additional Royalty Products” means any
two or more of the foregoing;
“Additional ZC Milestone Payment” has the meaning set out in Clause 13.4;
“Affiliate” means any entity that directly or indirectly controls, is controlled by, or is under common control with a Party, for so long
as such control exists. For the purposes of this definition of Affiliate and the definition of Tobacco Party, “control” and “controlled”
means either (a) with respect to any person or entity, ownership directly or indirectly of more than fifty (50%) per cent of the shares of
stock entitled to vote for the election of directors, in the case of a company or corporation, or more than fifty (50%) per cent of equity
interest in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby
a person controls or has the right to control the board of directors or equivalent governing body of the relevant entity, or the ability
generally to cause the direction of the management or policies of an entity. In the case of certain entities organised under the laws of
certain countries, where the maximum percentage ownership permitted by law for a foreign investor is less than fifty (50%) per cent,
in such case such lower percentage shall be substituted in the preceding sentence provided that such foreign investor has the power
to direct the management and policies of such entity. For the purposes of this Agreement (i) UCL shall be deemed an Affiliate of
UCLB and vice versa; and (ii) Autolus’ Affiliates shall be limited to its subsidiaries (as defined in section 1159 of the Companies Act
2006) from time to time;
“Agreement” means this agreement together with its schedules, each as may be amended from time to time in accordance with the
terms of this Agreement;
1
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
“ALLCAR19 Study” means the Permitted Study described in Schedule 1 under the heading CAT19 Program and conducted in
accordance with the [***] Contract under UCL’s sponsorship;
“Amendment Date” has the meaning set out in the initial paragraph of this Agreement;
“Antigen” means any protein or other molecular structure including for the avoidance of doubt a cell surface sugar or part thereof
(including any polypeptide or fragment thereof) whether glycosylated or otherwise and is capable of or demonstrates any binding
affinity with any antibody, antigen-binding domain or other engager protein or any fragment of any of the foregoing;
“Assigned Patents” has the meaning set out in Clause 10.1;
“Assignee Entity” means any third party to which Autolus assigns an Assigned Patent together with any successor in title to such
Assigned Patent and any licensee or sub-licensee of such third party or its successors under such Assigned Patent;
“Autolus Improvement” means to the extent Controlled by Autolus (free from any restriction or encumbrance) (i) any improvement
to the applicable Licensed Patent(s) in respect of which a Licence has been terminated by UCLB, where use or deployment of such
improvement in a product would infringe the applicable Licensed Patent(s) for which such Licence has been terminated; and, (ii) the
Test and Regulatory Data which has been generated by or on behalf of Autolus in its Exploitation of the applicable Licensed Patents
for which the Licence has been terminated by UCLB;
“Background Licence” has the meaning set out in Clause 2.1;
“Background Materials” means (i) those materials listed in Part B of Schedule 3; and (ii) any materials Controlled by UCLB (free
from any restriction or encumbrance) which are not Program Materials and which (a) have been used in connection with any of the
Programs prior to the Effective Date; and/or (b) are used in connection with the [***] Program, NSG Program and/or the ZipCAR
Program after the Effective Date; and/or (c) have been used in connection with any of the Additional Programs prior to the
Amendment Date or the CAT19 Program prior to the Second Amendment Date or the TRBC2 Dx Program on or after the
Amendment Date but prior to the Third Amendment Date;
“BCMA” means the specific Antigen (or part thereof) coded for by reference to the sequence defined in Schedule 1 under the
BCMA-CAR Program;
“[***]” means [***] in which one of the [***] intended to [***] on the [***] is capable of binding to [***];
“[***] Option” means Autolus’s rights under Clause 7;
“BCMA Field” means all uses without restriction except for use in [***];
“BCMA Licence” has the meaning set out in Clause 2.2.2;
“BCMA Product” means any product or therapy which within the BCMA Field (i) targets BCMA and is covered by, uses,
incorporates or has been developed using any of the BCMA Program IP; or (ii) targets BCMA and has been developed using any of
the UCL Background IP or Manufacturing Know-How; or (iii) were it not for the license to BCMA Program IP hereunder, would
otherwise infringe any Patent Right licensed hereunder under the BCMA Program IP or, were it not for the assignment of the BCMA-
CAR Patent Rights to Autolus (or subsequent assignment or licence grant to an Assignee Entity) would otherwise infringe such
assigned BCMA-CAR Patent Rights;
“[***] Existing Patent” means patent application [***] and all Patent Rights derived therefrom including International Patent
Application No. [***];
“[***] Period” has the meaning set out in Clause 7.1;
“[***] Program” means the research conducted with respect to [***] by MP and/or the MP Laboratory, as of the Effective Date and
thereafter during the [***] Period;
“[***] Program IP” means, excluding Program IP, UCL Background IP and Manufacturing Know-How, (i) all Know-How and
inventions generated, created or developed pursuant to the [***] Program excluding CGK as of the licence grant date (in respect of
the [***] Program IP); and (ii) the [***] Existing Patent and all Patent Rights filed in respect of the research undertaken pursuant to the
[***] Program from time to time (“[***] Patent Rights”);
“BCMA-CAR Program” means the program of research defined in Schedule 1 under the title BCMA-CAR Program as conducted
prior to the Effective Date;
2
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
“BCMA Program IP” means, excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the title
BCMA-CAR Patents and all Patent Rights derived therefrom (“BCMA-CAR Patent Rights”); (ii) the Know-How described in
Schedule 2 under the title BCMA-CAR Know-How; (iii) the materials listed in Schedule 2 under the title BCMA-CAR Materials
together with all IP in the same; and (iv) all Know-How and materials (together with all IP in the same) developed by MP and/or the
MP Laboratory pursuant specifically to the BCMA-CAR Program prior to the Effective Date, including the technology claimed or
disclosed in the BCMA-CAR Patent Rights as of the Effective Date, other than that which is CGK as of the Effective Date or
disclosed in the sections of the BCMA-CAR Patent Rights that refer to, describe or disclose prior art including CGK existing as of the
Effective Date;
“BiTE” means a bi-specific T-cell engager protein comprising two or more antigen-binding domains which bind a T-cell and a target
cell thereby bringing the two cells into close proximity intended to modulate or trigger an immune response against the target cell,
and for the avoidance of doubt is not a CAR;
“Buy-Out Option” has the meaning set out in Clause 17.1;
“CAROUSEL Clinical Study Agreement” means the [***] entered into between UCL and [***];
“CAROUSEL Clinical Study Results” means all data, information, know-how and other intellectual property and results arising
from the CAROUSEL Study including the protocol for the CAROUSEL Study and the Test and Regulatory Data resulting from the
CAROUSEL Study;
“CAROUSEL Patient Clinical Data” means patient clinical data generated in the performance of the CAROUSEL Study after the
Third Amendment Date;
“CAROUSEL Program IP” means, excluding Manufacturing Know-How, (i) the Know-How described in Schedule 2 under the title
CAROUSEL Know-How, including CAROUSEL Patient Clinical Data generated prior to the Third Amendment Date once the same is
disclosed to Autolus in accordance with Clause 9.9; and (ii) any Know-How generated in the performance of the CAROUSEL Study
after the Third Amendment Date, which shall include CAROUSEL Patient Clinical Data once disclosed to Autolus in accordance with
Clause 9.9;
“CAROUSEL Study” means the Permitted Study described in Schedule 7 under the heading CAT19 Studies with the study acronym
“CAROUSEL”;
“CARPALL and ALLCAR19 Patient Clinical Data” means patient clinical data generated from either the CARPALL Study or the
ALLCAR19 Study and (i) described in Schedule 2 under the title CAT19 Know-How, with the heading Patient Clinical Data or (ii)
which is otherwise generated after the Second Amendment Date but excluding [***];
“CARPALL Study” means the Permitted Study described in Schedule 1 under the heading CAT19 Program and conducted under
UCL’s sponsorship with funding from (i) Children with Cancer UK, (ii) Great Ormond St Hospital Children’s Charity and (iii) J P
Moulton Charitable Foundation;
“CAT19 1 Gen Product” means the CAT19 Product developed in the CAT19 Program (the “Original CAT19 Product”), and any
other CAT19 Product as may be modified by Autolus or any Sub-Licensee after the Second Amendment Date that is developed
using any of the CARPALL and ALLCAR19 Patient Clinical Data either in a Phase 2 study following directly a clinical study
conducted under the CAT19 Program, or pursuant to a bridging study or similar adjunctive study intended to demonstrate that the
modified CAT19 Product is equivalent to the Original CAT19 Product, but excluding any CAT19 CNS Product;
“CAT19 Binder Product” means a CAT19 Product that is not a CAT19 1 Gen Product or a CAT19 CNS Product;
“CAT19 CNS Licence” has the meaning set out in Clause 2.2.18;
“CAT19 CNS Product” means a CAT19 Product for the treatment of Primary CNS Lymphoma which is covered by, uses,
incorporates or has been developed using any of the CAROUSEL Program IP;
“CAT19 Licence” has the meaning set out in Clause 2.2.16;
“CAT19 Product” means any product or therapy which (i) targets the CD19 Antigen and is covered by, uses, incorporates or has
been developed using any of the CAT19 Program IP; or (ii) were it not for the license to CAT19 Program IP hereunder, or the
st
st
3
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
assignment to Autolus (or subsequent assignment or licence grant to an Assignee Entity) of the CAT19 Patent Rights, would
otherwise infringe any Patent Right licensed under the CAT19 Program IP;
“CAT19 Program” means the program of research defined in Schedule 1 under the title CAT19 Program as conducted prior to the
Second Amendment Date;
“CAT19 Program IP” means excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the title
CAT19 Patents and all Patent Rights derived therefrom (“CAT19 Patent Rights”); (ii) the Know-How described in Schedule 2 under
the title CAT19 Know-How, including CARPALL and ALLCAR19 Patient Clinical Data generated prior to the Second Amendment
Date once the same is disclosed to Autolus in accordance with Clause 9.8; (iii) the materials listed in Schedule 2 under the title
CAT19 Materials together with all IP in the same; and (iv) any Know-How generated in the performance of the ALLCAR19 and
CARPALL Studies after the Second Amendment Date, which shall include CARPALL and ALLCAR19 Patient Clinical Data once
disclosed to Autolus in accordance with Clause 9.8, but excluding any such Know-How in which Autolus has rights pursuant to any
agreement entered into in accordance with Clause 4.12 and excluding any Know-How owned by [***] pursuant to the [***]
Agreements;
“CAR” means a chimeric antigen receptor (also known as chimeric immunoreceptors or artificial T-Cell receptors) comprising an
extra-cellular Antigen binding or recognition domain and one or more intra-cellular signalling domains, wherein the extra-cellular
Antigen binding or recognition domain has binding specificity for one particular Antigen, and for the avoidance of doubt is not a BiTE;
“ccCAR Licence” has the meaning set out in Clause 2.2.7;
“ccCAR Product” means any product or therapy which, were it not for the licence to ccCAR Patent Rights granted hereunder or the
assignement to Autolus (or subsequent assignment or licence grant to an Assignee Entity) of the ccCAR Patent Rights, would
otherwise infringe the ccCAR Patent Rights in the relevant country of sale;
“ccCAR Program” means the program of research defined in Schedule 1 under the title ccCAR Program as conducted prior to the
Amendment Date;
“ccCAR Program IP” means excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the title
ccCAR Patents and all Patent Rights derived therefrom (“ccCAR Patent Rights”); (ii) the Know-How described in Schedule 2 under
the title ccCAR Know-How; and (iii) the materials listed in Schedule 2 under the title ccCAR Materials together with all IP in the same;
“CDA” the confidentiality agreement executed between [***];
“CD19 Antigen” means the specific Antigen (or part thereof) coded for by reference to the sequence set out in Schedule 12;
“CD19 Clinical Study Results” means all data, information, know-how and other intellectual property and results arising from the
ALLCAR19 Study or the CARPALL Study including the protocol for the ALLCAR19 Study and for the CARPALL Study and the Test
and Regulatory Data resulting from the ALLCAR19 Study and from the CARPALL Study;
“CD19 Clinical Study NHS Foundation Trusts” means UCL Hospitals NHS Foundation Trust, The Christie NHS Foundation Trust,
Oxford University Hospitals NHS Foundation Trust, Great Ormond Street Hospital for Children NHS Foundation Trust, Manchester
University NHS Foundation Trust and such other NHS Trusts as may act as study sites in respect of the ALLCAR19 Study and/or the
CARPALL Study from time to time;
“CD19 Clinical Study Agreements” means (i) the [***] Contract, (ii) the [***] Grant, (iii) the [***] Agreements and (iv) the
agreements entered into between UCL and [***] in respect of their conduct of the CARPALL Study or the ALLCAR19 Study, as
applicable;
“CD19 Field” means all uses without restriction;
“[***]” means the specific [***] defined in Schedule 1 under the [***] Program;
“[***] Exercise Period” has the meaning set out in Clause 2.4;
“[***] Licence” has the meaning set out in Clause 2.5;
“[***] Licence Notice” has the meaning set out in Clause 2.4;
“[***] Option” means Autolus’s rights under Clauses 2.4 and 2.5;
“[***] Product” means any product or therapy which (i) targets [***] and is covered by, uses, incorporates or has been developed
using any of the [***] Program IP; or (ii) targets [***] and has been developed using any of the UCL Background IP or Manufacturing
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Know-How; or (iii) were it not for the license to [***] Program IP hereunder, would otherwise infringe any Patent Right licensed
hereunder under the [***] Program IP;
“[***] Program” means the program of research defined in Schedule 1 under the title [***] Program, conducted prior to the Effective
Date together with the program of research conducted after the Effective Date as described in Schedule 1 under the title (B): [***]
Project Plan;
“[***] Program IP” means, excluding Manufacturing Know-How, (i) the Know-How described in Schedule 2 under the title [***] Know-
How; (ii) the materials listed in Schedule 2 under the title [***] Materials together with all IP in the same; (iii) all Know-How and
materials (together with all IP in the same) developed by MP and/or the MP Laboratory pursuant specifically to the [***] Program prior
to the Effective Date other than that which is CGK as of the date the [***] Option is exercised; (iv) any Patent Rights filed by or on
behalf of UCLB from time to time in respect of any work undertaken by MP and/or the MP Laboratory prior to, on or after the Effective
Date under or pursuant to the agreed project plan for the [***] Program as set out in Schedule 1 (“[***] Patent Rights”); and (v) all
Know-How and materials developed after the Effective Date by MP and/or the MP Laboratory pursuant specifically to the agreed
project plan for the [***] Program as set out in Schedule 1, including the technology claimed or disclosed in the [***] Patent Rights (if
any) as of the date the [***] Option is exercised, other than that which is CGK as of the date the [***] Option is exercised, or disclosed
in the sections of the [***] Patent Rights that refer to, describe or disclose prior art including CGK existing as of the date the [***]
Option is exercised; references to CGK in this definition shall exclude CGK that became CGK through disclosure after the Effective
Date by publication of the [***] Patent Rights or by MP making a publication in accordance with this Agreement or by Autolus’s
publication;
“CGK” or “Common General Knowledge” means all technical and other information, knowledge, ideas, inventions, concepts,
discoveries, data, designs, know-how, formulae, methods, sequences, models, procedures, designs, protocols, trials, tests, methods,
processes, specifications and techniques which are not confidential and are publicly available at the applicable time;
“Collaborative Research Project” has the meaning set out in Clause 4.7;
“Combination Product” has the meaning set out in paragraph 4 of Part A of Schedule 8;
“Commercial Licence” has the meaning set out in Clause 3.3;
“Commercial Research” means any research (i) that is, in whole or part, funded by a person or entity that is not a Funder; or (ii)
that is undertaken at the request of or for the benefit of any entity that is not an Academic Organisation involved in such research; or
(iii) that is undertaken (as opposed to funded) in collaboration with any entity which is not an Academic Organisation; or (iv) under
which a Third Party, which is not an Academic Organisation participating in such research, will acquire any rights in (including by way
of assignment or licence) or control over the results of such research;
“Competitive Product” means any product or therapy that is competitive to or equivalent (whether structurally, functionally or
through mechanism of action) to any Royalty Product, including any product or therapy that may be considered a generic, biosimilar
and/or a “me-too” product or therapy or otherwise infringes any of the Licensed Patents or makes use of any of the Technology;
“Complementary Diagnostic Product” means a Royalty Product that is not directly of therapeutic application and is used for
diagnosis, assessment or detection;
“Competing Entrant” has the meaning set out in Clause 14.11;
“Confidential Information” has the meaning set out in Clause 20.1;
“Control” or “Controlled” in respect of a Party, that Intellectual Property (or those materials) which such Party (which in the case of
UCLB means UCLB or UCL) (i) owns and is able, without breaching any obligation owed by it or (by rule of law) having to obtain the
consent of any co-owner, to license (or in the case of materials supply) the same to a third party (including a Party to this Agreement)
for the applicable Royalty Product or use; or (ii) is licensed to use (other than by the other Party to this Agreement) and is entitled
under the terms of the licence to which they are a party to sub-license (or in the case of materials supply) the same to a third party
(including a Party to this Agreement) for the applicable Royalty Product or use without having to obtain consent from such third party;
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
“Core Countries” means [***] and [***] and “Core Country” means any one of them;
“Cover”, “Covering” or “Covered” means (for the purposes of Clauses 13.2.1, 13.2.2, 14.4 and paragraph 1.8 of Part B Schedule
9, paragraph 1.7 of Part C Schedule 9 and paragraph 1.7 of Part D Schedule 9) in the case of a product or a therapy that (i) such
product or therapy would, were it not for the applicable licence granted and subsisting hereunder, infringe the applicable Patent
Rights so licensed hereunder; or (ii) in the case of the Assigned Patents such product or therapy would, were it not for the
assignment to Autolus (or subsequent assignment or licence grant to an Assignee Entity) of such Assigned Patent, infringe the
applicable Patent Rights so assigned;
“CRUK” means Cancer Research UK (registered as a company limited by guarantee in England and Wales under number 4325234)
and registered charity (number 1089464 in England and Wales and registered in Scotland under number SC041666 and in the Isle of
Man under number 1103);
“CRUK Funders” means Cancer Research Technology Limited, with company number 01626049 (“CRT”), CRUK, Leukaemia and
Lymphoma Research (registered as a company limited by guarantee in England and Wales under number 738089 and registered
charity number 216032 in England and Wales and registered in Scotland under number SC037529) (“LLR”) and Kay Kendall
Leukaemia Fund (a registered charity in England and Wales with number 290772) (“KKLF”);
“CRUK Indemnified Parties” has the meaning set out in Clause 23.1.1;
“CRUK Study” has the meaning set out in Clause 11.1.1(ii);
“Defaulting Party” has the meaning set out in Clause 24.4;
“Developing Country” or “Developing Countries” means those countries that are: (a) eligible for support from [***]; and (b) to the
extent not included in (a), defined as at the Second Amendment Date by the [***], as such definitions may be amended from time to
time by the World Bank:
“Direct Licence” has the meaning set out in Clause 29.6;
“Disclosing Party” has the meaning set out in Clause 20.1;
“Disclosure Notification” has the meaning in Clause 5.2;
“Enforcement Action” has the meaning set out in Clause 19.2;
“Epitope Tag Field” means all uses and applications without restriction;
“Epitope Tag Licence” has the meaning set out in Clause 2.2.12;
“Epitope Tag Product” means any product or therapy within the Epitope Tag Field: (i) which, were it not for the licence granted
hereunder or the assignment to Autolus (or subsequent assignment or licence grant to an Assignee Entity) of the Epitope Tag Patent
Rights, would infringe the Epitope Tag Patent Rights; and/or (ii) the manufacture of which product or therapy were it not for the
licence granted hereunder or the assignment to Autolus (or subsequent assignment or licence grant to an Assignee Entity) of the
Epitope Tag Patent Rights, would infringe the Epitope Tag Patent Rights; and/or (iii) where the manufacture of any materials used in
connection with the manufacture of such product or therapy, were it not for the licence granted hereunder or the assignment to
Autolus (or subsequent assignment or licence grant to an Assignee Entity) of the Epitope Tag Patent Rights, would infringe the
Epitope Tag Patent Rights (including without limitation the manufacture of the viral vector ultimately used for the manufacture of such
product or therapy);
“Epitope Tag Program” means the program of research defined in Schedule 1 under the title Epitope Tag Program as conducted
prior to the Amendment Date;
“Epitope Tag Program IP” means excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the
title Epitope Tag Patents and all Patent Rights derived therefrom (“Epitope Tag Patent Rights”); (ii) the Know-How described in
Schedule 2 under the title Epitope Tag Know-How; and (iii) the materials listed in Schedule 2 under the title Epitope Tag Materials
together with all IP in the same;
“Existing Licences” has the meaning set out in Clause 4.9;
“Exploit” and “Exploiting” means to make, have made, import, export, use, sell or offer for sale, including to research, experiment,
develop, commercialise, obtain and maintain Regulatory Approvals, manufacture, to have manufactured, hold or keep (whether for
disposal or otherwise), have used, export, transport, distribute, promote, market or have sold or otherwise dispose of, and
“Exploitation” shall mean the act of Exploiting;
“Extended Period” has the meaning set out in Clause 7.1;
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
“Field” means all uses and applications without restriction;
“Final Written Report” means with respect to the applicable Program, the final written report approved by MP and written following
completion of the applicable Program in accordance with the applicable project plan, and which shall provide a complete report of the
results, findings and activities arising from that Program;
“First Commercial Sale” means the first arm’s length commercial sale of the applicable Royalty Product in a country by Autolus or
by a Sub-Licensee or by an Assignee Entity pursuant to this Agreement, in each case following the grant of a Marketing Approval for
the applicable Royalty Product in such country;
“Funder” means an academic, charitable or other not-for-profit organisation including academic institutions, charities, and
government bodies;
“GD2” means the specific Antigen (or part thereof) coded for by reference to the sequence defined in Schedule 1 under the GD2
Program;
“GD2 Clinical Study Results” means all data, information, know-how and other intellectual property and results arising from the
CRUK Study including the protocol for the CRUK Study and the Test and Regulatory Data resulting from the CRUK Study;
“GD2 Diligence Obligation” has the meaning set out in Clause 11.1.1;
“GD2 Licence” has the meaning set out in Clause 2.2.3;
“GD2 Product” means any product or therapy which (i) targets GD2 and is covered by, uses, incorporates or has been developed
using any of the GD2 Program IP; or (ii) targets GD2 and has been developed using any of the UCL Background IP or Manufacturing
Know-How; or (iii) were it not for the license to GD2 Program IP hereunder, would otherwise infringe any Patent Right licensed under
the GD2 Program IP or, were it not for the assignment to Autolus (or subsequent assignment or licence grant to an Assignee Entity)
of the GD2 Patent Rights, would otherwise infringe such assigned GD2 Patent Rights;
“GD2 Program” means the program of research defined in Schedule 1 under the title GD2 Program as conducted prior to the
Effective Date;
“[***] Period” has the meaning set out in Clause 6.1;
“[***] Program” means the program of research concerning [***] being undertaken by [***] using the [***] as is used in the [***] and
any other research undertaken by [***] with respect to [***] in collaboration with [***] in each case up to the Effective Date and
thereafter during the [***] Period;
“[***] Program IP” means, excluding Program IP, UCL Background IP and Manufacturing Know-How, (i) all Know-How and
inventions generated, created or developed pursuant to the [***] Program excluding CGK as of the licence grant date, and (ii) all
Patent Rights filed in respect of the research undertaken pursuant to the [***] Program;
“GD2 Program IP” means, excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the title GD2
Patents and all Patent Rights derived therefrom (“GD2 Patent Rights”); (ii) the Know-How described in Schedule 2 under the title
GD2 Know-How; (iii) the materials listed in Schedule 2 under the title GD2 Materials together with all IP in the same; and (iv) all
Know-How and materials (together with all IP in the same) developed by MP and/or the MP Laboratory pursuant specifically to the
GD2 Program prior to the Effective Date including the technology claimed or disclosed in the GD2 Patent Rights as of the Effective
Date, other than that which is CGK as of the Effective Date or disclosed in the sections of the GD2 Patent Rights that refer to,
describe or disclose prior art including CGK existing as of the Effective Date;
“[***] Grant” means the grant from [***], and associated grant terms and conditions, dated [***];
“iCAR Licence” has the meaning set out in Clause 2.2.8;
“iCAR Product” means any product or therapy which, were it not for the licence to iCAR Patent Rights granted hereunder or the
assignment to Autolus (or subsequent assignment or licence grant to an Assignee Entity) of the iCAR Patent Rights, would otherwise
infringe the iCAR Patent Rights in the relevant country of sale;
“iCAR Program” means the program of research defined in Schedule 1 under the title iCAR Program as conducted prior to the
Amendment Date;
“iCAR Program IP” means excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the title
iCAR Patents and all Patent Rights derived therefrom (“iCAR Patent Rights”); (ii) the Know-How described in Schedule 2
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
under the title iCAR Know-How; and (iii) the materials listed in Schedule 2 under the title iCAR Materials together with all IP in the
same;
“Improvement” means (a) any improvement, enhancement, development or advancement (together with all Intellectual Property in
the same) over any of the Original Program IP in each case as created, generated or developed by MP (in the course of his activities
or role at or for UCL or UCLB) and/or the MP Laboratory, and which, if used, deployed or incorporated in the Exploitation of any
product, process or service would result in such product, process or service being within the scope of or otherwise dependent upon
(that is, in each case, in the absence of any licence, would otherwise infringe) any one or more claims of any of the Original Licensed
Patents; and (b) any CAR developed or generated by MP (in the course of his activities or role at or for UCL or UCLB) or the MP
Laboratory that targets any of GD2, BCMA, TRBC1, TRBC2, the CD19 Antigen and/or [***];
“Improvement Negotiation Period” means in respect of each Improvement or New Invention (as applicable), the period
commencing with the date the applicable Disclosure Notification (complying with Clause 5.2.2) is deemed to have been received by
Autolus and expiring [***] after the date such Disclosure Notification is deemed to have been so received;
“Improvement Period” has the meaning set out in Clause 5.1;
“Indemnity Claim” has the meaning set out in Clause 23.1;
“Indemnified Party” has the meaning set out in Clause 23.1;
“Insolvency Event” means the occurrence of any of the following events or circumstances (or any analogous event or circumstance
in a jurisdiction other than England and Wales) in relation to the relevant entity: (i) being deemed unable to pay its debts as defined
in section 123 Insolvency Act 1986 without any requirement to prove any matter stated in that section to a court, (ii) entering into a
voluntary arrangement or any other composition, scheme or arrangement with (or assignment for the benefit of) its creditors; (iii) the
appointment of a receiver, administrator or insolvency manager over the whole or the majority of its business or assets, and which
appointment is not appealed or set aside within twenty (20) days; (iv) an order is made or a resolution is passed for its winding up
(except for the purposes of a bona fide solvent reorganisation); (v) an order for bankruptcy or dissolution or the making of an
administration order is made which is not appealed or set aside within thirty (30) days of it being made; or (vi) ceasing to carry on
business for any period in excess of thirty (30) days or claiming the benefit of any statutory moratorium;
“Intellectual Property” or “IPR” or “IP” means all Patent Rights, claims in or rights to Patent Rights, rights in designs (including
design patents, registered designs and unregistered designs), copyright, rights in software, database rights, rights in data, inventions,
rights in Know-How, trade secrets and confidential information, and any and all other similar or equivalent rights to any of the
foregoing situated in any country in the world, in each case for their full term and any extensions, together with applications for any of
the foregoing, the right to apply for any of the foregoing in any part of the world and the right to claim priority in respect of any of the
foregoing;
“[***] Materials” means the [***] (as listed in Schedule 2 under the title [***] Materials – [***] Materials), complementarity determining
regions (“CDRs”) from such [***], and any derivatives, fragments, modifications, enhancements of such [***] or the CDRs from [***];
“[***]” means [***];
“[***] Agreements” means the agreements entered into between UCL and [***] (i) dated [***] for [***] to manufacture the viral vector
used in the CARPALL Study, (ii) dated [***] for [***] to manufacture the viral vector used in the CARPALL Study, (iii) dated [***] for
[***] to manufacture the viral vector used in the ALLCAR19 Study, and (iv) dated [***] for [***] to manufacture the viral vector used in
the ALLCAR19 Study;
“Know-How” means all technical and other information, knowledge, ideas, concepts, discoveries, data, designs, know-how, trade
secrets, inventions (which at the relevant time are not the subject of a Patent Right) formulae, methods, software sequences,
models, procedures, designs for experiments, trials and tests and results of the same, testing methods, processes, specifications
and techniques, clinical data and manufacturing data including all Test and Regulatory Data;
“Know-How Period” has the meaning set out in Clause 14.8;
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
“Laboratory Notebooks” means all laboratory notebooks in UCL’s possession, custody or control which emanate from laboratories
at UCL, in so far as they concern or contain information relating to any of the Programs, Program IP, Materials or UCL Background
IP;
“Licence” means one of the BCMA Licence, [***] Licence (if Autolus exercises its rights under Clause 2.4), GD2 Licence, Logic Gate
Licence, NSG Licence, RQR8 Licence, TRBC1/2 Licence, ZipCAR Licence, ccCAR Licence, iCAR Licence, Epitope Tag Licence,
Retrostim Licence, RapaiCASP9 Licence, TetCAR Licence, ZAP-CAR Licence, CAT19 Licence, TRBC2 Dx Licence, CAT19 CNS
Licence, Manufacturing Licence, the Background Licence and the licences granted under Clause 2.3;
“Licensed Patents” means the Original Licensed Patents, the Additional Licensed Patents, the CAT19 Patent Rights and the
TRBC2 Dx Patent Rights. For the avoidance of doubt, notwithstanding their assignment to Autolus pursuant to the Patent
Assignment, or subsequent assignment to an Assignee Entity, the Assigned Patents shall continue to be included within the definition
of Licensed Patents;
“Limb (i)(b) Notice” has the meaning set out in Clause 11.1.1(ii);
“Logic Gate Licence” has the meaning set out in Clause 2.2.4;
“Logic Gate Product” means any product or therapy which is covered by, uses or incorporates any of the Logic Gate Program IP;
“Logic Gate Program” means the program of research defined in Schedule 1 under the title Logic Gate Program as conducted prior
to the Effective Date;
“Logic Gate Program IP” means, excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the
title Logic Gate Patents and all Patent Rights derived therefrom (“Logic Gate Patent Rights”); (ii) the Know-How described in
Schedule 2 under the title Logic Gate Know-How; (iii) the materials listed in Schedule 2 under the title Logic Gate Materials together
with all IP in the same; and (iv) all Know-How and materials (together with all IP in the same) developed by MP and/or the MP
Laboratory pursuant specifically to the Logic Gate Program prior to the Effective Date including the technology claimed or disclosed
in the Logic Gate Patent Rights filed as of the Effective Date (or the Amendment Date for those Logic Gate Patents Rights filed as of
the Amendment Date), other than that which is CGK as of the Effective Date (or, in respect of those Logic Gate Patent Rights filed as
of the Amendment Date, the Amendment Date) or disclosed in the sections of the Logic Gate Patent Rights that refer to, describe or
disclose prior art including CGK existing as of the Effective Date or Amendment Date, as applicable, provided that to the extent that
any materials in (iii) or (iv) incorporate any of the following binders, CD5, CD19, CD22, CD23, CD33 and/or EGFRvIII, such binders
together with IP in the same are excluded. References to CGK in this definition shall exclude CGK that became CGK through
disclosure after the Effective Date by publication of the Logic Gate Patent Rights (filed as of the Effective Date), or by MP making a
publication in accordance with this Agreement or by Autolus’ publication;
“Manufacturing Licence” has the meaning set out in Clause 2.3;
“Manufacturing Know-How” means that Know-How generated by each of [***] prior to the Effective Date, irrespective of its use or
application in any of the Programs, which is required for or beneficial to practice any of the Program IP licensed hereunder, including
that listed in Schedule 4;
“Marketing Approval Application” or “MAA” means an application for a Marketing Approval;
“Marketing Approval” or “MA” means those Regulatory Approval(s) required by applicable laws and regulations in a particular
country or territory in order to sell or commercially supply a medicinal product and/or device in that country or territory;
“Martin Pule” or “MP” means Dr Martin Pule of [***] for so long as he is employed by, consults for or otherwise holds any position at
or undertakes or supervises any research at UCL or UCLB;
“Match Period” has the meaning set out in Clause 5.7;
“Materials” means Program Materials and Background Materials;
“Milestone” means a Success Milestone, an Additional Milestone or a Sales Milestone;
“Milestone Payment” means a Success Milestone Payment, an Additional Milestone Payment, a Sales Milestone Payment, an
Additional LG Milestone Payment or an Additional ZC Milestone Payment;
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
“MP Laboratory” means from time to time prior to, on and following the Effective Date, those members of the research group(s) at
UCL lead by MP, who at the relevant time were or are under the supervision or direction of MP;
“Net Receipts” has the meaning in Part B of Schedule 8;
“Net Sales” has the meaning in Part A of Schedule 8;
“New Invention” means any discovery, invention (whether patentable or not), Know-How or improvement concerning any CAR or
CARs (including methods for manufacture of any CAR or CARs) which is not an Improvement and which has been discovered,
generated, identified or invented by MP and/or by any member(s) of the MP Laboratory, and which is Controlled by UCLB either at
the time of creation, development or generation or upon UCL or UCLB acquiring or being granted a licence to the same from the
inventors or individuals responsible for the creation, development or generation of the same;
“[***] Contract” means the [***] contract entered into between (i) [***] and (ii) [***] on [***], together with the associated letter
agreement between (i) [***] and (ii) [***] dated [***];
“Non-Defaulting Party” has the meaning set out in Clause 24.4;
“Notice Period” has the meaning set out in Clause 24.4.1;
“NSG Licence” has the meaning set out in Clause 2.2.14;
“NSG Product” means any product or therapy which is covered by, uses or incorporates any of the NSG Program IP;
“NSG Program” means the program of research defined in Schedule 1 under the title New Suicide Gene Program conducted prior
to the Effective Date together with the program of research conducted after the Effective Date and prior to the Amendment Date as
described in Schedule 1 under the title (B) New Suicide Gene Project Plan;
“NSG Program IP” means, excluding Manufacturing Know-How, (i) the Know-How described in Schedule 2 under the title NSG
Know-How; (ii) the materials listed in Schedule 2 under the title NSG Materials together with all IP in the same; (iii) all Know-How and
materials (including all IP in the same) developed by MP and/or the MP Laboratory pursuant specifically to the NSG Program prior to
the Effective Date, other than that which is CGK as of the Amendment Date; (iv) any Patent Rights filed by or on behalf of UCLB from
time to time and in respect of any work undertaken by MP and/or the MP Laboratory for the NSG Program prior to the Amendment
Date and all Patent Rights resulting therefrom, including those as set out in Schedule 1 (“NSG Patent Rights”); and (v) all Know-
How and materials (including all IP in the same) developed after the Effective Date but prior to the Amendment Date by MP and/or
the MP Laboratory pursuant specifically to the agreed project plan for the NSG Program as set out in Schedule 1 including the
technology claimed or disclosed in the NSG Patent Rights (if any) as of the Amendment Date, other than that which is CGK as of the
Amendment Date, or disclosed in the sections of the NSG Patent Rights that refer to, describe or disclose prior art including CGK
existing as of the Amendment Date; references to CGK in this definition shall exclude CGK that became CGK through disclosure
after the Effective Date by publication of the NSG Patent Rights or by MP making a publication in accordance with this Agreement or
by Autolus’s publication;
“Option” means the [***] Option;
“Original Licensed Patents” means the BCMA-CAR Patent Rights, the [***] Patent Rights (if Autolus exercises its rights under
Clause 2.4), the GD2 Patent Rights, the TRBC1/2 Patent Rights, the RQR8 Patent Rights, the NSG Patent Rights, the Logic Gate
Patent Rights and the ZipCAR Patent Rights;
“Original Program” means one of the GD2 Program, the BCMA-CAR Program, the TRBC1/2 Program, the [***] Program (if Autolus
exercises its rights under Clause 2.5), the RQR8 Program, the NSG Program, the Logic Gate Program or the ZipCAR Program, and
“Original Programs” means any combination of two or more of the foregoing, as the context requires;
“Original Program IP” means the GD2 Program IP, the BCMA Program IP, the TRBC1/2 Program IP, the RQR8 Program IP, the
Logic Gate Program IP, the NSG Program IP and the ZipCAR Program IP; and (ii) where the [***] Option has been exercised, the
[***] Program IP;
“Original Program Licence” means any one of the BCMA Licence, GD2 Licence, Logic Gate Licence, RQR8 Licence, TRBC1/2
Licence, NSG Licence, ZipCAR Licence, and
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
where the [***] Option has been exercised, the [***] Licence, and “Original Program Licences” means any two or more of the
foregoing;
“Original Royalty Product” means any one of the BCMA Product, GD2 Product, Logic Gate Product, RQR8 Product, TRBC1/2
Product, NSG Product, ZipCAR Product, and where the [***] Option has been exercised, [***] Product, and “Original Royalty
Products” means any two or more of the foregoing;
“Other Technology” has the meaning set out in Clause 8.3;
“Party” or “Parties” means Autolus or UCLB, or both Autolus and UCLB, as the context requires, including their respective
successors in title, permitted assignees and transferees from time to time (if any);
“Patent Assignment” means the deed of assignment between the Parties in respect of the Assigned Patents dated on the Third
Amendment Date;
“Patent Prosecution Costs” means those professional service fees and costs reasonably charged by a Third Party for the provision
of patent filing, prosecution (including defending oppositions and interferences), maintenance and renewal services with respect to
the applicable Licensed Patent, including all official fees, charges and surcharges properly incurred in the provision of such services;
“Patent Rights” means all patent rights, claims in any patent right, applications for patents and the right to apply for patent rights in
any part of the world including all divisionals, reissues, extensions, substitutions, confirmations, registrations, revalidations, additions,
continuations in-part and any supplementary protection certificates or patent term extensions and where referred to in the context of
a schedule hereto shall include all patent rights from time to time derived from, claiming priority from, issued or granted from those
patent rights listed in such schedule;
“Patent Sale” has the meaning set out in Clause 15.1;
“Permitted Studies” means those clinical studies identified and briefly described in Schedule 7;
“Primary CNS Lymphoma” means lymphoma of CNS cells that has originated within the central nervous system as the primary site
of the lymphoma, as opposed to a secondary lymphoma of the CNS;
“Program” means any one of the Original Programs, the Additional Programs or the CAT19 Program, and “Programs” means any
combination of two or more of the Original Programs, Additional Programs and the CAT19 Program, as the context requires;
“Program IP” means the Original Program IP, the Additional Program IP, the CAT19 Program IP and the CAROUSEL Program IP;
“Program Licence” means one of the BCMA Licence, [***] Licence (if Autolus exercises its rights under Clause 2.5), GD2 Licence,
Logic Gate Licence, NSG Licence, RQR8 Licence, TRBC1/2 Licence, ZipCAR Licence, ccCAR Licence, Epitope Tag Licence, iCAR
Licence, RapaiCASP9 Licence, Retrostim Licence, TetCAR Licence, ZAP-CAR Licence, CAT19 Licence, TRBC2 Dx Licence and
CAT19 CNS Licence;
“Program Materials” means those materials forming part of the Program IP;
“Purple Book Reference” has the meaning set out in Clause 18.8;
“Quarterly” or “Quarter” means a period of three calendar months each commencing on 31 March, 30 June, 30 September or 31
December;
“RapaiCASP9 Licence” has the meaning set out in Clause 2.2.9;
“RapaiCASP9 Product” means any product or therapy which, were it not for the licence to RapaiCASP9 Patent Rights granted
hereunder or the assignment to Autolus (or subsequent assignment or licence grant to an Assignee Entity) of the RapaiCASP9
Patent Rights, would otherwise infringe the RapaiCASP9 Patent Rights in the relevant country of sale;
“RapaiCASP9 Program” means the program of research defined in Schedule 1 under the title RapaiCASP9 Program as conducted
prior to the Amendment Date;
“RapaiCASP9 Program IP” means excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the
title RapaiCASP9 Patents and all Patent Rights derived therefrom (“RapaiCASP9 Patent Rights”); (ii) the Know-How described in
Schedule 2 under the title RapaiCASP9 Know-How; and (iii) the materials listed in Schedule 2 under the title RapaiCASP9 Materials
together with all IP in the same;
“Recipient Party” has the meaning set out in Clause 20.1;
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
“Referral Notice” has the meaning set out in paragraph 1 of Part C Schedule 8;
“Regulatory Approval” means any and all approvals (including any applicable supplements, amendments, pre and post approvals,
and approvals of applications for regulatory exclusivity), licenses, registrations, or authorisations of any federal, national,
multinational, state, provincial or local regulatory agency, department, bureau, commission, council or other governmental entity
necessary for the manufacture, distribution, use, testing, development, storage, import, export, transport, promotion, marketing and
sale of a medicinal product in a country or countries;
“Regulatory Authority” means any governmental or regulatory authority responsible for assessing and/or granting Regulatory
Approvals (including any ethics committees) and “Regulatory Authorities” shall mean more than one such authority;
“Regulatory Exclusivity” means on a country by country basis that a Third Party under applicable laws concerning the application
for and grant of Marketing Approvals having jurisdiction over that country at the relevant time (i) is precluded from submitting a
Marketing Approval Application for any Competitive Product; or (ii) in respect of any Competitive Product, is prohibited from relying
upon Autolus’s, or its Affiliates’ or Sub-Licensee’s or any Assignee Entity’s product dossier or Regulatory Submission (from which
such party obtained a Marketing Approval) concerning any Royalty Product, under any applicable abridged or streamlined procedure
to obtain a Marketing Approval for such Competitive Product;
“Regulatory Submission” means in respect of a Royalty Product, the package or packages of data, pre-clinical and clinical trial
data and materials, information, results, materials and samples (including any Test and Regulatory Data and/or the drug master file
or part thereof) submitted to a Regulatory Authority in support of a Marketing Approval Application or any other Regulatory Approval;
“Retained Patents” means the RQR8 Patent Rights and the [***] Existing Patent;
“Retrostim Field” means all uses and applications without restriction;
“Retrostim Licence” has the meaning set out in Clause 2.2.13;
“Retrostim Product” means any product or therapy within the Retrostim Field: (i) which, were it not for the licence granted
hereunder or the assignment to Autolus (or subsequent assignment or licence grant to an Assignee Entity) of the Retrostim Patent
Rights, would infringe the Retrostim Patent Rights; and/or (ii) the manufacture of which product or therapy were it not for the licence
granted hereunder or the assignment to Autolus (or subsequent assignment or licence grant to an Assignee Entity) of the Retrostim
Patent Rights, would infringe the Retrostim Patent Rights, and/or (iii) where the manufacture of any materials used in connection with
the manufacture of such product or therapy, were it not for the licence granted hereunder or the assignment to Autolus (or
subsequent assignment or licence grant to an Assignee Entity) of the Retrostim Patent Rights, would infringe the Retrostim Patent
Rights;
“Retrostim Program” means the program of research defined in Schedule 1 under the title Retrostim Program as conducted prior to
the Amendment Date;
“Retrostim Program IP” means excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the title
Retrostim Patents and all Patent Rights derived therefrom (“Retrostim Patent Rights”); (ii) the Know-How described in Schedule 2
under the title Retrostim Know-How; and (iii) the materials listed in Schedule 2 under the title Retrostim Materials together with all IP
in the same;
“Royalty” or “Royalties” has the meaning set out in Clause 14.1;
“Royalty Expiry” has the meaning set out in Clause 14.6;
“Royalty Product” means any one of the Original Royalty Products, Additional Royalty Products or CAT19 Products, and “Royalty
Products” shall be constructed to mean any combination of two or more of the Original Royalty Products, Additional Royalty
Products and CAT19 Products, as the context requires;
“RQR8 Field” means all uses and applications without restriction except for any uses or activities relating to any allogeneic T-cell
therapy (being the therapeutic transplantation of genetically engineered T-cell lymphocyte to a recipient patient from a genetically
non-identical donor of the same species), including any activities of research, development or commercialisation of a therapeutic
relating to any allogeneic T-cell therapy;
“RQR8 Licence” has the meaning set out in Clause 2.2.5;
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
“RQR8 Permitted Studies” means those studies identified and briefly described in Schedule 7 under the title RQR8 Permitted
Studies;
“RQR8 Product” means any product or therapy within the RQR8 Field which is covered by, uses or incorporates any of the RQR8
Program IP;
“RQR8 Program” means the program of research defined in Schedule 1 under the title RQR8 Program conducted prior to the
Effective Date;
“RQR8 Program IP” means, excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the title
RQR8 Patents at all Patent Rights derived therefrom (“RQR8 Patent Rights”); (ii) the Know-How described in Schedule 2 under the
title RQR8 Know-How; (iii) the materials listed in Schedule 2 under the title RQR8 Materials together with all IP in the same; and (iv)
all Know-How developed by MP and/or the MP Laboratory pursuant specifically to the RQR8 Program prior to the Effective Date
including the technology claimed or disclosed in the RQR8 Patent Rights as of the Effective Date, other than that which is CGK as of
the Effective Date or disclosed in the sections of the RQR8 Patent Rights that refer to, describe or disclose prior art including CGK
existing as of the Effective Date;
“Sales Milestone” has the meaning set out in Clause 13.4;
“Sales Milestone Payment” has the meaning set out in Clause 13.4;
“Second Amendment Date” has the meaning set out in the first paragraph of this Agreement;
“SPC” has the meaning set out in Clause 18.8;
“SSA” means the Subscription and Shareholders’ Agreement between Autolus, UCLB, Dr Martin Pule, John Berriman and Syncona
LLP dated as of the Effective Date;
“Sublicence” has the meaning set out in Clause 15.1;
“Sub-Licensee” means any person (including an Affiliate) to whom Autolus: (i) sub-licenses all or part of the Intellectual Property
licensed to it under this Agreement in respect of Royalty Products; or (ii) licences any or all of the Assigned Patents in respect of
Royalty Products;
“Sublicence Or Patent Sale Payment” has the meaning set out in Clause 15.1;
“Success Milestone” has the meaning set out in Clause 13.1.1;
“Success Milestone Payment” has the meaning set out in Clause 13.1.1;
“Surrender” or “Surrendered” means in respect of any Patent Rights, any of (i) ceasing to maintain (by payment of renewal fees or
otherwise) the applicable Patent Rights; (ii) withdrawing, surrendering, dedicating to the public or allowing the applicable Patent
Rights to lapse; (iii) in the case of a pending application de-designating, or not validating or ratifying in, a country covered by the
application or not entering into the national or regional phase in a country designated in the international or convention application or
(iv) consenting to or ceasing to defend an application, action or litigation for revocation;
“Technology” collectively means all Program IP, Manufacturing Know-How, UCL Background IP and the Materials;
“Term” has the meaning in Clause 24.1;
“Territory” means all countries throughout the World;
“Test and Regulatory Data” means any and all pre-clinical and clinical test data, test designs and protocols, results and data from
pre-clinical and clinical studies, information contained in or submitted in government licenses and applications therefor, government
certifications and findings, and related materials, data from pre-clinical and clinical experiments demonstrating or supporting
bioavailability, bioequivalence, data concerning any adverse drug reactions;
“TetCAR Field” means all uses and applications without restriction;
“TetCAR Licence” has the meaning set out in Clause 2.2.10;
“TetCAR Product” means any product or therapy within the TetCAR Field which, were it not for the licence to TetCAR Patent Rights
granted hereunder or the assignment to Autolus (or subsequent assignment or licence grant to an Assignee Entity) of the TetCAR
Patent Rights, would otherwise infringe the TetCAR Patent Rights in the relevant country of sale;
“TetCAR Program” means the program of research defined in Schedule 1 under the title TetCAR Program as conducted prior to the
Amendment Date;
“TetCAR Program IP” means excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the title
TetCAR Patents and all Patent Rights
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
derived therefrom (“TetCAR Patent Rights”); (ii) the Know-How described in Schedule 2 under the title TetCAR Know-How; and (iii)
the materials listed in Schedule 2 under the title TetCAR Materials together with all IP in the same;
“Third Party” means any person other than the Parties or their respective Affiliates or MP;
“Third Party Access Rights” has the meaning set out in Clause 14.9;
“Tobacco Party” means: (i) any entity which develops, sells or manufactures tobacco products; and/or (ii) any entity which makes
the majority of its profits from the importation, marketing, sale or disposal of tobacco products. Furthermore, Tobacco Party shall include any
entity that is controlled by or controls any entity referred to in (i) or (ii); controlled and controls having the meaning defined in the definition of
Affiliate;
“TP Fees” has the meaning set out in Clause 14.9;
“TRBC1” means the specific Antigen (or part thereof) coded for by reference to the sequence defined in Schedule 1 under the
TRBC1/2 Program;
“TRBC1/2 Licence” has the meaning set out in Clause 2.2.6;
“TRBC1/2 Product” means any product therapy which (i) targets TRBC1/2 and is covered by, uses, incorporates or has been
developed using any of the TRBC1/2 Program IP; or (ii) targets TRBC1 and/or TRBC2 and has been developed using any of the
UCL Background IP or Manufacturing Know-How; or (iii) were it not for the license to TRBC1/2 Program IP hereunder, would infringe
any Patent Right licensed under the TRBC1/2 Program IP or, were it not for the assignment of the TRBC1/2 Patent Rights to Autolus
(or subsequent assignment or licence grant to an Assignee Entity), would infringe any TRBC1/2 Patent Rights;
“TRBC1/2 Program” means the program of research defined in Schedule 1 under the title TRBC1/2 Program conducted prior to the
Effective Date;
“TRBC1/2 Program IP” means, excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the title
TRBC1/2-CAR Patents and all Patent Rights derived therefrom (“TRBC1/2 Patent Rights”); (ii) the Know-How described in
Schedule 2 under the title TRBC1/2 Know-How; and (iii) the materials listed in Schedule 2 under the titles “TRBC1/2 Materials” and
“TRBC1/2 Materials – [***]” together with all IP in the same; and (iv) all Know-How and materials (together with all IP in the same)
developed by MP and/or the MP Laboratory pursuant specifically to the TRBC1/2 Program prior to the Effective Date including the
technology claimed or disclosed in the TRBC1/2 Patent Rights as of the Effective Date, other than that which is CGK as of the
Effective Date or disclosed in the sections of the TRBC1/2 Patent Rights that refer to, describe or disclose prior art including CGK
existing as of the Effective Date;
“TRBC2” means the Antigen (or part thereof) coded for by reference to the sequence defined in Schedule 1 under the TRBC1/2
Program;
“TRBC2 Dx Licence” has the meaning set out in Clause 2.2.17;
“TRBC2 Dx Product” means any product or therapy: (i) which, were it not for Autolus’ ownership of the TRBC2 Dx Patent Rights (or
subsequent assignment or licence of the TRBC2 Dx Patent Rights to an Assignee Entity), would otherwise infringe any TRBC2 Dx
Patent Rights; and/or (ii) the manufacture of which product or therapy were it not for Autolus’ ownership of the TRBC2 Dx Patent
Rights (or subsequent assignment or licence of the TRBC2 Dx Patent Rights to an Assignee Entity), would infringe any TRBC2 Dx
Patent Rights; and/or (iii) where the manufacture of any materials used in connection with the manufacture of such product or
therapy, were it not for Autolus’ ownership of the TRBC2 Dx Patent Rights (or subsequent assignment or licence of the TRBC2 Dx
Patent Rights to an Assignee Entity), would infringe any TRBC2 Dx Patent Rights;
“TRBC2 Dx Program” means the program of research defined in Schedule 1 under the title TRBC2 Dx Program as conducted prior
to the Third Amendment Date;
“TRBC2 Dx Program IP” means excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the
title TRBC2 Dx Patents and all Patent Rights derived therefrom (“TRBC2 Dx Patent Rights”); and (ii) the materials listed in
Schedule 2 under the title TRBC2 Dx Materials together with all IP in the same;
“UCL” means University College London, an institution incorporated in the United Kingdom by Royal Charter and having its address
at Gower Street, London, WC1E 6BT;
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
“UCL Background IP” means excluding Program IP and Manufacturing Know-How, (i) all Know-How listed in Part A of Schedule 3;
(ii) excluding that listed in Part A of Schedule 3, all other Know-How (excluding binder domains) developed by MP and/or the MP
Laboratory pursuant to or in conjunction with any of the Original Programs (or any combination of, or across any of, the Original
Programs) prior to the Effective Date (or in the case of the New Suicide Gene Program, or the ZipCAR Program, respectively prior to
the Amendment Date, or in the case of the [***] Program prior to the date of exercise of the [***] Option) to the extent that it is not
CGK as of the Effective Date and UCLB Controls the same; (iii) excluding that listed in Part A of Schedule 3, all other Know-How
(excluding binder domains) developed by MP and/or the MP Laboratory pursuant to or in conjunction with any of the Additional
Programs (or any combination of, or across any of, the Additional Programs) prior to the Amendment Date to the extent that it is not
CGK as of the Amendment Date and UCLB Controls the same; (iv) excluding that listed in Part A of Schedule 3, all other Know-How
(excluding binder domains) developed by MP and/or the MP Laboratory pursuant to or in conjunction with any of the CAT19 Program
prior to the Second Amendment Date to the extent that it is not CGK as of the Second Amendment Date and UCLB Controls the
same; (v) excluding that listed in Part A of Schedule 3, all other Know-How (excluding binder domains) developed by MP and/or the
MP Laboratory pursuant to or in conjunction with the CAROUSEL STUDY prior to the Third Amendment Date to the extent that it is
not CGK as of the Third Amendment Date and UCLB Controls the same (vi) excluding that listed in Part A of Schedule 3, all other
Know-How (excluding binder domains) developed by MP and/or the MP Laboratory pursuant to or in conjunction with the TRBC2 Dx
Program on or after the Amendment Date but prior to the Third Amendment Date to the extent that it is not CGK as of the Third
Amendment Date and UCLB Controls the same;
“UCLB Indemnified Parties” has the meaning set out in Clause 23.1.2;
“Unresolved Matter” has the meaning set out in Clause 33.2;
“Valid Claim” means a claim within (i) an issued or granted and unexpired Patent Right, including any Licensed Patent; or (ii) a
pending application for a Patent Right including an application with respect to any Licensed Patents, which has not been pending for
more than eight (8) years from the date of the priority filing from which such pending application originates, and in each case of (i)
and (ii) above, which has not been held unenforceable, unpatentable or invalid by a decision of a court or government body of
competent jurisdiction, or where appealed within the time allowed for appeal has not been held unenforceable, unpatentable or
invalid by an appellate body of competent jurisdiction (including by the highest appellate court in the relevant jurisdiction where
appealed to that court), or, which has not been withdrawn, cancelled, revoked, disclaimed, or rendered unenforceable through
disclaimer or otherwise, or which has not been donated or dedicated to the public, Surrendered or which has not been deemed
invalid by an interference or opposition panel or court as part of any interference or opposition proceeding;
“Year” means a period of twelve (12) months commencing on 1 January;
“ZAP-CAR Licence” has the meaning set out in Clause 2.2.11;
“ZAP-CAR Product” means any product or therapy which, were it not for the licence to ZAP-CAR Patent Rights granted hereunder
or the assignment to Autolus (or subsequent assignment or licence grant to an Assignee Entity) of the ZAP-CAR Patent Rights,
would otherwise infringe the ZAP-CAR Patent Rights in the relevant country of sale;
“ZAP-CAR Program” means the program of research defined in Schedule 1 under the title ZAP-CAR Program as conducted prior to
the Amendment Date;
“ZAP-CAR Program IP” means excluding Manufacturing Know-How, (i) those patent applications listed in Schedule 2 under the title
ZAP-CAR Patents and all Patent Rights derived therefrom (“ZAP-CAR Patent Rights”); (ii) the Know-How described in Schedule 2 under
the title ZAP-CAR Know-How; and (iii) the materials listed in Schedule 2 under the title ZAP-CAR Materials together with all IP in the same;
“ZipCAR Licence” has the meaning set out in Clause 2.2.15;
“ZipCAR Product” means any product or therapy which is covered by, uses or incorporates any of the ZipCAR Program IP;
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
“ZipCAR Program” means the program of research defined in Schedule 1 under the title ZipCAR Program conducted prior to the
Effective Date together with the program of research conducted after the Effective Date and prior to the Amendment Date as
described in Schedule 1 under the title (B): ZipCAR Project Plan;
“ZipCAR Program IP” means, excluding Manufacturing Know-How (i) the Know-How described in Schedule 2 under the title
ZipCAR Know-How; (ii) the materials listed in Schedule 2 under the ZipCAR Materials together with all IP in the same; (iii) all Know-
How and materials (including all IP in the same) developed by MP and/or the MP Laboratory pursuant specifically to the ZipCAR
Program prior to the Effective Date other than that which is CGK as of the Amendment Date; (iv) any Patent Rights filed by or on
behalf of UCLB from time to time in respect of any work undertaken by MP and/or the MP Laboratory for the ZipCAR Program prior
to the Amendment Date and all Patent Rights therefrom, including those as set out in Schedule 1 (“ZipCAR Patent Rights”); and (v)
all Know-How and materials (including IP in the same) developed after the Effective Date but prior to the Amendment Date by MP
and/or the MP Laboratory pursuant specifically to the agreed project plan for the ZipCAR Program as set out in Schedule 1, including
the technology claimed or disclosed in the ZipCAR Patent Rights (if any) as of the Amendment Date, other than that which is CGK as
of the Amendment Date, or disclosed in the sections of the ZipCAR Patent Rights that refer to, describe or disclose prior art including
CGK existing as of the Amendment Date, provided that to the extent that any materials in (ii), (iii) or (v) incorporate the binder CD33,
such binder together with IP in the same is excluded; references to CGK in this definition shall exclude CGK that became CGK
through disclosure after the Effective Date by publication of the ZipCAR Patent Rights or by MP making a publication in accordance
with this Agreement or by Autolus’s publication;
In this Agreement, unless the context requires otherwise:
use of the singular includes the plural and vice versa and use of any gender includes the other genders;
any reference to “this Agreement” is a reference to this Agreement as from time to time amended, varied or extended in any way;
and,
“undertaking” shall have the meaning given by section 1161 Companies Act 2006 save that for the purposes of this Agreement and
for the avoidance of doubt, an undertaking shall include a limited liability partnership.
In this Agreement unless otherwise specified:
any reference to a recital, clause, paragraph or schedule is to the relevant recital, clause, paragraph or schedule of or to this
Agreement, and any reference in a schedule to a part or a paragraph (as opposed to a clause) is to a part or a paragraph of that
schedule;
any reference to a “person” includes an individual, firm, partnership, body corporate, corporation, association, organisation,
government, state, foundation and trust, in each case whether or not having separate legal personality;
“parent undertaking” and “subsidiary undertaking” shall have the respective meanings given by section 1162 Companies Act 2006
save that for the purposes of this Agreement, an undertaking shall be treated as a member of another undertaking if any of the
shares in that other undertaking are registered in the name of another person (or its nominee) as security (or in connection with the
taking of security) from the first undertaking or any of that first undertaking's subsidiary undertakings;
any reference to a statute, statutory provision or subordinate legislation (“legislation”) shall be construed as referring to that legislation
as amended and in force from time to time and to any legislation which re-enacts, re-writes or consolidates (with or without
modification) any such legislation;
any reference to an English legal term or concept or any court, official, governmental or administrative authority or agency in England
includes, in respect of any jurisdiction other than England, a reference to whatever most closely approximates in that jurisdiction to
the relevant English legal term;
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
any reference to an agreement includes any form of arrangement, whether or not in writing and whether or not legally binding;
“writing” shall include any modes of reproducing words in a legible and non-transitory form excluding (unless expressly stated to
include) email, SMS and other temporary
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
n.
o.
p.
q.
r.
2.
a.
i..
ii..
transient electronic messaging systems and “written” shall be construed accordingly; and,
a period of time being specified which dates from a given day or the day of an act or event, it shall be calculated exclusive of that day.
In this Agreement, the words “other”, “including”, “includes”, “include”, “in particular” and any similar words, shall not limit the general
effect of words that precede or follow them and accordingly, the ejusdem generis rule shall not apply.
Any undertaking by or obligation on a Party not to do any act or thing includes an undertaking not to allow, cause or assist the doing of
that act or thing and to exercise all rights of control over the affairs of any other person which that Party is able to exercise (directly or
indirectly) in order to secure performance of that undertaking, which in the case of UCLB shall include UCL as a person over whom
UCLB can exercise control.
The index to and the headings in this Agreement are for information only and are to be ignored in construing the same.
Where this Agreement refers to a Person being “free” to do something, this shall be construed as that Person not being prevented,
whether by law, equity or contract, from doing that thing.
LICENCE GRANT
UCL Background Licence
Subject to Clause 4, UCLB hereby grants to Autolus for the full duration of the Term and throughout the Territory a licence to the UCL
Background IP and Background Materials (including the right to sub-license through multiple tiers) within the Field to use the same:
for any and all acts of Exploitation with respect to any and all of the Royalty Products, which licence shall be exclusive to Autolus
(to the exclusion of UCLB, UCL and any Third Party); and
without prejudice to Clause 2.1.1, for any other purpose or act of Exploitation without restriction (including in respect of Royalty
Products if the licence under Clause 2.1.1 terminates), which licence shall be non-exclusive, royalty-free, irrevocable and
perpetual;
(collectively the “Background Licence”). It is acknowledged that the Background Licence granted under Clause 2.1.1 shall include
Exploitation of the [***] Product upon election of the [***] Option, and shall include Exploitation of the NSG Product and shall include
Exploitation of the ZipCAR Product and that UCLB shall not (and shall procure that UCL shall not) grant any rights under UCL
Background IP and Background Materials with respect to any and all acts of Exploitation with respect to the [***] Product until such
time (if any) as Autolus’s right to exercise the [***] Option has expired. The Background Licence shall be assignable as part of any
assignment of this Agreement in accordance with Clause 29. Autolus shall not be entitled to assign the Background Licence
independently of the other Licences.
b.
Program Licences
Subject to Clause 4, UCLB hereby grants to Autolus for the full duration of the Term and throughout the Territory an exclusive (save
as provided in Clause 2.2.3 and Clause 2.2.6) licence (to the exclusion of UCLB, UCL and any Third Party) which shall be sub-
licensable through multiple tiers:
with effect from the Effective Date to the BCMA Program IP within the BCMA Field to use the same for any act of Exploitation
concerning any product, therapy, service or process without restriction;
with effect from the Effective Date to the [***] Existing Patent within the BCMA Field to use the same for any act of Exploitation
concerning any product, therapy, service or process without restriction (collectively the licences under Clauses 2.2.1 and
2.2.2 being the “BCMA Licence”);
with effect from the Effective Date to the GD2 Program IP within the Field to use the same for any act of Exploitation concerning
any product, therapy, service or process without restriction, save that where the provisions of Clause 9.7 apply and GD2
Clinical Study Results are deemed to be part of the GD2 Program IP, Autolus’s licence pursuant to this Clause 2.2.3 in
respect of the GD2 Clinical Study Results only shall be exclusive to those aspects of the GD2 Clinical Study Results that
relate directly to and only to the GD2 Product and non-exclusive to
i..
ii..
iii..
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all other aspects of the GD2 Clinical Study Results for use in connection with CARs (“GD2 Licence”);
with effect from the Effective Date to the Logic Gate Program IP within the Field to use the same for any act of Exploitation
concerning any product, therapy, service or process without restriction (“Logic Gate Licence”);
with effect from the Effective Date to the RQR8 Program IP within the RQR8 Field to use the same for any act of Exploitation
concerning any product, therapy, service or process without restriction (the “RQR8 Licence”);
with effect from the Effective Date to the TRBC1/2 Program IP within the Field to use the same for any act of Exploitation
concerning any product, therapy, service or process without restriction save that this licence pursuant to Clause 2.2.6 in
relation to the [***] only shall be limited to the [***] (i) for the purpose of Exploiting a TRBC1/2 Product in humans (including
for the avoidance of doubt, use of [***] for pre-clinical studies in animals or otherwise for such Exploitation of a TRBC1/2
Product) and (ii) for Exploiting companion diagnostics for use with a TRBC1/2 Product; (“TRBC1/2 Licence”);
with effect from the Amendment Date to the ccCAR Program IP within the Field to use the same for any act of Exploitation
concerning any product, therapy, service or process without restriction (“ccCAR Licence”);
with effect from the Amendment Date to the iCAR Program IP within the Field to use the same for any act of Exploitation
concerning any product, therapy, service or process without restriction (“iCAR Licence”);
with effect from the Amendment Date to the RapaiCASP9 Program IP within the Field to use the same for any act of Exploitation
concerning any product, therapy, service or process without restriction (“RapaiCASP9 Licence”);
with effect from the Amendment Date to the TetCAR Program IP within the TetCAR Field to use the same for any act of
Exploitation concerning any product, therapy, service or process without restriction (“TetCAR Licence”);
with effect from the Amendment Date to the ZAP-CAR Program IP within the Field to use the same for any act of Exploitation
concerning any product, therapy, service or process without restriction (“ZAP-CAR Licence”);
with effect from the Amendment Date to the Epitope Tag Program IP within the Epitope Tag Field to use the same for any act of
Exploitation concerning any product, therapy, service or process without restriction (the “Epitope Tag Licence”);
with effect from the Amendment Date to the Retrostim Program IP within the Retrostim Field to use the same for any act of
Exploitation concerning any product, therapy, service or process without restriction (the “Retrostim Licence”);
with effect from the Amendment Date to the NSG Program IP within the Field to use the same for any act of Exploitation
concerning any product, therapy, service or process without restriction (“NSG Licence”);
with effect from the Amendment Date to the ZipCAR Program IP within the Field to use the same for any act of Exploitation
concerning any product, therapy, service or process without restriction (“ZipCAR Licence”);
with effect from the Second Amendment Date to the CAT19 Program IP within the CD19 Field to use the same for any act of
Exploitation concerning any product, therapy, service or process without restriction (“CAT19 Licence”);
with effect from the Third Amendment Date to the TRBC2 Dx Program IP within the Field to use the same for any act of
Exploitation concerning any product, therapy, service or process without restriction (“TRBC2 Dx Licence”); and
with effect from the Third Amendment Date to the CAROUSEL Program IP within the CD19 Field to use the same for any act of
Exploitation concerning any product, therapy, service or process without restriction (“CAT19 CNS Licence”),
it being acknowledged that each of the foregoing Licences granted under this Clause 2.2(i) may only be revoked or terminated
pursuant to a right of termination under Clause 11.1.5, 11.2.3, 11.3.2 or Clause 24 (as applicable) in respect of the applicable
Licence(s); and (ii) may all be assigned together (but not individually) as part of any assignment of this Agreement in accordance with
Clause 29.
iv..
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
c.
Manufacturing Know-How
i..
ii..
Subject to Clause 4, UCLB hereby grants to Autolus for the full duration of the Term and throughout the Territory a non-exclusive
licence under the Manufacturing Know-How (including the right to sub-license through multiple tiers) within the Field to use the same:
for any act of Exploitation of the Royalty Products in the Territory; and
without prejudice to Clause 2.3.1 for any other act of Exploitation or purpose without restriction (including in respect of a Royalty
Product if the licence under Clause 2.1.1 terminates), in which case such licence shall be royalty-free, irrevocable and
perpetual;
the (“Manufacturing Licence”). The Manufacturing Licence may be assigned together (but not alone) as part of any assignment of
this Agreement in accordance with Clause 29.
d.
Option to a Licence under the [***] Program IP
i..
ii..
iii..
iv..
v..
e.
At any time up until [***] following Autolus’s receipt of the Final Written Report concerning the [***] Program in accordance with the
[***] project plan set out in Schedule 1 (“[***] Exercise Period”), Autolus shall have the right upon written notice to UCLB, to
exercise its option for the grant of a licence on the terms of this Agreement to the [***] Program IP (“[***] Licence Notice”). Prior to
service of a [***] Licence Notice:
UCLB shall keep Autolus informed, on a reasonably frequent basis (or otherwise upon request by Autolus), of (i) the status and
performance of the [***] Program against the [***] project plan set out in Schedule 1; (ii) developments and advancements in
the [***] Program since the last report; (iii) identification and disclosure of any [***] Program IP not previously disclosed to
Autolus; (iv) disclosure at least 30 days in advance of filing of any draft patent filing for any [***] Patent Rights intended to be
filed; and (v) details of all [***] Patent Rights that have been filed and their current prosecution status;
Autolus shall have the right (prior to filing and thereafter) to participate with UCLB and input into any draft patent filing for any [***]
Patent Rights that are filed or are intended to be filed and UCLB shall consider, take into account and implement any
reasonable recommendations made by Autolus with respect to such filings or proposed filings;
UCLB shall use reasonable endeavours to seek appropriate IP protection for any results and inventions arising from the [***]
Program;
UCL and UCLB shall ensure that all Intellectual Property generated by MP or the MP Laboratory in connection with the [***]
Program shall be owned by UCLB and shall be held subject to the terms of this Agreement; and,
UCLB shall not, and shall procure that UCL shall not, assign, grant (whether conditional, optional or otherwise) any rights to,
encumber, charge, mortgage, license, sell, Exploit, or waive any rights over any of the [***] Program IP, nor enable another to
do so.
Automatically upon service of a [***] Licence Notice by Autolus, UCLB shall have granted to Autolus for the remaining duration of the
Term (from the date of such notice) and throughout the Territory, an exclusive (to the exclusion of UCLB, UCL and any Third Party)
licence to the [***] Program IP within the Field which shall be sub-licensable through multiple tiers to use the same for any act of
Exploitation concerning any product, therapy, service or process without restriction (“[***] Licence”). Upon the grant of the [***]
Licence, the licences to UCL Background IP, Background Materials and Manufacturing Know-How shall automatically be extended
such that references to “Royalty Products” in Clauses 2.1.1 and 2.3.1 shall automatically include [***] Products and the relevant
schedules in respect of Patent Rights shall be updated. The [***] Licence (i) may only be revoked or terminated pursuant to a right of
termination under Clause 11.1.5(ii) in respect of the [***] Licence or Clause 24; and (ii) may be assigned but only as part of the
assignment of this Agreement in accordance with Clause 29.
f.
If Autolus does not serve a [***] Licence Notice on UCLB prior to expiry of the [***] Exercise Period, thereafter without otherwise
affecting any other Licences, including in each case the exclusivity granted in respect of the same, Autolus shall cease to have any
right or interest in or to the [***] Program IP and UCLB shall be free to develop and exploit the [***] Program IP as it thinks fit, without
any reference to Autolus.
g.
Option to a Licence under the NSG Program IP
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
UCLB acknowledges that Autolus has exercised its option for the grant of a licence on the terms of this Agreement to the NSG
Program IP with effect from the Amendment Date.
h.
Option to a Licence under the ZipCAR Program IP
UCLB acknowledges that Autolus has exercised its option for the grant of a licence on the terms of this Agreement to the ZipCAR
Program IP with effect from the Amendment Date.
i.
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3.
a.
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Schedule Updates
The Parties have agreed a list of Know-How and materials generated during the period commencing after the Effective Date and
ending as of the Amendment Date which are included in the NSG Licence and ZipCAR Licence, but which are not
necessarily exhaustive of all Know-How and materials licensed under the NSG Licence and ZipCAR Licence. The Parties
further agree that such list, to the extent incomplete, may be updated from time to time pursuant to the provisions of Clause
9.1 to include Know-How and materials under the NSG Program and ZipCAR Program.
Upon exercise of the [***] Option the Parties shall, purely for convenience and future reference purposes, co-operate to agree a
list of Know-How and materials generated after the Effective Date that are included in the [***] Licence. The grant of the [***]
Licence is not dependent on agreeing such list, and such list shall not fetter, vary or otherwise limit the terms of this
Agreement or the scope or inclusion of Know-How or materials under the [***] Licence unless the Parties expressly agree in
writing that it shall do.
SUB-LICENSING
Autolus shall be entitled to sub-license any of the Technology licensed to it hereunder or licence any of the Assigned Patents through
multiple tiers and without restriction save that (i) no sub-licence or licence may be granted to a Tobacco Party and (ii) UCLB shall
have a right to object to the grant of a sub-license or licence by Autolus to other Third Parties solely in the following specific
circumstances:
UCLB may only object in respect of a proposed sub-licensee or licensee if, due to the nature of that proposed sub-licensee’s or
licensee’s business, the grant of the sub-license or licence to that entity will, in the reasonable and measured opinion of
UCLB, have a material detrimental impact on the reputation of UCL by its association; and
if the circumstances in Clause 3.1.1 apply, UCLB shall only have the right to object provided that it serves written notice of its
objection setting out the grounds for its objection within [***] of written notice from Autolus of the identity of the proposed sub-
licensee.
b.
If UCLB has objected to the grant of a sub-license or licence in accordance with Clause 3.1, Autolus may either accept that objection
and not grant (or terminate) the sub-license or licence or if it disputes the objection the following shall apply:
UCLB shall procure that representatives from UCLB and UCL shall meet with Autolus within [***] of the objection to enable the
Parties and UCL to discuss the proposed sub-license or licence and the reasons for the perceived risk that an association
will have a material detrimental impact on UCL’s reputation and, in good faith, seek ways in which to overcome or mitigate
such risk to a pragmatic and reasonably acceptable position;
if UCLB agrees that the risk is acceptable or UCLB and Autolus agree on any conditions to include in a sub-license or licence to
avert or mitigate the risk then Autolus shall be entitled to grant (or maintain) the sub-license or licence subject to any
agreement reached between UCLB and Autolus;
if within [***] of the objection, (i) UCLB and Autolus are unable to reach an agreement and Autolus still wishes to grant (or
maintain) a sub-license or licence or (ii) representatives of UCLB and UCL do not or are unable to meet with Autolus; then
Autolus shall be entitled to refer the objection to a person nominated by the chairman of the Wellcome Trust to the
determination identified below (the “Appointed Expert”). The nomination shall be subject to the Appointed Expert agreeing
to be so appointed and the terms of that appointment set by the Wellcome Trust. The costs of the Appointed Expert shall be
borne by the Parties equally. The Appointed Expert shall be entitled to consider any information presented to the Appointed
Expert by UCLB or Autolus (provided that
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
each Party shall copy to the other Party all information provided to the Appointed Expert at the same time) and any other
information that the Appointed Expert may consider relevant. The Appointed Expert shall make his or her decision as expert
and not as arbiter, and the decision of the Appointed Expert shall be final and binding save in the case of manifest error. If, in
the Appointed Expert’s opinion the Appointed Expert considers the grant of a sub-licence or licence to the Third Party
objected to by UCLB will, by virtue of the nature of the business of that Third Party entity, be materially detrimental to the
reputation of UCL, then Autolus shall not grant (or shall terminate) such sub-licence or licence. In all other circumstances,
irrespective of any objection by UCLB or UCL, Autolus shall be entitled to grant (or maintain) the sub-licence or licence
without restriction or condition. UCLB and Autolus hereby irrevocably agree, accept and acknowledge that neither the
Wellcome Trust, the Chairman of the Wellcome Trust nor the Appointed Expert shall have any liability to UCLB or Autolus (or
any Third Party or any other person) by virtue of the provisions of this Clause or exercise of decisions pursuant this Clause,
and UCLB and Autolus hereby undertake not to make or bring any claim against any of the Wellcome Trust, the Chairman of
the Wellcome Trust or the Appointed Expert with respect to performance in connection with the foregoing or this Agreement.
c.
i..
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In so far as Autolus grants a sub-licence of rights under the Technology to a sub-licensee or a licence of the Assigned Patents to a
licensee (other than in respect of a material transfer agreement, contract research agreement or manufacturing agreement, provided
they do not include rights to sell products or services incorporating the Technology) (“Commercial Licence”), Autolus shall in such
circumstances enter into a written agreement with each sub-licensee or licensee (provided that this obligation to enter into a written
agreement shall not apply where, and for so long as, the sub-licensee or licensee is an Affiliate of Autolus). Additionally,
Autolus shall ensure that the provisions of the sub-licence or licence agreement do not grant rights in the Technology beyond
those granted hereunder and impose obligations and restrictions on the sub-licensee or licensee consistent with the
obligations and restrictions imposed on Autolus hereunder under (i) Clauses 3, 16 and 20 and (ii) Clauses 23.1.1 and 23.2 to
23.5 should any CRUK Rights be sub-licensed;
Autolus shall ensure that the sub-licence or licence agreement imposes obligations of confidentiality on the sub-licensee or
licensee which are no less onerous than those set out in Clause 20;
the sub-licence or licence agreement shall, if required by Autolus, be novated to UCLB (which novation UCLB will accept
provided that, in the case of the Assigned Patents, such Assigned Patents have been assigned to UCLB) on termination of
this Agreement, provided that (i) the sub-licensee or licensee is willing to accept the novation of any sub-licence or licence
agreement upon such termination and make payment of sums otherwise payable under this Agreement for the sub-
licensee’s (and its sub-sublicensees') Exploitation of the Technology or licensee’s (and its sub-licensees’) Exploitation of the
Assigned Patents directly to UCLB; (ii) at the time of novation the sub-licensee or licensee is not in breach of its obligations
to Autolus under the sub-licence agreement; (iii) the sub-licence or licence agreement does not impose on UCLB any
obligations or commitments beyond those included in this Agreement; and (iv) the sub-licence or licence agreement includes
terms (at a minimum) consistent with those in Clauses 3, 11, 13, 14, 15, 16, 20 and 23, 24.4, 24.5, 24.6, 24.7 and 24.8 of this
Agreement failing which the sub-licence or licence agreement shall automatically terminate.
d.
e.
Autolus shall be liable to UCLB for all acts and omissions of its sub-licensees and licensees (other than those whose sub-license or
licence has novated to UCLB) that, if committed by Autolus, would constitute a breach of any of the provisions of this Agreement.
Autolus shall provide UCLB with written notice of any Commercial Licence and, to the extent it is able to do so, provide UCLB with a
copy of any Commercial Licence (with confidential and financial information redacted) promptly following its execution.
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
f.
4.
a.
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b.
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Notwithstanding the above, where the sub-licence relates only to UCL Background IP or Manufacturing Know-How the provisions of
Clauses 3.3.1, 3.3.3, and 3.5 shall not apply and such sub-licences shall not terminate on termination of this Agreement.
RETAINED RIGHTS, ACADEMIC RESEARCH & RESTRICTIONS, COLLABORATIVE PROGRAMS
The licences to Program IP and the Background Licence, to the extent each of them are exclusive (including the [***] Program IP), are
subject to: (a) UCLB reserving for and having the right to grant the limited non-assignable, worldwide, perpetual and irrevocable right,
and (b) Autolus hereby granting to UCLB a limited, non-exclusive, non-assignable, worldwide, royalty free, registrable, perpetual and
irrevocable licence under the Assigned Patents with the right to grant sub-licences, in each case:
to UCL to enable UCL to use the (i) licensed Program IP; and/or (ii) each of the UCL Background IP and Background Materials
forming part of the exclusive licence pursuant to Clause 2.1.1; and/or (iii) Assigned Patents, solely to teach and undertake
Academic Research at UCL and/or (subject to Clause 4.7) in collaboration with other Academic Organisations; and
to CRUK to enable CRUK, and those scientists employed at Academic Organisations funded by CRUK and/or those scientists
employed by CRUK and other Funders who have provided funding for the CRUK Study to use the GD2 Clinical Study
Results to undertake academic research that is not Commercial Research alone or in collaboration with other Academic
Organisations;
but for no other purposes (collectively the “Academic Rights”). For the avoidance of doubt, UCLB and/or UCL (including MP and
MP Laboratory) are not precluded under this Clause 4, from using and/or disclosing for any purpose without any restriction, the UCL
Background IP and the Background Materials that are subject to the non-exclusive licence granted to Autolus pursuant to Clause
2.1.2 where such use and/or disclosure does not relate to the use of any of the Program IP. Also, for the avoidance of doubt, this
Clause 4 shall not apply to the exercise of rights by UCLB, UCL or any Third Party under the RQR8 Program IP outside the RQR8
Program Field, the TetCAR Program IP outside the TetCAR Field or the CAT19 Program IP outside the CD19 Field.
The Academic Rights shall be subject to the following:
UCLB and UCL shall be entitled to apply for, obtain and use Third Party funding from a Funder for any of the Academic Research,
provided that:
(1) during the Improvement Period only and where the Academic Research relates to or is likely to give rise to
Improvements, UCLB and UCL shall be entitled to accept such Third Party funding if there are no restrictions or
conditions on UCLB and UCL by the Third Party Funder with respect to Exploitation of the funded Improvements other
than the requirement that UCLB and/or UCL seek the consent of the Funder prior to UCLB’s grant of any commercial
licence to exploit any such Improvement;
(2) during the Improvement Period only and where the Academic Research relates to or is likely to give rise to
Improvements, UCLB and UCL shall not without the prior written consent of Autolus accept any such funding if such
Third Party Funder imposes restrictions or conditions on the Exploitation of Improvements funded in whole or in part by
that Third Party in addition to the requirement in (i) above;
(3) during the Improvement Period only and where the Academic Research relates to or is likely to give rise to CARs
developed by MP and/or the MP Laboratory (but such research does not relate to Improvements), UCLB shall use its
reasonable endeavours to obtain, or not accept a restriction over, commercialisation rights from such Third Party
Funder, in which case, the provisions of Clause 4.2.1(i) and (ii) above shall apply (and the Parties acknowledge that
where UCLB is unable to secure commercialisation rights from any Third Party Funder such Intellectual Property shall
not fall within the definition of New Inventions);
(4) during the [***] Period only and where the Academic Research relates to the [***] Program IP, UCLB and UCL shall be
entitled to accept such Third Party funding if there are no restrictions or conditions on UCLB and UCL by the Funder
with respect to Exploitation of the [***] Program IP, other than the
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
requirement by the Third Party Funder that UCLB and/or UCL shall seek the consent of that Funder prior to UCLB’s
grant of any commercial licence to exploit any such [***] Program IP; and
(5) during the [***] Period only and where the Academic Research relates to the [***] Program IP, UCLB and UCL shall not
without the prior written consent of Autolus accept any such funding if such Third Party Funder imposes restrictions or
conditions on the commercial exploitation of [***] Program IP funded in whole or in part by that Third Party in addition to
the requirement in Clause 4.2.1(iv) above;
UCLB shall and shall procure that UCL shall maintain the confidentiality of the Program IP (with the exception of information
disclosed in the Licensed Patents once published) and shall impose the same restrictions on its Academic Collaborators (and
enforce the same), save that UCL and its Academic Collaborators shall be entitled to publish the results of their Academic
Research under these Academic Rights subject to and in accordance with the provisions of Clause 4.5;
with the exception of the CRUK Study and the Permitted Studies, or as otherwise permitted under Clause 4.2.5, no studies
intended to be (or required by applicable laws, ethical requirements or standards or otherwise to be) conducted in
accordance with the standards of GLP (good laboratory practice), GMP (good manufacturing practice) and/or GCP (good
clinical practice) may be conducted under the Academic Rights without the prior written consent of Autolus, and UCLB shall
procure that an equivalent restriction is imposed on and complied with by all Academic Collaborators and shall ensure that
the Program Materials and Background Materials (that are subject to the exclusive licence granted pursuant to Clause 2.1.1)
are not provided to any Third Party for the purposes of any such study that has not been authorised by Autolus;
with the exception of the CRUK Study and the Permitted Studies, no clinical studies or treatment of patients may be conducted
under the Academic Rights except for academic clinical studies conducted with the involvement of MP and/or MP’s
Laboratory, which studies shall only be conducted with the prior written consent of Autolus (such consent not to be
unreasonably withheld or delayed), and UCLB shall procure that an equivalent restriction is imposed on and complied with by
all Academic Collaborators and shall ensure that the Program Materials and Background Materials (that are subject to the
exclusive licence granted pursuant to Clause 2.1.1) are not provided to any Third Party for the purposes of any such study
that has not been authorised by Autolus;
CRUK shall be permitted to use the GD2 Clinical Study Results for the purposes of clinical research with the prior written consent
of Autolus, such consent not to be unreasonably withheld or delayed;
UCLB shall procure the lawful disclosure to Autolus (free of any restriction) of the Regulatory Submissions for each of the
CARPALL Study,the ALLCAR19 Study and the CAROUSEL Study and, subject to the requirements of any Regulatory
Authority, shall notify Autolus if there are any changes to the Regulatory Submissions for either study. Autolus shall be
entitled to comment on the content of any draft Regulatory Submission and/or any proposed changes to any Regulatory
Submission for the CARPALL Study, the ALLCAR19 Study, or the CAROUSEL Study in advance of their submission to any
Regulatory Authority. UCLB shall procure that UCL shall consider any such Autolus comments but Autolus acknowledges
that UCL shall be under no obligation to take any such comments into account and the contents of any Regulatory
Submissions (and any amendments) shall be determined by UCL as sponsor of the CARPALL Study, the ALLCAR19 Study
and the CAROUSEL Study in its absolute discretion;
subject to the requirements of any Regulatory Authority, UCLB shall procure that UCL shall promptly provide to Autolus
information regarding any Suspected Unexpected Serious Adverse Reactions or other adverse events resulting from either
the CARPALL Study, the ALLCAR19 Study or the CAROUSEL Study and which are reported to any Regulatory Authority;
and
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viii..
Clause 4.2.6 and 4.2.7 may be subject to additional terms agreed in any collaboration agreement entered into in accordance with
Clause 4.12;
save that where Program IP is in or comes into the public domain (other than as a result of a breach of any obligation of
confidentiality owed by UCLB, UCL or an Academic Collaborator), the provisions of this Clause 4 shall not apply in respect of
Academic Research relating to such Program IP, except where the Academic Research is conducted by MP and/or the MP
Laboratory in which case these provisions shall continue to apply.
The Parties acknowledge that UCLB, UCL and/or MP have entered or have agreed to enter into agreements governing the Permitted
Studies and that UCLB, UCL and/or MP are free to continue in those studies to the extent of the scope of such studies as outlined in
Schedule 7 and the provisions of this Clause 4 shall not (with the exception of the CRUK Study and subject to Clause 4.11, the
ALLCAR19 Study, the CARPALL Study and the CAROUSEL Study) apply to those Permitted Studies in that regard.
UCLB shall procure the lawful disclosure to Autolus (free of any restriction) of the protocol (once finalised) for the CRUK Study and,
subject to the requirements of any Regulatory Authority, shall notify Autolus if there are any changes to the protocol after it has been
finalised. The Parties acknowledge that RQR8 Permitted Studies listed with the identifiers DCAR19 and UCART19 in Schedule 7 are
being conducted with a commercial Third Party and, as such, Autolus shall have no access to the protocol or results from those
RQR8 Permitted Studies.
If UCL or any Academic Collaborator (which for the purposes of this Clause 4.5 shall include any of their respective academics,
employees or students), wish to publish (including by way of publication of any thesis) (i) any of the Program IP; or (ii) with respect to
each Improvement or New Invention for the duration of the period prior to and during the applicable Improvement Negotiation Period,
any results of Academic Research that amount to Improvements or New Inventions; or (iii) for the duration of the [***] Period, any
results of Academic Research that relate to [***] Program IP (each of (i), (ii) and (iii) being “Academic Information”) then UCLB
shall procure that:
UCL and the Academic Collaborator shall refrain from making any publication (or submitting for approval any publication) of any
of the information in the Academic Information (or the Academic Information in its entirety) pending conclusion of all steps
required under this Clause 4.5;
UCL or the Academic Collaborator(s) must first, via UCLB, give to Autolus, in advance, a copy of the proposed publication
containing the Academic Information and which is intended to be disclosed or published, or submitted for publication at least
[***] before its presentation or intended submission for publication (“Academic Reports”);
upon receipt of the Academic Reports, Autolus shall within [***] of receipt either approve or (where Autolus has legitimate
commercial concerns including wanting to seek patent protection of the relevant Academic Information) refuse the request for
publication, and failing receipt of Autolus’s notice within the [***] time period, the request for publication shall be deemed to
be approved in the form in which the Academic Reports were provided to Autolus pursuant to Clause 4.5.2;
where the request for publication is refused, the refusal shall be communicated to UCLB in writing, following which UCLB shall
procure that UCL and the Academic Collaborator(s) shall refrain from making any publication of the Academic Reports (and
the Academic Information contained in such Academic Reports) for a period no less than [***] (or no less than [***] if agreed
by UCLB) from the date of notification from Autolus refusing the request for publication;
if consent is given to the request for publication, or where refused the period of [***] (or such longer period as agreed) pursuant to
Clause 4.5.4 has expired, UCL and/or the Academic Collaborator(s) may proceed to publish the Academic Reports in the
form in which they were provided to Autolus pursuant to Clause 4.5.2;
notwithstanding the above, this Clause 4.5 shall not prevent or hinder any student from submitting for degrees of UCL or any
Academic Collaborator any thesis containing Academic Information or from following the procedures of UCL or any
Academic Collaborator for examination and for admission to postgraduate degree
c.
d.
e.
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f.
g.
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h.
i.
status provided that such procedures require the thesis to be placed on restricted access within the library of UCL for at least
[***] from the date of placement of the thesis at the library of UCL.
Where Autolus has exercised its right to refuse the request for publication of any Academic Reports, then Autolus and UCLB shall
promptly and collaboratively work together in order to assess, and where appropriate, file and seek appropriate patent protection for
the Academic Information. Where UCLB files for patent protection, the costs for seeking such protection shall be borne by UCLB.
UCL shall have the limited right to sub-license the Academic Rights through one tier only, to Academic Collaborators for named staff to
work on with respect to a collaborative Academic Research project in conjunction with UCL (a “Collaborative Research Project”).
Such sub-licence shall:
only be granted provided that all results and Intellectual Property arising from a Collaborative Research Project shall be subject to
Autolus’s right to exercise its rights over Improvements in accordance with the provisions of Clause 5 (and the Parties
acknowledge that this obligation shall not apply in respect of results or Intellectual Property which are not Improvements);
be in writing and the Intellectual Property licensed, and Materials provided, shall be limited for use solely by the named individuals
at the Academic Collaborator and for that Collaborative Research Project only;
be subject to all the conditions and restrictions set out in this Clause 4, which UCL and UCLB shall ensure are binding on such
Academic Collaborator, with UCLB procuring compliance;
automatically terminate on conclusion of the Collaborative Research Project, and require the return of any Materials provided by
UCL (or its academics or laboratories) under or pursuant to the Collaborative Research Project;
not permit, and positively restrict, the Academic Collaborator from undertaking any of the studies referred to in Clauses 4.2.3 and
4.2.4 without Autolus’s prior written consent; and,
be promptly notified to Autolus, within [***] of grant of such sub-licence and, to the extent it is able to do so, provide Autolus with a
copy of the agreement with respect to the Collaborative Research Project (with confidential and financial information
redacted) promptly following its execution.
UCLB shall procure the compliance of any Academic Collaborator(s) with the provisions of this Clause 4 by including these terms in an
agreement with the Academic Collaborator(s). UCLB shall be responsible to Autolus for any act or omission of a sub-licensee who is
granted a sub-license by UCL under Clause 4.7 where such act or omission if committed by UCL or UCLB would be a breach of this
Agreement.
UCLB warrants and represents to Autolus that the agreements disclosed to Autolus and identified in Part A of Schedule 6 comprise all
licences, consents, waivers and/or permissions (whether express or implied) granted by UCL and/or UCLB in respect of any of the
Program IP or UCL Background IP (that is subject to the exclusive licence pursuant to Clause 2.1.1) to any Third Party (“Existing
Licences”), save that Existing Licences shall not include arrangements relating to the use of the RQR8 Program IP outside of the
RQR8 Field or arrangements relating to the use of the UCL Background IP for purposes which are unrelated to any of the Program
IP or Royalty Products. Notwithstanding the foregoing, UCLB shall not be deemed in breach of the requirements or restrictions under
this Clause 4 with respect to those Existing Licences provided that such Existing Licences shall not be amended after the Effective
Date without the prior written consent of Autolus (not to be unreasonably withheld or delayed) nor shall their duration be extended or
consent granted under them to allow materials to be provided to a Third Party. The Parties confirm that UCL has agreed to provide to
[***] CAT19 Materials for use in the research collaboration between [***] and UCL referred to in Part A of Schedule 6 and that the
Existing Licence relating to such research collaboration shall apply.
j.
Save for the limited right granted to UCL under Clause 4.1 to undertake Academic Research, UCLB shall retain no other rights that
deviate from or otherwise encumber, limit or affect the licences (including their scope, termination and duration) granted to Autolus
hereunder.
k.
CARPALL, ALLCAR19 and CAROUSEL Studies
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
The Parties acknowledge that:
in respect of the ALLCAR19 Study, UCL has various reporting commitments to [***] and [***] is entitled to use, publish and
disclose CD19 Clinical Study Results relating to the ALLCAR19 Study in accordance with the terms of the [***] Contract;
in respect of the CARPALL Study, UCL has various reporting commitments to [***], and [***] is entitled to use CD19 Clinical Study
Results relating to the CARPALL Study in accordance with the terms of the [***] Grant;
in respect of the CAROUSEL Study, UCL has various reporting commitments to [***] in accordance with the terms of the
CAROUSEL Clinical Study Agreement;
in respect of the ALLCAR19 Study, [***] is entitled to use CD19 Clinical Study Results relating to the ALLCAR19 Study in
accordance with the terms of the [***] Contract;
the [***] are permitted to use, publish and disclose the CD19 Clinical Study Results in accordance with the terms of the
agreements entered into between [***] and UCL that govern the conduct of the relevant clinical study;
[***] is entitled to use, publish and disclose certain CD19 Clinical Study Results in accordance with the [***] Agreements;
where there is any conflict or inconsistency between the provisions of the CD19 Clinical Study Agreements and the provisions of
this Clause 4 in respect of the use, publication or disclosure of the CD19 Clinical Study Results, the provisions of this Clause
4 shall not apply to the use, publication or disclosure of the CD19 Clinical Study Results by [***], [***], [***], or [***] (as
applicable) and the provisions of the relevant CD19 Clinical Study Agreements shall prevail, (provided that any such use,
publication or disclosure may be subject to further terms agreed in any collaboration agreement entered into in accordance
with Clause 4.12);
where [***], [***] or [***] (as applicable) propose to make any publication or presentation which includes any of the CD19 Clinical
Study Results and submits the same to UCL for review, UCLB shall procure that UCL shall provide a copy of the draft
publication to Autolus for review as soon as reasonably practicable, but Autolus acknowledges that it may receive the
proposed publication or presentation less than [***] before its presentation or intended submission for publication;
subject to Clause 4.11.8, Autolus shall be entitled to review any draft publications relating to the CD19 Clinical Study Results
submitted to UCL by [***], [***] or [***] (as applicable) in accordance with the principles set out in Clause 4.5, but subject to
Clause 4.11.10 and to the extent consistent with UCL’s rights under the relevant CD19 Clinical Study Agreements;
in respect of any draft publications or presentations relating to the CD19 Clinical Study Results and/or the CAROUSEL Clinical
Study Results, Autolus confirms that under Clause 4.5.3, Autolus’ grounds to refuse publication shall be for the purposes of a
delay to seek patent protection in respect of any CD19 Clinical Study Results and/or CAROUSEL Clinical Study Results (as
applicable) in accordance with Clause 4.6 or to prevent the publication of any of Autolus’ Confidential Information; and
where there is any conflict or inconsistency between the provisions of the CD19 Clinical Study Agreements and/or the
CAROUSEL Clinical Study Agreement and the provisions of this Clause 4, UCLB shall not be under any obligation to amend
the terms of any CD19 Clinical Study Agreement and/or the CAROUSEL Clinical Study Agreement (or otherwise impose on
the parties to the CD19 Clinical Study Agreements and/or CAROUSEL Clinical Study Agreement any obligation required
under this Clause 4 which is not included in any CD19 Clinical Study Agreement and/or the CAROUSEL Clinical Study
Agreement) and UCLB shall not be in breach of the provisions in this Clause 4 to the extent of any such conflict or
inconsistency. The provisions of Clauses 4.7 and 4.8 shall not apply to the CD19 Clinical Study Agreements or the
CAROUSEL Clinical Study Agreement and the conduct of the CARPALL Study and ALLCAR19 Study shall be under the
terms of the CD19 Clinical Study Agreements and the conduct of the CAROUSEL Study shall be under the terms of the or
the CAROUSEL Clinical Study Agreement.
i..
ii..
iii..
iv..
v..
vi..
vii..
viii..
ix..
x..
xi..
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
UCLB confirms that any site agreements in respect of the ALLCAR19 Study entered into with any CD19 Clinical Study NHS
Foundation Trusts after the Second Amendment Date shall be on substantially the same terms as those study site
agreements entered into prior to the Second Amendment Date.
Autolus and UCL propose to collaborate on the ALLCAR19 Study and CARPALL Study. Autolus shall use commercially reasonable
efforts to enter into collaboration and funding agreements with UCL with respect to i) the ALLCAR19 Study as soon as practicable
after the Second Amendment Date and ii) any extension of the CARPALL Study as soon as practicable after UCLB has procured the
release of all the CARPALL and ALLCAR19 Patient Clinical Data generated before the Second Amendment Date. UCLB shall use
commercially reasonable efforts to facilitate such discussions between UCL and Autolus with a view to two separate collaboration
agreements being entered into within this timescale. Such agreements will include terms typical for a clinical research collaboration,
including a joint governance structure to lead this program, and a contribution of expertise and funding to be agreed in order to
establish a manufacturing process suitable for commercial scale and lay the foundation for a registration study. The total value of
such commitment by Autolus shall be mutually agreed by Autolus and UCL in the applicable collaboration and funding agreement.
In respect of the ALLCAR19 Study, notwithstanding the provisions of Clause 4.12, Autolus confirms that, as a minimum, it shall pay to
UCL the sum of £875,000 (eight hundred and seventy-five thousand pounds), being [***] (the “Autolus Funding Commitment”).
The Parties acknowledge that the consent given [***] to permit the licensing of the Test and Regulatory Data arising from the
ALLCAR19 Study to Autolus under this Agreement is dependent on the Autolus Funding Commitment.
The parties intend that the collaboration agreement relating to the ALLCAR19 Study referred to in Clause 4.12 shall include details of
Autolus’ total funding commitment in respect of the ALLCAR19 Study (which may be higher than the Autolus Funding Commitment,
but not lower), together with payment terms. The Autolus Funding Commitment is binding on Autolus, irrespective of whether or not
the parties enter into any such collaboration agreement. Autolus shall pay the Autolus Funding Commitment to UCL in quarterly
instalments. UCL shall be entitled to invoice Autolus for the Autolus Funding Commitment in quarterly instalments in such amounts
as reflect the instalments payable by [***] under the [***] Contract, as amended from time, and the parties acknowledge that the
quarterly instalments will vary in amount from quarter to quarter. UCL shall invoice Autolus for the first quarterly instalment in April
2018. Autolus shall pay all invoices within [***] of the date of receipt of the invoice from UCL.
ACCESS TO IMPROVEMENTS AND NEW INVENTIONS
The provisions of this Clause 5 shall apply to each and every Improvement and New Invention that is generated, reduced to practice or
otherwise discovered or identified at any time up until and including the [***] anniversary of the Effective Date (“Improvement
Period”). For clarity, in respect of CD19 CARs or binders, the Improvement Period shall commence on the Second Amendment
Date. UCLB shall procure that UCL, MP and the MP Laboratory shall comply with the terms of this Clause 5 and notify UCLB of all
Improvements and New Inventions in order that UCLB shall be able to comply with this Clause 5.
From the Effective Date until expiry of the Improvement Period, UCLB shall notify Autolus of each and every Improvement and New
Invention generated, developed or arising in such period within [***] of UCLB’s receipt of an invention disclosure form describing the
Improvement or New Invention (in respect of each Improvement and each New Invention, each notification to Autolus being a
“Disclosure Notification”). In respect of Improvements and New Inventions which UCLB is obliged to notify to Autolus:
UCLB shall procure the exclusive right (to the exclusion of UCL and the inventor(s)) to license, assign, exploit or otherwise grant
any rights to that Improvement or New Invention (as applicable) to, any Third Party, and shall ensure that such Improvement
or New Invention (as applicable) is kept confidential including by its Academic Collaborators (subject to the publications
procedure under Clause 4.5) until Autolus ceases to have any rights (exercisable,
l.
m.
n.
5.
a.
b.
i..
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
ii..
iii..
iv..
v..
c.
d.
i..
ii..
iii..
negotiable or otherwise) to that Improvement or New Invention (as applicable) under the terms of this Clause 5;
UCLB shall procure that the Disclosure Notification shall provide (i) reasonable details of that Improvement or New Invention (as
applicable) with a similar level of detail as that which UCLB provided to Syncona Management LLP for the purpose of
Syncona Management LLP evaluating the Program IP and (ii) any draft or pending application for registered patent
protection in respect of that Improvement or New Invention (as applicable); in each case disclosure to Autolus shall be
subject to the confidentiality obligations of this Agreement;
UCLB shall procure that Autolus shall have reasonable access to those individuals at UCL that invented, generated, discovered
or developed that Improvement or New Invention (as applicable) in order to allow a confidential discussion as to the nature
and features of that Improvement or New Invention (as applicable) and its application;
UCLB shall not, until Autolus ceases to have any rights (exercisable, negotiable or otherwise) to that Improvement or New
Invention (as applicable) under the terms of this Clause 5, encumber, charge, mortgage, license, sell, assign, Exploit or
otherwise grant any other right or enable any Third Party to Exploit the Improvement or New Invention (as applicable);
provided that Autolus acknowledges that Improvements and New Inventions may be subject to the rights of Funders in
accordance with Clause 4.2.1 and that Autolus’s ability to exercise its rights under this Clause 5 may be dependent on any
such Funder providing its consent to the terms of Exploitation as agreed by the Parties in accordance with Clause 4.2.1,
which UCLB shall use reasonable endeavours to obtain; In particular the consent of CRUK, KK and LLF may be required in
respect of any licence of Improvements relating to TRBC1/2 and the consent of KK and LLF may be required in respect of
any licence of Improvements relating to BCMA CAR.
Following the date of the Disclosure Notification, Autolus shall have the right, exercisable at any time up until expiry of the Improvement
Negotiation Period (irrespective of whether that is before or after the Improvement Period) to exercise its right of first negotiation in
respect of obtaining a worldwide, assignable, sub-licensable (through multiple tiers) licence within the Field of the applicable
Improvement or New Invention that is the subject of the Disclosure Notification, such licence to be exclusive or non-exclusive, as
agreed by the Parties.
Upon Autolus exercising its right of first negotiation in respect of an Improvement or a New Invention (as applicable) by way of serving
a written notice on UCLB, the following shall apply until expiry of the applicable Improvement Negotiation Period for that
Improvement or New Invention (as applicable), unless extended by agreement between the Parties:
unless the Parties agree to terminate negotiations during the Improvement Negotiation Period, Autolus and UCLB shall promptly
and actively negotiate throughout the Improvement Negotiation Period, in good faith and acting reasonably, fair and
reasonable terms for and a conclusive agreement upon which that Improvement or New Invention (as applicable) may be
licensed to Autolus;
in so far as UCLB fails to comply with the provisions of Clause 5.4.1, the Improvement Negotiation Period shall be extended by a
period equal to, or otherwise fairly calculated to, compensate for any delay in or absence from a negotiation by UCLB in
accordance with the principles under Clause 5.4.1;
in its negotiations around the fair and reasonable financial and other terms for a licence of Improvements (as opposed to New
Inventions), UCLB shall have regard to the existing licensing and financial structure under this Agreement with respect to the
Royalty Product to which such Improvement relates or is applicable.
e.
If Autolus, by written notice, elects not to continue with negotiations over an Improvement or a New Invention, then without prejudice to
the remainder of this Clause 5 or any other Improvements or New Inventions, the Parties shall be released from their then current
28
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
obligations to negotiate in accordance with Clause 5.4 with respect to that particular Improvement or New Invention.
f.
Subject to UCLB’s compliance with Clause 5.4.1, if the Improvement Negotiation Period has expired with respect to an Improvement or
New Invention (as applicable), and that Improvement or New Invention (as applicable) has not been licensed to Autolus, then:
i..
ii..
in respect of that Improvement, subject to the terms of Clause 5.7, UCLB shall be entitled to (i) instigate negotiations with Third
Parties for the grant of a licence of that Improvement; or (ii) engage in negotiations solicited by Third Parties to agree terms
for the grant of a licence of that Improvement to that Third Party; or
in respect of that New Invention, Autolus shall cease to have any further rights to negotiate or match terms for any licence of
rights to that New Invention under this Clause 5, save that the foregoing shall be without prejudice to any other New
Inventions.
g.
In negotiating with any Third Party to grant a licence of an Improvement to that Third Party, for a period of [***] after the expiry of the
Improvement Negotiation Period (“Match Period”) or Autolus having served notice under Clause 5.5:
i..
ii..
h.
i.
6.
a.
UCLB shall not accept or agree any term (or overall set or combination of terms) that are equal to or less preferential or
favourable to UCLB than the most preferential or favourable matching or equivalent term (or, as applicable, matching or
equivalent set or combination of terms) as offered by Autolus to UCLB; and,
where UCLB has reached an agreement (in principle) on all material terms for the licence of the Improvement with the Third Party
(which is in compliance with Clause 5.7.1), but prior to concluding the definitive binding agreement on such terms with the
Third Party, UCLB shall promptly first offer such terms to Autolus for acceptance within the Match Period whereupon:
(1) during such Match Period UCLB shall not execute or enter into such agreement with any Third Party or otherwise look to
license or otherwise Exploit or grant rights to Exploit the Improvement with any Third Party; and,
if such terms are accepted by Autolus, UCLB shall conclude the definitive agreement with Autolus on those same terms
(or, if the Parties agree otherwise, more preferential or favourable terms for Autolus); or,
if rejected by Autolus, UCLB shall conclude the definitive agreement with that Third Party on those same terms.
(2)
(3)
The provisions of Clause 5.7 shall apply each and every time that UCLB instigates in or engages in negotiations with any Third Party
concerning an Improvement during the Match Period, such that if negotiations with a Third Party break down and either re-
commence with that Third Party or new negotiations begin with a different Third Party to that Improvement, the provisions of Clause
5.7 shall continue to apply again.
Where during the Improvement Period MP and/or any member of the MP Laboratory generates, identifies or invents any discovery,
invention (whether patentable or not), Know-How or improvement concerning any CAR or CARs (including methods for manufacture
of any CAR or CARs) which is not an Improvement and which has been discovered, generated, identified or invented together with
another Academic Organisation(s) such that UCLB does not Control the same and it does not fall within the definition of New
Inventions, UCLB shall use reasonable endeavours to agree with the other Academic Organisation(s) that UCLB shall be the lead
commercialisation partner and that the relevant technology will be offered to Autolus in accordance with this Clause 5.
ACCESS TO [***] PROGRAM
The provisions of this Clause 6 shall apply to the [***] Program as it is developed from time to time up until the [***] anniversary of the
Effective Date (“[***] Period”). UCLB shall procure that UCL and [***] shall comply with the terms of this Clause 6 and notify UCLB
of the progress, development and generation of IP under the [***] Program in order that UCLB shall be able to comply with this
Clause 6. During the [***] Period, UCLB shall keep Autolus appraised on a reasonable basis of the progress and development of the
[***] Program and the inventions arising therefrom.
b.
If at any time during the [***] Period, any bona fide decision is made by UCLB, UCL or [***] to seek a licensee to Exploit any of the [***]
Program IP or any bona fide approach is
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
made by a Third Party to seek rights to or under any of the [***] Program IP, and in respect of which UCLB genuinely intends to
engage in, UCLB shall provide written notice to Autolus together with (under the confidentiality obligations of this Agreement):
a description of the [***] Program and related [***] Program IP; and
a copy of any application for Patent Rights in respect of any invention arising from the [***] Program that has been filed in respect
of inventions arising from the [***] Program.
Following service of a notice in accordance with Clause 6.2:
at Autolus’s request, UCLB shall use reasonable endeavours to procure that Autolus shall have access to those individuals at
UCL that work on the [***] Program or invented, generated, discovered or developed the [***] Program IP in order to allow a
confidential discussion as to the nature and features of the [***] Program and the [***] Program IP and its application; and,
Autolus shall have the option to negotiate with UCLB to agree terms for the grant of a licence (which may be exclusive or non-
exclusive as the Parties agree) to [***] Program IP.
Upon exercise of its right to negotiate with UCLB, UCLB and Autolus shall negotiate the terms for such licence in good faith and acting
reasonably and seeking fair and reasonable commercial terms and Autolus’s right to negotiate with Autolus shall expire [***] following
Autolus’s receipt of UCLB’s notice of served under Clause 6.2.
If Autolus, by written notice, elects not to continue with negotiations over the [***] Program IP, then the Parties shall be released from
their then current obligations to negotiate in accordance with Clause 6.3.2. If the Parties are unable to agree licence terms within the
[***] period referred to in Clause 6.4 above, then UCLB shall be under no further obligation to Autolus and shall be free to license or
commercialise the same [***] Program IP as it thinks fit.
UCLB confirms that save for having to seek the consent of the Wellcome Trust and the National Institute for Health Research for the
Exploitation of the [***] Program IP, it otherwise Controls that [***] Program IP existing as of the Effective Date. For the avoidance of
doubt, nothing in this Agreement shall impose any restrictions or controls on UCL’s ability to publish and to undertake Academic
Research or obtain Third Party funding from a Funder for Academic Research or otherwise collaborate with any Academic
Organisation in respect of the [***] Program and, as a result, the [***] Program IP may be subject to rights of Third Party Funders and
may not be Controlled by UCLB. UCLB shall procure that during the [***] Period, UCL shall not and [***] shall not undertake any
Commercial Research with respect to the [***] Program or accept Third Party funding other than from Funders for the [***] Program.
Autolus acknowledges that UCLB or UCL shall not under any circumstances be required to restrict [***] from undertaking any work
(academic or commercial) either independently or in collaboration with any Third Party, on any program (including a [***] program)
that is not a [***] Program.
Upon the Parties concluding terms for a license to the [***] Program IP as provided for in this Clause 6, UCLB shall procure full
disclosure to Autolus of the [***] Program including the [***] Program IP and relevant UCL Background IP used for the same.
Until the expiry of the [***] Period, UCLB shall not, and shall procure that UCL and [***] shall not, grant any rights to, license, assign,
grant an option to, Exploit, or otherwise encumber, mortgage, charge or otherwise waive rights in respect of the [***] Program IP,
save that this shall not prevent UCLB, UCL and/or [***] from securing funding from Funders pursuant to Clause 6.6 above and/or
collaborating with Academic Organisations.
ACCESS TO [***]
The provisions of this Clause 7 shall apply to the [***] Program as it is developed from time to time up until expiry of the [***] Period.
The “[***] Period” shall be for a minimum of [***] from the Effective Date, and may be extended by Autolus (upon written notice
served prior to the [***] anniversary of the Effective Date) for the Extended Period. The “Extended Period” shall mean the day
commencing on the [***] anniversary of the Effective Date and ending on the earlier of (i) Autolus and UCLB concluding a definitive
agreement for a licence to any of the [***] Program IP; (ii) Autolus terminating its rights under this Clause 7 by written notice; or (iii)
the [***] anniversary of the Effective Date.
i..
ii..
c.
i..
ii..
d.
e.
f.
g.
h.
7.
a.
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b.
c.
d.
i..
ii..
iii..
The Parties acknowledge and agree that Autolus has served notice to extend the [***] Period beyond its [***], and is under the
obligation to reimburse UCLB [***] of those Patent Prosecution Costs incurred by UCLB for activities during the Extended Period in
respect of the [***] Patents that are the subject of the [***] Option. Autolus shall not be responsible for any Patent Prosecution Costs
incurred before or after the Extended Period.
UCLB shall and shall procure that UCL (including MP and the MP Laboratory) shall comply with the terms of this Clause 7 and notify
UCLB of the progress, development and generation of Intellectual Property under the [***] Program in order that UCLB shall be able
to comply with this Clause 7.
From the Effective Date until expiry of the [***] Period, UCLB shall:
from time to time (and upon reasonable request from Autolus):
(1) notify Autolus of the development, progress and advances made in the [***] Program since the last update report was
provided;
(2) notify Autolus of any change in status of MP’s position at UCL (including termination of the same) or the MP Laboratory;
(3) disclose to Autolus (under the confidentiality obligations of this Agreement) any planned application for a Patent Right in
respect of any invention arising from the [***] Project at least [***] prior to it being filed, and thereafter keep Autolus
informed of all developments in the prosecution of such Patent Right(s); and,
(4) procure the exclusive right (to the exclusion of UCL and the inventor(s)) to license, assign, exploit or otherwise grant any
rights to the [***] Program IP until Autolus ceases to have any rights (exercisable, negotiable or otherwise) to the [***]
Program under the terms of this Clause 7;
use reasonable endeavours to procure that Autolus shall have access to those individuals at UCL that work on the [***] Program
or invented, generated, discovered or developed any of the [***] Program IP in order to allow a confidential discussion as to
the nature and features of the [***] Program and the [***] Program IP and its application;
not, until Autolus ceases to have any rights (exercisable, negotiable or otherwise) to the [***] Program under the terms of this
Clause 7, encumber, charge, mortgage, license, sell, assign, Exploit or otherwise grant any other right or enable any Third
Party to Exploit the [***] Program IP,
provided that Autolus acknowledges that certain [***] Program IP (i) existing as of the Effective Date is subject to those rights of Third
Party Funders which are disclosed in Schedule 6 and described as having funded such [***] Program IP; and (ii) arising after the
Effective Date may be subject to the rights of Third Party Funders in accordance with Clause 4.2.1; and that in case of (i) and (ii)
Autolus’s ability to exercise its rights under this Clause 7 in respect of such [***] Program IP may be dependent on any such Third
Party Funder providing its consent to the terms of Exploitation as agreed by the Parties in accordance with Clause 4.2.1; In particular
consent of [***] may be required in respect of any licence of [***] Program IP developed prior to or after the Effective Date.
e.
Autolus shall have the right, exercisable at any time up until expiry of the [***] Period to exercise its right of first negotiation in respect of
obtaining a worldwide, assignable, sub-licensable licence (which may be exclusive or non-exclusive as the Parties may agree), within
the Field of the [***] Program IP (or, as the Parties may agree, any part thereof).
f.
Upon Autolus exercising its right of first negotiation in respect of the [***] Program by way of serving a written notice on UCLB, the
following shall apply until expiry of the [***] Period (unless extended by agreement between the Parties):
unless the Parties agree to terminate negotiations during the [***] Period, Autolus and UCLB shall promptly and actively negotiate
throughout that period, in good faith and acting reasonably, fair and reasonable terms for a conclusive agreement upon which
the [***] Program IP may be licensed to Autolus;
in so far as UCLB fails to comply with the provisions of Clause 7.6.1, does not actively and properly participate in such
negotiations or does not act reasonably or in good faith, the [***] Period shall be extended by a period equal to, or otherwise
fairly calculated to, compensate for any delay in, or absence from a negotiation by UCLB in accordance with the principles
under Clause 7.6.1.
i..
ii..
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g.
h.
If Autolus, by written notice, elects not to continue with negotiations over the [***] Program IP, then the Parties shall be released from
their then current obligations to negotiate in accordance with Clause 7.6.
Subject to UCLB’s compliance with Clause 7.6.1, upon expiry of the [***] Period and provided that Autolus has not been granted an
exclusive license to the [***] Program IP, UCLB shall then be entitled to negotiate with any Third Party to grant a licence to or
otherwise Exploit the [***] Program IP subject always to the BCMA Licence with respect to the [***] Existing Patent.
i.
Upon the Parties concluding terms for a license to the [***] Program IP as provided for in this Clause 7, UCLB shall procure full
8.
a.
b.
i..
ii..
iii..
iv..
c.
disclosure to Autolus of the [***] Program including the [***] Program IP and relevant UCL Background IP used for the same.
The provisions of this Clause 7 shall be without prejudice to UCLB’s obligations under Clause 18 with respect to the [***] Existing
Patent.
INFORMATION AND ACCESS TO MARTIN PULE’S OTHER PROGRAMS & OTHER RESTRICTIONS
During the Improvement Period, the Parties shall hold regular meetings to review the activities of MP and the MP Laboratory. Such
meeting shall be held every month, or at such intervals as the Parties shall otherwise agree.
At each meeting UCLB shall update Autolus (under the confidentiality obligations of this Agreement) in respect of:
research activities being undertaken by MP and the MP Laboratory, together with progress and advances made under all
research activities since the last meeting was held;
any change in status of MP’s position at UCL (including termination of the same) or the MP Laboratory;
any collaboration with Academic Collaborators entered into by MP and/or the MP Laboratory; and,
any proposed applications for Patent Rights;
provided that the foregoing: (i) shall not require any disclosure of research activities being undertaken by MP on behalf of [***]
pursuant to his [***] existing as of the Effective Date; and (ii) shall not require disclosure of any of research activities being
undertaken by MP and/or the MP Laboratory where UCL, MP and/or MP Laboratory are restricted from disclosing any such
information as a result of obligations of confidentiality owed to a Third Party.
For any new inventions generated, reduced to practice or otherwise developed by or under the supervision of MP (whilst employed at
UCL) and/or the MP Laboratory (including therapeutic immune therapies, engineered T-cells, CARs or BiTEs, and any manufacturing
techniques and/or research tools relating to the foregoing) from time to time up until the [***] anniversary of the Effective Date and in
respect of which Autolus does not have any rights pursuant to Clauses 5, 6 or 7 (“Other Technology”), UCLB shall provide and
procure that Autolus shall have a right of first review according to Clause 8.4.
d. Where Other Technology is Controlled by UCLB or UCL and where UCLB or UCL makes any bona fide decision to seek a licensee to
Exploit any Other Technology, or any bona fide approach is made by a Third Party to seek rights to or under any of the Other
Technology which UCLB or UCL genuinely intends to engage in, UCLB shall not, and shall procure that UCL shall not, disclose the
Other Technology to any Third Party for the purposes of instigating or encouraging any licensing discussions nor offer to license the
Other Technology to any Third Party, in each case prior to disclosing to Autolus at least [***] in advance (and in no less detail than it
will disclose to any Third Party) the same Other Technology.
Commercial Restrictions
The Parties acknowledge that Autolus’s business is primarily based upon the Exploitation of CARs and this licence of Technology
and involvement of MP as an employee to Autolus is crucial and fundamental to its business. Accordingly, in recognition of
the foregoing UCLB hereby agrees and undertakes that for a period of [***] after the Effective Date UCLB shall procure that
for so long as MP is employed by or holds any position or undertakes or supervises any research at UCL during such period,
that with respect to any CARs:
e.
i..
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(1) MP shall not undertake any Commercial Research himself or through the MP Laboratory;
(2) without Autolus’s prior written consent, neither MP or UCL shall accept or use any funding to enable MP to undertake
any Commercial Research himself or through the MP Laboratory; and
(3) without Autolus’s prior written consent, MP shall not participate in, contribute to or otherwise supervise any Commercial
Research;
save that the foregoing shall not prevent MP (i) undertaking that Commercial Research which is on-going as of the Effective
Date and which is the subject of the those agreements disclosed to Autolus and listed in Part B of Schedule 6, (ii) from
undertaking any Approved Activity as such term is defined in the SSA (effective at the same date as the Effective Date); and
(iii) from undertaking Commercial Research on behalf of Autolus. For the avoidance of doubt, the provisions of this
Agreement do not apply to any work (commercial, academic or otherwise) conducted in relation to CARs in any laboratory of
UCL without any assistance from and/or involvement of MP.
Should Autolus be sold (comprising the transfer of all shares in Autolus to a Third Party or the sale of all assets of the business of
Autolus to a Third Party) and MP ceases to be employed or provide consultancy to Autolus (in the case of a share sale) or
the Third Party acquirer (in the case of either a share sale or asset sale) then the restriction under Clause 8.5 shall terminate
on the earlier of (i) [***] after the Effective Date; or (ii) [***] following the completion of the relevant sale.
MATERIALS TRANSFER AND ENABLEMENT OF THE LICENSED RIGHTS
From the Effective Date and thereafter until the [***] anniversary of the Effective Date:
UCLB shall procure the disclosure to Autolus by UCL, MP and the MP Laboratory of all Technology licensed hereunder in
accordance with the timeline and practical disclosure steps set out in Schedule 5;
After compliance with Clause 9.1.1, UCLB shall thereafter continue to disclose to Autolus, and procure the disclosure to Autolus
by UCL, MP and the MP Laboratory, of any Technology not disclosed under Clause 9.1.1, at Autolus’s request from time to
time;
UCLB shall procure that each of UCL, MP and the MP Laboratory shall help facilitate any technology transfer or teach-in
(including any demonstrations) concerning any of the Technology; and,
it being understood that such disclosure should be in the English language and should be disclosed in a structured and helpful
manner to enable the proper understanding, benefit and access to the technology in respect of each Program and the
Program IP.
ii..
9.
a.
i..
ii..
iii..
iv..
b. Where the Technology comprises Materials, UCLB shall procure the delivery of a reasonable quantity of such Materials and UCL shall
itself be entitled to retain a reasonable quantity of the Materials for the exercise of its Academic Rights subject to and in accordance
with the provisions of Clause 4.
c. With respect to materials which as of the Effective Date are not Program Materials, have been used in connection with any of the
Original Programs, but are not Controlled by UCLB and so do not fall within the definition of Background Materials, UCLB shall use
its reasonable endeavours to obtain consent for the transfer of such materials to Autolus (and for the licensing of associated
Intellectual Property) or otherwise assist Autolus in obtaining access to and the right to use such materials. Where UCLB uses its
commercially reasonable efforts to obtain such consent, it shall not be obliged to make any payment but, should any payment be
demanded by the relevant Third Party Autolus may, at its discretion, make such payment to obtain consent. This Clause 9.3 shall not
apply in respect of materials that are “off the shelf”, such as reagents and other commercially available Third Party materials.
UCL shall retain ownership and possession of all Laboratory Notebooks and UCLB shall procure throughout the Term:
physical access for Autolus (including the right for Autolus to physically borrow from UCL’s possession and copy), upon
reasonable notice, of any Laboratory Notebooks in so far as they concern any of the Programs, Program IP, Materials or UCL
Background IP;
d.
i..
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ii..
iii..
e.
f.
that all Laboratory Notebooks shall be kept reasonably safe and secure and protected from loss, damage or destruction in
accordance with standard UCL process; and,
that all Laboratory Notebooks shall not be destroyed without first offering the same to be transferred to Autolus.
UCLB shall co-operate and collaborate with Autolus to provide, and procure, guidance, information and know-how from time to time
from MP and MP Laboratory about Program IP and the Technology.
UCLB shall not and shall procure that UCL (including MP and the MP Laboratory) shall not transfer, lend, supply or otherwise provide
(i) any Laboratory Notebooks to any Third Party and/or (ii) any Program Materials to any Third Party except (a) in the exercise of
UCL’s Academic Rights subject to and in accordance with the provisions of Clause 4; and/or (b) with respect to those specific parts
of the Laboratory Notebooks or specific Program Materials under (1) the RQR8 Program IP in the exercise of UCLB’s rights to the
extent permitted outside of the RQR8 Field; and/or (2) the TetCAR Program IP in the exercise of UCLB’s rights to the extent
permitted outside of the TetCAR Field.
g. Without prejudice to Clause 4.4, UCLB shall procure the transfer to Autolus of a copy of the Test and Regulatory Data resulting from
the CRUK Study, once such Test and Regulatory Data has been released by the sponsor and UCLB has authority from any
applicable Regulatory Authority to disclose the same to Autolus. Upon the disclosure of such Test and Regulatory Data to Autolus,
the GD2 Licence shall automatically be extended to include a licence to the GD2 Clinical Study Results and the GD2 Program IP
shall be deemed to include GD2 Clinical Study Results.
h.
i.
UCLB shall procure the transfer to Autolus of a copy of the Test and Regulatory Data resulting from the CARPALL Study and
ALLCAR19 Study which shall include the CARPALL and ALLCAR19 Patient Clinical Data once such CARPALL and ALLCAR19
Patient Clinical Data has been released by the sponsor and UCLB has authority to disclose the same to Autolus. The frequency and
timing of such transfers of the CARPALL and ALLCAR19 Patient Clinical Data is detailed in Schedule 11. Upon the disclosure of
such CARPALL and ALLCAR19 Patient Clinical Data to Autolus, the CAT19 Licence shall automatically be extended to include a
licence to the CARPALL and ALLCAR19 Patient Clinical Data released and the CAT19 Program IP shall be deemed to include such
CARPALL and ALLCAR19 Patient Clinical Data.
UCLB shall procure the transfer to Autolus of a copy of the Test and Regulatory Data resulting from the CAROUSEL Study which shall
include the CAROUSEL Patient Clinical Data once such CAROUSEL Patient Clinical Data has been released by the sponsor and
UCLB has authority to disclose the same to Autolus. The frequency and timing of such transfers of the CAROUSEL Patient Clinical
Data is detailed in Schedule 11. Upon the disclosure of such CAROUSEL Patient Clinical Data to Autolus, the CAT19 CNS Licence
shall automatically be extended to include a licence to the CAROUSEL Patient Clinical Data released and the CAROUSEL Program
IP shall be deemed to include such CAROUSEL Patient Clinical Data.
j.
UCLB shall procure that UCL (including MP and those engaged in the MP Laboratory) shall:
keep the Program IP confidential (subject to any disclosure in accordance with patent prosecution of the Licensed Patents);
not disclose the Program IP to any Third Party, other than as expressly permitted in the course of Academic Research pursuant to
Clause 4; and,
not enable or assist any Third Party to Exploit any of the Program IP other than (i) as expressly permitted in the course of
Academic Research pursuant to Clause 4, or (ii) in connection with (1) the RQR8 Program IP to the extent permitted outside
of the RQR8 Field; (2) the Epitope Tag Program IP to the extent permitted outside of the Epitope Tag Field; (3) the Retrostim
Program IP to the extent permitted outside of the Retrostim Field; and/or (4) the TetCAR Program IP to the extent permitted
outside of the TetCAR Field.
OPTION TO ACQUIRE PROGRAM IP
UCLB acknowledges that Autolus has exercised its right to acquire ownership of all of the Licensed Patents, but excluding all Retained
Patents, as set forth in Schedule 14 (collectively, the “Assigned Patents”), with effect from the Third Amendment Date.
i..
ii..
iii..
10.
a.
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b.
Autolus acknowledges that the assignment of the Assigned Patents with effect from the Third Amendment Date shall not extinguish
Autolus’s (or its successors) obligation to pay Royalties for sales of Royalty Product or other financial commitments under Clauses
13, 14 and 15.
c.
Autolus shall not be entitled to assign the Assigned Patents to any third party other than in accordance with the following provisions.
Autolus shall be entitled to assign the Assigned Patents in whole or part to:
i..
ii..
an acquirer of all or substantially all of Autolus’s business provided Autolus complies with Clause 29.2; or
a third party which is not acquiring all or substantially all of Autolus’s business provided that:
i.
ii.
iii.
the provisions of Clause 3.1 and 3.2 shall apply with respect to any proposed assignment as if it were a sub-licence and
Autolus shall procure that such third party and its successors in title to the Assigned Patents agree to, and comply with,
legally binding provisions in substantially the same form as Clause 3 in respect of any licences granted by such Third
Party under the Assigned Patents;
the assignment to such third party and its successors in title to the Assigned Patents shall be made subject to the non-
exclusive licence under the Assigned Patents granted by Autolus to UCLB purusant to Clause 4.1; and
prior to such assignment becoming effective, Autolus and UCLB shall agree in good faith, and enter into, a reasonable
and proportionate legally binding agreement which safeguards UCLB’s interests as regards the third party assignee and
any successors to the Assigned Patents in the following: (a) the Royalties and Milestones and other financial
commitments under Clauses 13, 14 and 15 in respect of Royalty Products developed and sold by an Assignee Entity;
(b) the maintenance and defence of such Assigned Patents; and (c) the assignment of such Assigned Patents to UCLB
on termination of a Program Licence or this Agreement as a whole pursuant to Clauses 25.1.2, 25.2.2, and/or 25.4.2.
DILIGENCE OBLIGATIONS
Diligence Obligations for Original Royalty Products
With respect to diligence obligations on Autolus concerning the GD2 Product, the Parties agree as follows:
iv.
v.
vi.
The “GD2 Diligence Obligation” shall mean (i) either (a) Autolus has initiated a follow-up clinical study with the same
CAR construct as used in the CRUK Study; or if necessary (b) Autolus has initiated formal pre-clinical development of a
new GD2 Product not used in the CRUK Study; and (ii) as soon as is reasonably practicable following marketing
approval of the GD2 Product in each of the relevant territories, Autolus (or its Sub-licensee) has commenced sale of the
GD2 Product in either (a) the [***] (if reimbursement has been granted in the [***]) and one other Core Country or one of
[***] or (b) at least any two of [***] or any of the Core Countries (other than the [***]), in the event reimbursement is not
granted in the [***];
If Autolus fails to achieve limb (i)(a) of the GD2 Diligence Obligation within [***] of completion (being delivery of the final
written report to Autolus concerning the study) of the Cancer Research UK sponsored GD2-CAR clinical trial
(CRUKD/15/001) (“CRUK Study”), UCLB may serve written notice on Autolus to terminate the GD2 Licence which
termination shall be effective within [***] of Autolus’s receipt of the same unless Autolus has previously served or within
the [***] period serves notice on UCLB that it has or will initiate pre-clinical development as an alternative under limb (i)
(b) of the GD2 Diligence Obligation (a “Limb (i)(b) Notice”);
If Autolus, having served a Limb (i)(b) Notice, fails to achieve limb (i)(b) of the GD2 Diligence Obligation within [***] of
completion of the CRUK Study, UCLB may serve written notice on Autolus to terminate the GD2 Licence in which case
the provisions of Clauses 11.1.4 and 11.1.5 shall govern the right to terminate the GD2 Licence;
11.
a.
i..
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vii.
Autolus shall be obliged to use its commercially reasonable efforts to fulfil limb (ii) of the GD2 Diligence Obligation
following marketing approval of the GD2 Product and the provisions of Clauses 11.1.4 and 11.1.5 shall govern any
allegation of breach of such obligation or termination of the GD2 Licence under this Clause 11.
Subject to Clause 11.1.3, and without prejudice to Clause 11.1.1, Autolus shall use its commercially reasonable efforts to develop
Original Royalty Products under any of the Program Licences in respect of the Original Program IP (other than a GD2
Product) provided that it is acknowledged that Autolus shall not be obliged to develop an Original Royalty Product under
each and every Program Licence in respect of the Original Program IP at all times during the relevant period. It is recognised
that in complying with the above, Autolus shall have the right to determine in its sole discretion the prioritisation, on a purely
commercial basis, of the various Royalty Products for development, and that Autolus’s compliance with the foregoing shall be
assessed on the basis of the whole of its Royalty Product (Original Royalty Product, Additional Royalty Product and CAT19
Product) and other product development portfolio.
Once all of the Tranche 3 Subscription Shares (as such term is defined in the SSA) have been issued by Autolus, the diligence
obligations set out under Clause 11.1.2 above shall cease to apply other than for Autolus seeking to develop one BCMA
Product, a [***] Product (if the licence has been exercised) and a TRBC1/2 Product.
Non-compliance with Clause 11.1.1 and/or 11.1.2 shall not result in a right to terminate this Agreement or any financial or
equitable remedy (including any remedy in damages), but UCLB’s sole remedy for non-compliance shall be limited to the
right to terminate those specific Original Program Licences granted under this Agreement for which Autolus is in breach in
accordance with Clause 11.1.5. It is acknowledged that notwithstanding any delay in development of one or more Original
Royalty Products, a breach of Clause 11.1.1 and/or 11.1.2 may be remedied by Autolus subsequently undertaking activities
to develop the applicable Original Royalty Product following UCLB’s written notice referred to below and, as such, a delay in
development timeline shall not be an un-remediable breach. Prior to exercising any right of termination UCLB shall first be
obliged to provide Autolus with a written notice setting out the basis for its allegation of breach by Autolus under Clause
11.1.1 and/or 11.1.2, which notice shall set out the deficiencies by Autolus and set out a series of reasonable activities UCLB
consider sufficient to remedy the breach. For the avoidance of doubt, UCLB's list of suggested activities shall not be a
definitive list of what is required to remedy any breach. Upon Autolus’s receipt of such notice, the Parties shall, promptly, in
good faith and acting reasonably, (i) discuss ways for Autolus to remedy or undertake activities in compliance with the
obligations under Clause 11.1.1 and/or 11.1.2 and (ii) agree a reasonable period of time within which Autolus will be required
to undertake such activities. If the Parties fail to agree the period which Autolus has to undertake the activities, Autolus shall
have [***] from the date Autolus or UCLB serves written notice stating in its view that an agreement under (ii) cannot be
reached to comply with its obligations under Clause 11.1.1 and/or 11.1.2 for the Original Royalty Product(s) in respect of
which the breach has occurred.
Provided that Clause 11.1.4 has been complied with and the process set out therein followed, and provided that following the [***]
period (or such other period agreed between the Parties) Autolus is still in breach of the same obligations under Clause
11.1.1 and/or 11.1.2 in respect of the development of one or more Original Royalty Products that were the subject of the
original breach notice under Clause 11.1.4, UCLB shall be entitled upon immediate written notice to terminate the Program
Licence(s) granted as follows:
viii.
UCLB shall be entitled to terminate the GD2 Licence where, in breach of its obligations hereunder, Autolus has not met
and failed to remedy the GD2 Diligence Obligation; and
ii..
iii..
iv..
v..
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b.
i..
ix.
UCLB shall be entitled to terminate, on an Original Program Licence by Original Program Licence basis, the Original
Program Licence applicable to the Original Royalty Product where, in breach of its obligations hereunder in respect of
such Original Royalty Product, Autolus has not met and has failed to remedy its diligence obligation under Clause 11.1.1
and/or 11.1.2 to develop such Royalty Products.
Diligence Obligations for Additional Royalty Products
Autolus shall use its commercially reasonable efforts to develop at least one Additional Royalty Product under each of the
Additional Program Licences (with the exception of the iCAR Program Licence in respect of which no diligence obligations
shall apply under this Agreement), it being acknowledged that (i) an individual Additional Royalty Product may utilise
technology under more than one of the Additional Program Licences and hence fulfil the foregoing diligence obligation for
more than one Additional Program Licence and (ii) should all the Patent Rights either licensed hereunder or assigned to
Autolus under the Patent Assignment that are applicable to an Additional Royalty Product either be Surrendered or cease to
have any Valid Claim Autolus shall be deemed to have complied with its foregoing obligation. The foregoing obligation is
subject to the following:
x.
xi.
xii.
UCLB shall be entitled to assess Autolus’s compliance with the foregoing obligation [***], by assessing the development
work undertaken by or on behalf of Autolus under each of the Additional Program Licences over [***] (each period being
an “Assessment Period”). For this purpose, [***] before the end of any Assessment Period in respect of each Additional
Program Licence, Autolus shall provide UCLB with a written report that is detailed enough for UCLB to assess if Autolus’
activities are in accordance with this Clause 11.2;
Autolus’s diligence obligation under this Clause 11.2.1 shall, subject to the remaining provisions of this Clause 11.2.1,
expire upon the [***] anniversary of: [***];
Autolus will have met its diligence obligations under this Clause 11.2.1 for any Additional Program Licence where, in an
applicable Assessment Period:
(a) Autolus has spent an amount equivalent to GBP £[***] on development activities under the Additional Program
Licence in question. Where development of a Royalty Product utilises technologies licensed under more than one
Additional Program Licence, in order to assess if an amount equivalent to GBP £[***] has been spent on
development activities under the Additional Program Licence in question, the total amount of investment made by
Autolus in the applicable Assessment Period shall be apportioned equally (on a numerical basis and not a value
basis) across the applicable Additional Program Licences, or where Autolus reasonably believes that it is more
appropriate for the apportionment to be across the applicable Additional Program Licences in which investment has
been made on a value basis (rather than on an equal numerical basis) then at the time of reporting pursuant to
Clause (i), Autolus shall disclose to UCLB the details of the basis according to which Autolus has determined the
apportionment of investment to be allocated for each of the Additional Program Licences by reference to value.
UCLB shall in good faith consider Autolus’ proposal. If UCLB agrees with Autolus, or does not object to Autolus’
proposal in writing within [***] of Autolus’ notification, the apportionment of the investment for the Royalty Product
across the Additional Program Licences shall be carried out in accordance with the proposal put forward by
Autolus. If UCLB does not agree with Autolus’ proposal and notifies Autolus in writing within [***] of Autolus’
notification setting out the reasons for its disagreement, the investment made by Autolus with respect to the Royalty
Product in the applicable Assessment Period shall be apportioned equally across the applicable Additional Program
Licences; or
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ii..
iii..
(b) Autolus has conducted research and development activities over the applicable Assessment Period which in
UCLB’s reasonable opinion are sufficient to demonstrate that Autolus has used commercially reasonable efforts to
develop one or more Additional Royalty Products under the Additional Program Licence in question;
If Autolus (or its Sub-licensee) has filed any IND, CTA or comparable application for undertaking any clinical trial in respect of an
Additional Royalty Product, then notwithstanding the provisions of Clause 11.2.1(iii), Autolus shall be deemed to have fulfilled
its diligence obligations under this Clause 11.2 with respect to such Additional Royalty Product and the Additional Program
Licence(s) applicable to such Additional Royalty Product;
If Autolus does not meet (or is not deemed to have met) its diligence obligations for any Additional Program Licence in any
Assessment Period, (i) UCLB shall be entitled to terminate the specific Additional Program Licence in question by serving
written notice of termination on Autolus within [***] of expiry of the applicable Assessment Period in which case the
termination of the Additional Program Licence shall have immediate effect, but failing which the Additional Program Licence
may not be terminated for non-compliance during such Assessment Period; and (ii) UCLB shall not have a right to terminate
this Agreement as a whole or any financial or equitable remedy (including any remedy in damages), but UCLB’s sole remedy
for non-compliance shall be limited to the right to terminate the Additional Program Licence in question.
c.
Diligence Obligations for the CAT19 Product
With respect to diligence obligations on Autolus concerning the CAT19 Product, the Parties agree as follows:
The “CAT19 Diligence Obligation” shall mean (i) either (a) Autolus has initiated a follow-up clinical study with a CAT19 1 Gen
Product, or (b) Autolus has initiated formal pre-clinical development of a CAT19 Binder Product; and (ii) as soon as is
reasonably practicable following marketing approval of the CAT19 Product in each of the relevant territories, Autolus (or its
Sub-licensee) has commenced sale of the CAT19 Product in either (a) the [***] (if reimbursement has been granted in the
[***]) and one other Core Country or one of [***] or (b) at least any two of [***] or any of the Core Countries (other than the
[***]), in the event reimbursement is not granted in the [***].
st
If Autolus fails to achieve the CAT19 Diligence Obligation under limb (i) within [***] of completion of the ALLCAR19 Study (being
delivery of the final written report to Autolus concerning the relevant study) or fails to use its commercially reasonable efforts
to fulfil limb (ii) of the CAT19 Diligence Obligation following Marketing Approval of the CAT19 Product, then UCLB may serve
written notice on Autolus to terminate the CAT19 Licence and the CAT19 CNS Licence, in which case the provisions of
Clauses 11.1.4 and 11.1.5 shall govern the right to terminate the CAT19 Licence and the CAT19 CNS Licence (in which case,
references in Clauses 11.1.4 and 11.1.5 to Original Program Licences and Original Royalty Product shall be read as the
CAT19 Licence and CAT19 Product and CAT19 CNS Licence and CAT19 CNS Product and references within Clauses 11.1.4
and 11.1.5 to Clause 11.1.1 and Clause 11.1.2 shall be read as references to Clause 11.3.1).
The Parties recognise the importance of making pharmaceutical products available in Developing Countries, to the extent
practicable. However, the Parties acknowledge the early stage nature of the CAT19 Program IP and acknowledge that a
substantial investment would be required to bring CAT19 Products to market in Developing Countries, especially given the
clinical infrastructure required to support the administration of a CAR T-cell therapy, the unfamiliarity of such therapies to
local regulatory authorities and the uncertainty associated with pricing and reimbursement strategies in Developing
Countries.
Diligence Provisions relating to all Programs
It is acknowledged that Exploitation by or on behalf of Autolus, Autolus’s Affiliates and/or Sub-licensees or Assignee Entities of
any Royalty Product shall, for the purposes of this Clause 11, be considered activities of Autolus for assessing its
i..
ii..
iii..
d.
i..
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use of commercially reasonable efforts and compliance with Clause 11. Without prejudice to the provisions of Clause
11.2.1(i), with effect from UCLB ceasing to have a director or observer status on the board of Autolus, thereafter by [***] of
each year, Autolus shall provide UCLB with a written report that will include a summary of its development timelines and
major development steps in relation to the Royalty Products that were taken in the previous twelve (12) months and will
include development timelines, budget and major development steps that Autolus anticipates shall be undertaken with
respect to the Royalty Products for the following twelve (12) months. In addition to the foregoing (but without prejudice to the
provisions of Clause 11.2.1(i)), UCLB shall be entitled, if reasonable, to request details of FTE resource allocation and CRO
costs incurred by Autolus. The foregoing obligation shall cease to apply with effect from the [***] anniversary of the Effective
Date.
Upon termination of any Program Licence pursuant to this Clause 11, UCLB shall have the option to negotiate with Autolus to
agree terms for the assignment of or grant of an exclusive licence to those Autolus Improvements Controlled by Autolus free
of restrictions and encumbrances and which specifically relate to the Program Licence that has been terminated. The
foregoing right of UCLB to negotiate an assignment or licence with Autolus for the Autolus Improvements shall expire [***]
following notice of termination served under Clause 11.1.5, Clause 11.2.3 or Clause 11.3.2. This Clause 11.4.2 shall survive
the termination of this Agreement for [***] from the date of termination during which UCLB shall have a right to exercise its
right under Clause 11.4.2.
Autolus shall, by written notice, promptly notify UCLB in the event that its Board takes any decision to permanently terminate
development of any Royalty Products under a particular Program Licence, whereupon Autolus shall have no further
obligation to develop or Exploit any Royalty Product applicable to that Program Licence and the relevant Program Licence
shall terminate as of the date of Autolus’s written notice and the relevant provisions of Clause 25 shall apply.
UCLB MANAGEMENT FEE AND SHARES
Autolus shall, during the Term of this Agreement, make a maximum of [***] payments to UCLB each of GBP £[***], with each annual
payment being made within [***] of receipt of a VAT invoice addressed to Autolus, the first of which shall be issued no earlier than the
first anniversary of the Effective Date, and thereafter for the remaining three (3) annual payments they shall be issued on each
subsequent anniversary of the Effective Date.
In consideration of UCLB entering into the Agreement with effective date 25 September 2014, Autolus has issued and allocated to
UCLB 4,769,994 B Ordinary Shares (as such terms is defined in the SSA) in Autolus.
In consideration of UCLB granting the Additional Program Licences (except the TRBC2 Dx Licence) to Autolus pursuant to the deed of
variation of the Agreement with effective date 2 March 2016, Autolus has issued and allocated to UCLB 1,000,000 additional B
Ordinary Shares (as such term is defined in the SSA) each credited as fully paid up to £1.00 per B Ordinary Share. In addition,
Autolus has paid UCLB the sum of £150,000 (one hundred and fifty thousand pounds sterling) within 14 days of the Amendment
Date.
ii..
iii..
12.
a.
b.
c.
d.
In consideration of UCLB entering into this Amended and Restated Licence Agreement effective as of the Second Amendment Date,
Autolus shall pay UCLB within [***] of the Second Amendment Date:
the sum of £1,000,000 (one million pounds sterling); and
the sum of £500,000 (five hundred thousand pounds sterling) in recognition of the Second Amendment Date being a date no later
than [***].
In consideration of the transfer of a copy of all the CARPALL and ALLCAR19 Patient Clinical Data generated as at the Third
Amendment Date, Autolus shall pay UCLB the sum of £[***] within [***] of the Third Amendment Date.
In consideration of UCLB entering into this Amended and Restated Licence Agreement effective as of the Third Amendment Date,
Autolus shall pay UCLB within [***] of the Third Amendment Date the sum of £[***] in recognition of the TRBC2 Dx Licence.
MILESTONE PAYMENTS
One-Off Success Milestone Payments
i..
ii..
e.
f.
13.
a.
39
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
i..
During the Term of this Agreement, upon the occurrence of any milestone applicable to the relevant Royalty Product set out in the
table below (each a “Success Milestone”) Autolus shall, in accordance with Clause 16, pay a sum equal to the amount set
against that Success Milestone in the table below (each amount being a “Success Milestone Payment”).
Royalty Product
Success Milestone
Success Milestone
Payment
([***])
GD2 Product
BCMA Product
TRBC1/2 Product
TRBC1/2 Product
[***] Product
NSG Product
Logic Gate Product
Logic Gate Product
ZipCAR Product
ZipCAR Product
ccCAR Product
Epitope Tag Product
iCAR Product
RapaiCASP9 Product
Retrostim Product
TetCAR Product
ZAP-CAR Product
CAT19 Product
CAT19 Product
CAT19 Product
CAT19 Product
CAT19 Product
TRBC2 Dx Product
TRBC2 Dx Product
TRBC2 Dx Product
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
xiv.
xv.
The payment of Success Milestone Payments under Clause 13.1.1 above is subject to the following:
xiii.
each Success Milestone Payment set out above shall be payable once only, irrespective of the number of Royalty
Products achieving the applicable Success Milestone;
the aggregate maximum payment under Clause 13.1.1 and 13.1.2 shall never exceed GBP £[***] ([***] pounds sterling);
if a particular Royalty Product triggers two or more Success Milestones (on the basis that by definition it may fall within
more than one definition of a Royalty Product), then:
(c)
if the occurrence of the Success Milestones are simultaneous with each other, then only the highest value
applicable Success Milestone Payment triggered at that time shall be payable in respect of that Royalty Product,
and the other Success Milestone Payments triggered at the same time shall not be payable; or
if the occurrence of the Success Milestones are sequential, then with the exception of the Success Milestones
referred to in Clause (C) the Success Milestone Payment attributable to the first Success Milestone applicable to
that Royalty Product shall be paid in full, and the Success Milestone Payment attributable to the next sequential
Success
(d)
ii..
40
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Milestone shall be payable at [***] of the Success Milestone value set out in the table above, and no further
Success Milestones shall be payable in respect of that Royalty Product;
(f)
(e) with respect to the TRBC1/2 Product, there shall be no reduction in the Success Milestone Payment identified as
number (4)(ii), in the above table by virtue of such Success Milestone being a sequential Success Milestone in
respect of the same Royalty Product (TRBC1/2 Product), unless such Success Milestone is a [***], where upon it
shall be payable at [***] of the Success Milestone value set out at (4(ii)) in the table above, and no further Success
Milestones shall be payable in respect of that TRBC1/2 Product;
in calculating Net Sales for the applicable Royalty Product (i) the currency exchange mechanism set out in this
Agreement to calculate the relevant Net Sales shall be applied and (ii) sales of any Complementary Diagnostic
Product shall be excluded from Net Sales for the purposes of calculating whether a Success Milestone has been
triggered;
in the case of Success Milestones 7 and 8 above concerning Logic Gate Products, the reference to a “first Logic
Gate Product” and a “second Logic Gate Product” shall mean that the first and second Logic Gate Products shall
each [***]; and,
in the case of Success Milestones 9 and 10 above concerning ZipCAR Products, the reference to a “first ZipCAR
Product” and a “second ZipCAR Product” shall mean that the first and second ZipCAR Products shall each [***].
(g)
(h)
Additional Milestone Payments
During the Term, if Success Milestones 7 and 8 have both been achieved (irrespective of whether UCLB has received payments
with respect to either or both of Success Milestones 7 and 8), should any subsequent Logic Gate Product achieve [***] (being
any Logic Gate Product that [***]), Autolus shall, in accordance with Clause 16, pay to UCLB a one-off milestone payment of
GBP £[***] upon the [***] of such subsequent Logic Gate Product (“Additional LG Milestone Payment”) provided that at the
time of [***]. A “Milestone Logic Gate Product” is any Logic Gate Product in respect of which a Success Milestone
Payment or Additional LG Milestone Payment has been paid or is payable. For the avoidance of doubt, subject to the
requirement of [***], there shall be no limit on the number of Additional LG Milestone Payments that may be payable under
this Clause 13.2.1. Upon there ceasing to be [***], this Clause 13.2.1 shall cease to apply.
During the Term, if Success Milestones 9 and 10 have both been achieved (irrespective of whether UCLB has received payments
with respect to either or both of Success Milestones 9 and 10), should any subsequent ZipCAR Product achieve [***] (being a
ZipCAR Product that [***]), Autolus shall, in accordance with Clause 16, pay to UCLB a one-off milestone payment of GBP £
[***] upon [***] of such subsequent ZipCAR Product (“Additional ZC Milestone Payment”) provided that at the time of [***].
A “Milestone ZipCAR Product” is any ZipCAR Product in respect of which a Success Milestone Payment or Additional ZC
Milestone Payment has been paid or is payable. For the avoidance of doubt, subject to the requirement of [***], there shall be
no limit on the number of Additional ZC Milestone Payments that may be payable under this Clause 13.2.2. Upon there
ceasing to be [***], this Clause 13.2.2 shall cease to apply.
By way of example only to assist interpretation of Clauses 13.1 to 13.2.2 (inclusive) assuming:
a Royalty Product is a [***] Product, a [***] Product and a [***] Product, the first set of Success Milestones to be achieved for this
Royalty Product would, on a simultaneous basis, be the Success Milestones for the [***] (number [***] in above table) and
[***] Product (number [***] in the above table). Upon achievement of the foregoing simultaneous Success Milestones, the
payment provisions of Clause [13.1.2(iii)(A) ]would apply and so UCLB would be entitled to receive a
b.
i..
ii..
c.
i..
41
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
payment of £[***] (the higher of the simultaneous Success Milestones). The second set of Success Milestones to be
achieved for this Royalty Product would be the Success Milestone for the [***] Product (number [***] in the above table). As
the Success Milestone for the [***] Product ([***]) in respect of the Royalty Product would be achieved after achievement of
the Success Milestones [***], the Success Milestone for the [***] would be a sequential Success Milestone that would be
subject to the provisions of Clause [13.1.2(iii)(B)]. Accordingly, if the Success Milestone for the [***] is achieved in relation to
the aforementioned Royalty Product, UCLB would be entitled to receive a payment of £[***] ([***] of the Success Milestone
([***]));
a Royalty Product is a [***] Product, a [***] Product and a [***] Product, the only Success Milestone for which a payment is due to
UCLB would be the Success Milestone for the [***] Product (number [***] in the above table). Accordingly, if the Success
Milestone for the [***] Product is achieved in relation to the aforementioned Royalty Product, UCLB would be entitled to
receive a payment of £[***].
Sales Milestones
During the Term Autolus shall pay to UCLB each of the following one-off sales-related milestone payments (each a “Sales
Milestone Payment”) payable in the Year that aggregate annual global Net Sales of all Royalty Products first exceed the
following thresholds (each a “Sales Milestone”) calculated from the Effective Date:
ii..
d.
i..
Aggregate annual global Net Sales of all Royalty Products
GBP £[***]
GBP £[***]
Sales Milestone Payment
([***])
[***]
[***]
In calculating aggregate annual global Net Sales, (i) the currency exchange mechanism set out in this Agreement to calculate the
relevant Net Sales shall be applied; and (ii) sales of any Complementary Diagnostic Product shall not be included in Net
Sales for the purposes of calculating whether a Sales Milestone has been triggered. Each of the Sales Milestone Payments
in this Clause 13.4.2 shall be paid once only irrespective of the number of Royalty Products and shall be paid in accordance
with Clause 16.
ROYALTIES
On a Program Licence by Program Licence basis, in partial consideration of the grant of that particular Program Licence, during the
Royalty Term Autolus shall pay to UCLB a royalty on Net Sales of the applicable Royalty Product supplied by Autolus or its Sub-
Licensees or any Assignee Entity within the applicable field under that Program Licence within the Territory, such royalty calculated
as the percentage value of the Net Sales at the following rates subject to the terms and conditions of this Agreement, and in
particular the remaining provisions of this Clause 14 (individually per Royalty Product a “Royalty” and collectively the “Royalties”):
ii..
14.
a.
42
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Royalty Product and Field
Royalty Rate
Net Sales of BCMA Products within the BCMA Field
Net Sales of [***] Product within the Field (with effect from grant of the [***] Licence)
Net Sales of GD2 Products within the Field
Net Sales of Logic Gate Products within the Field
Net Sales of NSG Products within the Field
Net Sales of RQR8 Product within the Field
Net Sales of TRBC1/2 Products within the Field
Net Sales of ZipCAR Products within the Field
Net Sales of ccCAR Products within the Field
Net Sales of Epitope Tag Products within the Field
Net Sales of iCAR Products within the Field
Net Sales of RapaiCASP9 Products within the Field
Net Sales of Retrostim Products within the Field
Net Sales of TetCAR Products within the Field
Net Sales of ZAP-CAR Products within the Field
Net Sales of CAT19 1 Gen Product within the Field
st
Net Sales of CAT19 CNS Product within the Field
Net Sales of CAT19 Binder Product within the Field
Net Sales of TRBC2 Dx Products within the Field
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
b.
c.
d.
Subject to Clause 14.4, only one Royalty Rate shall be payable per Royalty Product and the Royalty payable on a Royalty Product
shall be calculated only once and payable only once.
The Royalty Rate in respect of a Royalty Product set out above shall be adjusted, as applicable, in accordance with the provisions of
Clause 14.4 to 14.10, and the order of reduction or adjustment in the Royalty Rate or Royalty due shall be applied sequentially in the
order of those remaining clauses.
Multiple Royalty Product Adjustments
No Royalty Product shall trigger more than one Royalty payment, such that if a product or therapy falls within two or more categories
of Royalty Product (such as a GD2 Product being Covered by RQR8 Program IP) then the maximum Royalty payable for that
particular product or therapy shall be calculated as a percentage of the Net Sales for such Royalty Product at a rate being the sum of
[***] payable pursuant to Clause 14.1 for such Royalty Product, plus [***] of the next [***] payable pursuant to Clause 14.1 for such
Royalty Product.
e.
Adjustment to Royalty Rate for Sub-Licensees
Excluding the Royalty Rate for the GD2 Product, where Autolus has granted rights under the Technology to any Sub-Licensee in
respect of any Royalty Product and at the effective date of such sub-licence, the Royalty Product has only been the subject of
preclinical development (being any development activities prior to commencement of a phase I trial) conducted by or on behalf of
Autolus, then the Royalty due to UCLB on Net Sales of that Royalty Product made by the Sub-Licensee, irrespective of the Royalty
Rate(s) applicable to such Net Sales set out above, shall not exceed [***] of the sums received by Autolus from such Sub-Licensee in
respect of such Net Sales.
f.
Royalty Rate Reductions
In respect of each Royalty Product and on a country by country basis, the Royalty Rate applicable to the Net Sales for such Royalty
Product shall be reduced by the percentages set out in the table below where the applicable circumstance exists or does not exist, as
the context requires. Furthermore, where a product or therapy falls within two or more definitions of a Royalty Product, then the
following circumstances shall be assessed on an individual Royalty Product by Royalty Product basis (and hence separate Program
IP by Program IP basis) such that the Royalty Rate in respect of the product or therapy falling within one Royalty Product definition
may be adjusted differently to the Royalty Rate that would be applicable for such same product or therapy also falling within a second
definition for another Royalty Product.
43
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Circumstance in the country of sale in respect of the applicable Royalty Product
(A) the sale of the Royalty Product in the country of sale would were it not for the specific Licence granted
hereunder in respect of Licensed Patents under one category of Program IP specific to that Royalty
Product or the ownership by Autolus or the relevant Assignee Entity of the relevant Licensed Patents, at the
time of sale infringe a Valid Claim of such Licensed Patents included in that Program IP.
(B) where the Royalty Product is either an Epitope Tag Product and/or a Retrostim Product (i) such Royalty
Product would were it not for the specific Licence granted hereunder in respect of the Epitope Tag Patent
Rights and/or Retrostim Patent Rights, as applicable to that Royalty Product, or the ownership by Autolus
or the relevant Assignee Entity of the Epitope Tag Patent Rights and/or Retrostim Patent Rights, at the time
of sale infringe a Valid Claim of the Epitope Tag Patent Rights and/or Retrostim Patent Rights in that
country of sale; (ii) the manufacture of such Royalty Product or the manufacture of any component used in
its manufacture would, were it not for the specific Licence granted hereunder in respect of the Epitope Tag
Patent Rights or the ownership by Autolus or the relevant Assignee Entity of the Epitope Tag Patent Rights,
have infringed a Valid Claim of the Epitope Patent Tag Rights at the time of sale in the country of sale for
such Royalty Product (as if such Royalty Product or any component used in the manufacture of such
Royalty Product had been manufactured in the country of sale) and/or (iii) the manufacture of such Royalty
Product or the manufacture of any component used in its manufacture would, were it not for the specific
Licence granted hereunder in respect of the Retrostim Patent Rights, or the ownership by Autolus or the
relevant Assignee Entity of the Retrostim Patent Rights have infringed a Valid Claim of the Retrostim Patent
Rights at the time of its sale in the country of sale for such Royalty Product (as if such Royalty Product or
any component used in the manufacture of such Royalty Product had been manufactured in the country of
sale).
(C) Circumstance (A) above does not exist, but the Original Royalty Product or the CAT19 1 Gen Product
or the CAT19 CNS Product benefits from Regulatory Exclusivity in that country of sale.
st
(D) Neither of the circumstances (A) or (C) exists, but the sale of the Original Royalty Product or CAT19 1
Gen Product or CAT19 CNS Product is made in the country during the Know-How Period applicable to that
Original Royalty Product or the CAT19 1 Gen Product or CAT19 CNS Product.
st
st
(E) Neither of the circumstances (A) or (C) exists, but the sale of the CAT19 Binder Product is made in the
country during the Know-How Period applicable to the CAT19 Binder Product, provided that the CAT19
Binder Product is not Covered by any Program IP in addition to the CAT19 Program IP at the time of sale.
(F) (i) in the case of an Original Royalty Product or CAT19 Product, [***] for that applicable Original Royalty
Product or CAT19 Product; or (ii) in the case of an Additional Royalty Product (that is not an Epitope Tag
Product or a Retrostim Product), [***] for that applicable Additional Royalty Product; or (iii) in the case of an
Epitope Tag Product or a Retrostim Product, neither circumstance (A) or (B) apply for such Epitope Tag
Product or Retrostim Product (each being a “Royalty Expiry”).
Percentage reduction to the
Royalty Rate
[***]%
(with respect to the Royalty Rate
applicable only to the use of any
Licensed Patents excluding the
Epitope Tag Patents and
Retrostim Patent Rights)
[***]%
(with respect to the Royalty Rate
applicable only to the use of
Epitope Tag Patents or Retrostim
Patent Rights only)
[***]%
[***]%
[***]%
[***]%
g.
By way of example only to assist interpretation of the foregoing, assuming a Royalty Product is (i) both a [***] Product and a [***]
Product, but that in the country of sale there are no Valid Claims remaining under the [***] Patent Rights and one Valid Claim remains
under the [***] Patent Rights which would, were it not for the Licence to the [***] Program
44
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
IP or the ownership by Autolus or the relevant Assignee Entity of the [***] Patent Rights, be infringed by the sale of such Royalty
Product, and there remains Regulatory Exclusivity then the applicable royalty would be [***] being [***] of the [***] Royalty Rate and
[***] of the [***] Royalty Rate; or (ii) both a [***] Product and an [***] Product, but that in the country of sale there are no Valid Claims
remaining under the [***] Patent Rights or [***] Patent Rights, but one Valid Claim remains under the [***] Patent Rights in the country
of sale of the [***] Product, which Valid Claim would, were it not for the Licence to the [***] IP or the ownership by Autolus or the
relevant Assignee Entity of the [***] Patent Rights, be infringed at the time of the sale of such [***] Product, by the manufacture of
such [***] Product or by the manufacture of materials subsequently used in the manufacture of the such [***] Product (as if such
manufacture was taking place in the country of sale), and the Royalty Product is sold during the Know-How Period, then the total
applicable royalty would be[***], being [***] of the [***] Royalty Rate [***][***][***] and [***] of the [***] Royalty Rate [***][***][***].
For the purposes of Clause 14.6:
st
the “Know-How Period” means (a) with respect to Original Royalty Products the period of time in a particular country
commencing with the Effective Date and expiring on the earlier of (i) the [***] of the Effective Date or (ii) [***] from the date of
First Commercial Sale in the country in question for the applicable Original Royalty Product, and (b) with respect to a CAT19
1 Gen Product the period of time in a particular country commencing with the Second Amendment Date and expiring on the
earlier of (i) the [***] of the Second Amendment Date or (ii) [***] from the date of First Commercial Sale in the country in
question for the applicable CAT19 1 Gen Product and (c) with respect to a CAT19 Binder Product the period of time in a
particular country commencing with the Second Amendment Date and expiring on the earlier of (i) the [***] of the Second
Amendment Date or (ii) [***] from the date of First Commercial Sale in the country in question for the applicable CAT19
Binder Product, and (d) with respect to a CAT19 CNS Product the period of time in a particular country commencing with the
Third Amendment Date and expiring on the earlier of (i) the [***] of the Third Amendment Date or (ii) [***] from the date of
First Commercial Sale in the country in question for the applicable CAT19 CNS Product; and,
st
no Royalty shall be payable on an Additional Royalty Product unless condition (A) or condition (B) exists at the time of sale.
Royalty Stacking
If Autolus, its Affiliates or any Sub-Licensee or any Assignee Entity in-licenses or acquires (a) any rights for Exploitation of the BioVec
cell line referred to in Schedule 13 for the purpose of Exploiting the same GD2 Product that is the subject of the CRUK Study; or (b)
any Patent Rights from any Third Party or, subject to Clause 14.10 from UCLB, and such Patent Rights are required (as reasonably
assessed, based on such rights blocking Exploitation) to Exploit any Royalty Product(s) in any way (“Third Party Access Rights”);
to the extent Autolus, its Affiliates or its Sub-Licensee or Assignee Entity is required (under (a) and/or (b)) to pay any consideration,
royalties, monies, milestones, or other fees under or in connection with the aforementioned use of such cell line and/or Third Party
Access Rights applicable to any Royalty Product(s) (“TP Fees”), such TP Fees shall be deductible from Royalties otherwise due on
those Royalty Product(s) as follows:
the deduction from Royalties of the TP Fees payable in respect of the [***][***][***] shall be limited to [***], and only [***] of the
value of those TP Fees [***] may be deducted;
in the case of TP Fees paid for Third Party Access Rights, a maximum deduction of [***] of the total Royalty that would otherwise
be payable were it not for this Clause;
for the purpose of this Clause, Third Party Access Rights shall include the in-licensing or acquisition of [***] or equivalent
technology in so far as it relates to [***] but shall not include the in-licensing of any other unpatented technology.
If Autolus, its Affiliates or any Sub-Licensee or any Assignee Entity in-licenses any Patent Right from UCLB that is (i) in the name of
UCLB as of the Effective Date; and/or (ii) is filed by or on behalf of or at the direction of UCLB within [***] after the Effective Date in
h.
i..
ii..
i.
i..
ii..
iii..
j.
45
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
k.
i..
respect of any invention recorded in an invention disclosure form logged in UCLB’s database and categorised as “Biopharm” and
with the status “being assessed” as of [***] prior to the Effective Date, then where such Patent Right is required to Exploit any Royalty
Product(s) in any way (as reasonably assessed, based on such rights blocking Exploitation), if Autolus, its Affiliates or any Sub-
Licensee or any Assignee Entity is required under the terms of such licence to pay any consideration, royalties, monies, milestones,
or other fees under or in connection with such rights, the Royalty in respect of such Royalty Product(s) shall be reduced by [***].
Diminished Royalty Product
If a Third Party (that is not authorised as a Sub-licensee or an Assignee Entity to Exploit a particular Royalty Product)
commences Exploitation of any Competitive Product in a country within the Territory that infringes any of the Intellectual
Property licensed hereunder or any Assigned Patents (each an “Competing Entrant”), and UCLB and/or Autolus
commence litigation against such Competing Entrant in respect of such Competitive Product, then in so far as any Royalties
are due for sales of Royalty Product(s) in the country where litigation is ongoing and in respect of which the Competitive
Product is competitive, such Royalties will be paid into escrow by Autolus pending resolution of such litigation. Upon
conclusion of such litigation, the Royalties due on those Royalty Products sold during the period in which the litigation was
on-going, shall be re-calculated (based on the final outcome of the patent position, status of Regulatory Exclusivity available
and Know-How Period as at the conclusion of the litigation) and the funds held in escrow shall be distributed according to
such re-calculation.
ii..
All interest earned on the sums paid into escrow pursuant to this clause shall accrue to the benefit of the escrow account for
distribution in accordance with Clause 14.11.
l.
Royalty Term
The Royalty Term shall commence on the Effective Date and on a country by country basis and Royalty Product by Royalty Product
basis, shall expire automatically upon there being a Royalty Expiry in such country for such Royalty Product. Upon such expiry the
rights and licences granted under this Agreement to Autolus in respect of such Royalty Product and country (including any sub-
licences granted by Autolus in respect thereof) shall become irrevocable, perpetual, royalty free and fully paid up.
SUB-LICENSEE PAYMENTS
If Autolus, upon (i) granting a sub-license of any Technology or a licence of Assigned Patents to a Sub-Licensee for the right to Exploit
one or more Royalty Products (each being a “Sublicence”), or (ii) assigning any Assigned Patent to a third party (each being a
“Patent Sale”) receives in consideration of that grant or sale any Net Receipts, Autolus shall, subject to Clause 15.2 and Clause 16,
make payments to UCLB from time to time calculated by reference to a percentage of Net Receipts received by Autolus under the
Sublicence or Patent Sale in accordance with the applicable percentage set out below (“Sublicence Or Patent Sale Payment”):
where (i) the Sublicence includes a sub-licence under any of the BCMA Licence, the [***] Licence, the GD2 Licence, the Logic
Gate Licence, the NSG Licence, the RQR8 Licence, the TRBC1/2 Licence and/or the ZipCAR Licence or a licence under any
Assigned Patents which were previously licensed under any such Program Licence but not under any Additional Program
Licences, or (ii) the Patent Sale includes assignment of any of the [***] Patent Rights, the GD2 Patent Rights, the Logic Gate
Patent Rights, the NSG Patent Rights, the TRBC1/2 Patent Rights and/or the ZipCAR Patent Rights: -
15.
a.
i..
46
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Circumstances at the time of grant of the Sublicence or Patent Sale
Percentage of Net Receipts
At the time of grant of the Sublicence or completion of such Patent Sale, the aggregate
investment (by way of cash or debt) in Autolus from its incorporation date by its shareholders or
investors for the development of the Technology is less than GBP £[***]
At the time of grant of the Sublicence or completion of such Patent Sale, the aggregate
investment (by way of cash or debt) in Autolus from its incorporation date by its shareholders or
investors for the development of the Technology is equal to or more than GBP £[***] (unless the
circumstances below apply)
At the time of grant of the Sublicence or completion of such Patent Sale, at least [***] have
passed since the aggregate investment (by way of cash or debt) in Autolus from its incorporation
date by its shareholders or investors for the development of the Technology first equalled or
exceeded GBP £[***] (in which case none of the above provisions shall apply)
[***]%
[***]%
[***]%
ii..
where (i) the Sublicence is in respect of any of the ccCAR Licence, the Epitope Tag Licence, the iCAR Licence, the RapaiCASP9
Licence, the Retrostim Licence, the TetCAR Licence, and/or the ZAP-CAR Licence or a licence under any Assigned Patents
which were previously licensed under any such Program Licence (and does not include a sub-licence under any of the
Original Program Licences or a licence under any Assigned Patents which were previously licensed under any such Program
Licence), or (ii) the Patent Sale is in respect of any of the ccCAR Patent Rights, the Epitope Tag Patent Rights, the iCAR
Patent Rights, the RapaiCASP9 Patent Rights, the Retrostim Patent Rights and/or the ZAP-CAR Patent Rights (and does not
include a sub-licence under any of the Original Program Licences or a licence under any Assigned Patents which were
previously licensed under any such Program Licence):
Circumstances at the time of grant of the Sublicence or Patent Sale
Percentage of Net Receipts
The Sublicence is granted or Patent Sale is completed within [***] following the Amendment
Date
The Sublicence is granted or Patent Sale is completed between [***] and [***] following the
Amendment Date
The Sublicence is granted or Patent Sale is completed anytime after [***] following the
Amendment Date
[***]%
[***]%
[***]%
iii..
where the Sublicence is in respect of the CAT19 Licence and/or under the CAT19 CNS Licence (and does not include a sub-
licence under any of the Original Program Licences or the Additional Program Licences or a licence under any Assigned
Patents which were previously licensed under any such Program Licence):
Circumstances at the time of grant of the Sublicence
Percentage of Net Receipts
The Sublicence is granted within [***] following the Second Amendment Date
The Sublicence is granted between [***] and [***] following the Second Amendment Date
The Sublicence is granted anytime after [***] following the Second Amendment Date
[***]%
[***]%
[***]%
47
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
iv..
where Autolus grants sub-licences under any of the Original Program Licences, the Additional Program Licences, the CAT19
Licence and/or under the CAT19 CNS Licence or a licence under any Assigned Patents which were previously licensed
under any such Program Licence or assigns an Assigned Patent which were previously licensed under any such Program
Licence to the same Sub-Licensee or Asignee Entity (irrespective of whether such sub-licences, licences or patent
assignments form part of the same, separate or a connected Sublicence or Patent Sale), then subject first to any reduction of
the value of Net Revenues attributable to Intellectual Property that is not exclusively Technology (pursuant to Clause 15.2),
for the purposes of calculating the Sublicence Or Patent Sale Payment due to UCLB in respect of the Original Program
Licences, the Additional Program Licences, the CAT19 Licence and/or the CAT19 CNS Licence or Assigned Patents which
were previously licensed under any such Program Licence the following shall apply:
xvi.
xvii.
xviii.
to the extent Clause 15.2.1 applies, an adjustment will be made to the total value (after any adjustment pursuant to the
provisions of Clause 15.2.1) after which the remaining value of the Net Receipts shall first be divided in proportion to the
value fairly and reasonably attributable to the Original Program Licences and/or Assigned Patents which were previously
licensed under the Original Program Licences, the value fairly and reasonably attributable to the Additional Program
Licences and/or Assigned Patents which were previously licensed under the Additional Program Licences, the value
fairly and reasonably attributable to the CAT19 Licence and the value fairly and reasonably attributable to the CAT19
CNS Licence;
at UCLB’s request, Autolus shall provide details to UCLB of the basis of Autolus’ proposed apportionment of the total
value of Net Receipts between the Original Program Licences and/or Assigned Patents which were previously licensed
under the Original Program Licences, the Additional Program Licences and/or Assigned Patents which were previously
licensed under the Additional Program Licences, the CAT19 Licence and the CAT19 CNS Licence pursuant to (i); and,
following an agreed apportionment of the total value of Net Receipts between the Original Program Licences and/or
Assigned Patents which were previously licensed under the Original Program Licences, the Additional Program
Licences and/or Assigned Patents which were previously licensed under the Additional Program Licences, the CAT19
Licence and the CAT19 CNS Licence pursuant to (i), the Sublicence Or Patent Sale Payment shall be calculated) using
the applicable percentages set out in the tables under Clauses 15.1.1, 15.1.2, and 15.1.3.
Each Sublicence Or Patent Sale Payment under Clause 15.1 is subject to the following:
where the Sublicence or Patent Sale includes a grant of rights to Intellectual Property which is not exclusively Technology, then
for the purposes of calculating the Sublicence Or Patent Sale Payment, the value of Net Receipts shall first be adjusted to a
value attributable to the Technology sub-licensed, or in the case of the Assigned Patents, licensed or assigned, to the Sub-
Licensee or Assignee Entity (as applicable) which will be calculated in direct proportion to the value fairly and reasonably
attributed to Technology licensed hereunder (or in the case of the Assigned Patents, assigned to Autolus or Assignee Entity)
as against all other Intellectual Property licensed or assigned to the Third Party under the Sublicence or Patent Sale (as
applicable). At UCLB’s request Autolus shall provide details to UCLB of the basis of any proposed apportionment;
either party may refer any dispute relating to any apportionment of values either under any of Clauses 15.1.4 and/or 15.2.1 to the
Expert in accordance with Part C of Schedule 8;
Sublicence Or Patent Sale Payments in respect of Net Receipts received under a particular Sublicence or Patent Sale shall, on a
country by country basis, cease to be payable:
b.
i..
ii..
iii..
48
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
xx.
xix.
xxiv.
xxiii.
xxi.
xxii.
under Clause 15.1.1 where Licensed Patents are sub-licensed, or in the case of Assigned Patents licensed or assigned,
to the Sub-Licensee or Assignee Entity (as applicable) in that country, upon the later of (i) the [***]; or (ii) [***] after the
Effective Date;
under Clause 15.1.1 where no Licensed Patents are sub-licensed to the Sub-Licensee in that country or in the case of
Assigned Patents licensed or assigned, [***] after the Effective Date;
under Clause 15.1.2 upon [***] under the Additional Program Licences so sub-licensed or assigned;
under Clause 15.1.3 where Licensed Patents are sub-licensed to the Sub-Licensee in that country, upon the later of (i)
[***] in that country; or (ii) [***] after the Second Amendment Date;
under Clause 15.1.3 where no Licensed Patents are sub-licensed to the Sub-Licensee in that country, [***] after the
Second Amendment Date; and
under Clause 15.1.4, according to the relevant periods set out above under this Clause 15.2.3 applicable to the
Technology licensed under the Original Program Licences, the Additional Program Licences and/or the CAT19 Licence;
and/or the relevant Assigned Patents which were previously licensed under any such Program Licence.
In the event that any of the Milestones are achieved by a Sub-Licensee or Assignee Entity (as opposed to by Autolus) in respect of a
particular Royalty Product then Autolus shall be entitled to offset against the corresponding Milestone Payment payable to UCLB the
amount of Sublicence Or Patent Sale Payments payable to UCLB in respect of a Sublicence to that Royalty Product or Patent Sale
of Assigned Patents Covering such Royalty Product on or before the date that the Milestone Payment is triggered. In the event that
any Milestone Payment is triggered by a second or subsequent Royalty Product (derived from the same Program IP), the right to
offset Sublicence Or Patent Sale Payments against such Milestone Payment shall exclude any previous Sublicence Or Patent Sale
Payments to the extent that they have already been offset in relation to the previous Milestone Payment provided that any excess of
a Sublicence Or Patent Sale Payment not offset shall be capable of offset against future Milestone Payments relating to Royalty
Products derived from the same Program IP. Where the amount of the Milestone Payment exceeds the Sublicence Or Patent Sale
Payments that can be offset against it, Autolus shall pay to UCLB the shortfall against that Milestone Payment in accordance with
Clause 13.
REPORTING AND PAYMENT PROVISIONS
Payment Provisions for Milestone Payments and Sublicence Or Patent Sale Payments
Milestone Payments and Sublicence Or Patent Sale Payments shall all be made in accordance with the following procedure:
Autolus shall, within [***], of the occurrence of a Milestone or receipt of Net Receipts triggering a Sublicence Or Patent Sale
Payment, notify UCLB of such occurrence, and in the case of a receipt of Net Receipts Autolus shall include in its notification
confirmation of what sum is payable by way of a Sublicence Or Patent Sale Payment and its notification shall include the
information listed in Schedule 10 in so far as relevant to the calculation of a Milestone or Sublicence Or Patent Sale
Payment;
UCLB shall send to Autolus a VAT invoice addressed to Autolus in respect of the applicable payment due under either Clause 13
or Clause 15;
Autolus shall pay such invoice within [***] of the date of receipt of the same by Autolus.
Payment Provisions for Royalties
With effect from the First Commercial Sale of the first Royalty Product to be sold and throughout the remainder of the Royalty
Term, Autolus shall provide UCLB with a written report showing the gross selling price of those Royalty Products (triggering
Royalties or Milestones) sold by Autolus and its Sub-Licensees or any Assignee Entity in the preceding Quarter together with
the calculations of Net Sales, which report shall include the information listed in Schedule 10 to the extent relevant to the
calculation of Net Sales.
c.
16.
a.
i..
ii..
iii..
b.
i..
49
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
ii..
iii..
iv..
Quarterly reports shall be due within [***] of the close of every Quarter. Autolus shall keep accurate records in sufficient detail to
enable the Royalties and payable hereunder to be determined.
After receipt of the Quarterly report referred to in Clause 16.2.2, UCLB shall send to Autolus a VAT invoice addressed to Autolus
in respect of the applicable payment due under Clause 14 as indicated in the royalty report.
Royalties shall be due and payable within [***] of the date such invoice is received by Autolus in accordance with Clause 16.2.3.
Payments of Royalties due in whole or in part may be made in advance of such due date.
c.
Late Payments
Any payment of any amount under this Agreement not received on the due date specified in accordance with this Clause 16 shall
accrue interest thereafter on the sum due and owing from the date payment is due until the date payment is received at an annual
interest rate equal to [***].
d.
Currency Conversion
All amounts payable pursuant to this Agreement shall be payable in Pounds Sterling by bank transfer to a bank account designated
from time to time in writing by UCLB. In calculating Net Sales, Sublicence Or Patent Sale Payments and Royalties under this
Agreement, where receipts are received in a currency other than Pounds Sterling, such sums shall be calculated as Pounds Sterling
by converting such sums according to the spot rate for the Pound Sterling against the applicable currency as of midday on the day at
the end of the applicable calendar Quarter, as such rate is advertised by the Financial Times in London.
e. Withholding
All amounts due under the Agreement shall be made after deduction of any withholding taxes, charges or other duties in the country
of payment. Where any amount due to be paid under this Agreement is subject to any withholding or similar other tax, the Parties
shall take reasonable steps to do such reasonable acts and things and sign such deeds and documents as reasonably appropriate to
assist them to take advantage of any applicable double taxation agreements or other legislative provisions to reduce the rate of
withholding or similar taxes with the object of paying the sums due under deduction of a reduced rate of withholding tax or on a gross
basis. In the event there is no double taxation agreement or other legislative provision or the reduced rate of withholding tax under
the relevant double taxation agreement is greater than zero per cent., Autolus (or its agent) shall promptly pay such withholding or
similar tax by deducting the relevant amount from the payment due to UCLB, and send to UCLB proof of such withholding or similar
tax in a form in accordance with the relevant taxation authority as evidence of such payments. Similarly, in so far as withholding or
similar taxes are payable on sums ultimately due hereunder but are required to be made by Autolus’s Affiliates or Sub-Licensees,
such withholding may be made and Autolus shall work with UCLB to obtain from Autolus’s Affiliates and Sub-Licensees proof that
such withholding has been properly accounted for to the relevant tax authority and such documents as are reasonably necessary to
allow UCLB to take advantage of any double taxation agreement, other legislative provision or reduced rate as may be available to it.
Royalty Audits
UCLB shall have the right to appoint, [***] on at least [***] prior written notice to Autolus, an independent certificated accountant
reasonably acceptable to Autolus to undertake an audit of Autolus’s accounts and records relevant to the sales of Royalty
Products, Net Sales and Net Receipts to verify the accuracy of any payments due in respect of Royalties and Net Receipts.
The independent certified accountant shall spend no more than [***] at the premises of Autolus for the purpose of
undertaking the audit. Thereafter, Autolus shall within [***] of receiving a written request from the independent accountant
provide any additional information that is reasonable and reasonably requested for the purpose of assisting with the audit,
provided that the foregoing obligation shall expire [***] after the audit. The independent auditor shall be required to enter into
a confidentiality agreement on reasonable and standard terms with Autolus and shall not be entitled to disclose any
confidential information of Autolus from the audit but shall be able to disclose whether or not Autolus is in compliance with its
f.
i..
50
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
ii..
reporting obligations and the levels of Royalty and Sublicence Or Patent Sale Payments declared and paid, and any
discrepancy in the amount of Royalties and Sublicence Or Patent Sale Payments declared as against those calculated to be
due. To comply with its obligations under this Clause 16.6.1, Autolus shall include obligations in its Sublicences and any
assignment of the Assigned Patents to obtain and make available to the auditor appropriate information from Sub-Licensees
and any Assignee Entity of an Assigned Patent to enable the independent auditor to verify the accuracy of Royalties, Net
Receipts and Sublicence Or Patent Sale Payments.
If, as a result of an audit being undertaken, any additional amount is found to be owed by Autolus to UCLB, such additional
amount shall be paid within [***] after receipt of the accountant’s report, along with interest at the annual interest rate of [***]
from the date that such additional amount should have first been paid until paid in full. If the amount underreported as
Royalties or Sublicence Or Patent Sale Payments for the relevant periods that are the subject of the audit, are in excess of
[***]. in the relevant audit, then Autolus shall in full and final settlement of any claim of breach reimburse UCLB for those
reasonable and customary costs charged by the independent auditor for conducting such audit (upon production of
accompanying receipted invoices in respect of the same). If the accountant determines that there has been an overpayment
by Autolus, the amount of such overpayment shall be refunded to Autolus within [***] after receipt of the accountant’s report,
or at Autolus’s discretion, set-off against a future payment of Royalties or Sublicence Or Patent Sale Payments.
g.
Fair Market Value
Any disagreement between the Parties as to the fair market value for the purpose of calculating any Net Sales pursuant to Part A of
Schedule 8 of this Agreement shall be referred to an expert for resolution in accordance with the provisions of Part C of Schedule 8.
The value of such Net Sales in dispute shall (i) not be included in the calculation of the percentage of underreported royalties referred
to in Clause 16.6.2 for the purposes of determining responsibility for the auditor's fees; and (ii) be excluded from any late payment
charges or allegations of breach for non-payment until such time as the dispute is resolved, a value attributed and at least [***] has
passed from such final determination. Notwithstanding the foregoing provision, if the expert determines that the fair market value is
such that UCLB is entitled to additional sums, UCLB shall be entitled to charge interest on any outstanding amount on a daily basis
at a rate equivalent of [***], such interest shall be payable from the date UCLB issues a notice disputing the fair market value until the
date the UCLB receives such additional payment.
BUY-OUT OPTION
On a Royalty Product by Royalty Product basis, once the aggregate Net Sales for a Royalty Product have exceeded GBP £[***],
Autolus shall thereafter have a right, exercisable on written notice at any time, to negotiate with UCLB to buy out UCLB’s rights to
Royalties, Milestone Payments and Sublicence Or Patent Sale Payments Sales Milestone Payments on such Royalty Product (for
each Royalty Product a “Buy-Out Option”). The reference to “buy out” in this Clause shall mean that UCLB shall cease to be
entitled to Royalties in exchange for some other cash consideration.
17.
a.
b.
Upon exercising the Buy-Out Option by way of Autolus serving a written notice on UCLB, the following shall apply until expiry of [***]
after the date Autolus’s notice is deemed served (unless extended by agreement between the Parties):
Autolus and UCLB shall promptly and actively negotiate throughout the [***] period, in good faith and acting reasonably, fair and
reasonable terms for, and the, conclusive agreement upon which the buy-out may be exercised;
in so far as UCLB does not actively and properly participate in such negotiations or does not act reasonably or in good faith, the
[***] period shall be extended by a period equal to, or otherwise fairly calculated to, compensate for any delay in or absence
from a negotiation by UCLB in accordance with the principles under Clause 17.2.1.
INTELLECTUAL PROPERTY PROSECUTION AND MAINTENANCE
Ownership
i..
ii..
18.
a.
51
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
i..
ii..
iii..
b.
i..
ii..
c.
i..
Nothing in this Agreement shall assign or purport to assign any Intellectual Property rights owned by one Party to the other Party.
With the exception of the Assigned Patents, ownership of which has been assigned to Autolus with effect from the Third
Amendment Date, UCLB is and shall at all other times remain the sole and exclusive owner of all right, title and interest in
and to any and all Program IP. UCLB shall not assign, mortgage, encumber or otherwise gift or provide an option over any of
the Licensed Patents or Program IP without the prior written consent of Autolus.
Autolus is and shall at all times remain the sole and exclusive owner of all right, title and interest in and to any and all Intellectual
Property that it owns or Controls (other than by virtue of the licences granted hereunder) as of or after the Effective Date.
Patent Prosecution
In respect of the Retained Patents:
xxv.
xxvi.
UCLB shall not Surrender any of them without the prior written consent of Autolus;
UCLB shall ensure that all documents and correspondence that it, or its agents or other licensees receive in connection
with any of such Retained Patents shall be promptly and in any event within seven (7) days forwarded to Autolus, and
without limiting the foregoing, UCLB shall keep Autolus promptly informed in advance of any steps taken regarding the
RQR8 Patent Rights and the [***] Existing Patent;
UCLB shall promptly notify Autolus of any threatened or actual claim of invalidity or revocation or opposition of any of
the Retained Patents and shall provide full details and all such information available to it regarding such threatened or
actual claim;
in respect of the RQR8 Patent Rights, if the validity of any of them is challenged and UCLB (or its other licensees) does
not defend such challenge, then Autolus shall have the right (but not the obligation) to control, direct and conduct such
proceedings. UCLB shall do (or not do) all such things as are reasonably directed by Autolus to enable Autolus to
control, direct and conduct such proceedings, including allowing Autolus’s legal representatives to conduct such
litigation in UCLB’s name where required or beneficial provided that Autolus indemnifies UCLB and/or its Affiliates for
any Third Party costs, damages, expenses or liability incurred by UCLB and/or its Affiliates as a direct result of assisting
Autolus subject to Clause 18.8. Autolus shall pay UCLB’s and/or its Affiliates for any reasonable (economy) travel and
reasonable subsistence costs incurred by UCLB and/or its Affiliates as a result of assisting Autolus under this Clause
18.2.1(iv). Autolus shall consult and co-operate with UCLB and its licensees outside of the RQR8 Field if it elects to
defend such challenge;
UCLB shall provide assistance to and co-operate with Autolus in accordance with this Clause 18 without any further cost
to Autolus, save that (i) if UCLB personnel are required to participate in any opposition proceeding (or comparable
proceeding before patent offices and courts) which requires full time involvement for more than [***] per annum per
Program IP under any Program Licence, then for such excess co-operation beyond the [***] for that Program IP Autolus
shall reimburse UCLB its reasonable costs, and (ii) this provision shall be without prejudice to the indemnity given in
Clause 18.2.1(iv); and,
any enforcement of the Licensed Patents shall be subject to Clause 19.
xxvii.
xxviii.
xxix.
xxx.
[***]
In respect of the RQR8 Patent Rights:
Autolus shall be responsible for [***]. of those Patent Prosecution Costs properly incurred by UCLB in the prosecution and
maintenance of the RQR8 Patent Rights provided that UCLB’s Third Party licensee outside the RQR8 Field and/or UCLB is
responsible for and pays [***] of those Patent Prosecution Costs;
ii..
UCLB shall keep Autolus informed of developments in the prosecution and maintenance of the RQR8 Patent Rights and shall
provide Autolus with copies of
52
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
iii..
iv..
v..
d.
e.
f.
i..
ii..
iii..
g.
i..
ii..
all material correspondence to and from its patent attorneys or patent offices in relation to the RQR8 Patent Rights and shall
provide Autolus reasonable notice of and the opportunity at its own cost to participate in any conference calls or meetings
with UCLB’s patent attorneys in relation to the drafting, filing, prosecution, and maintenance of the RQR8 Patent Rights;
UCLB shall consult with Autolus in connection with UCLB’s and its Third Party licensee’s strategy for the prosecution and
maintenance of the RQR8 Patent Rights;
UCLB shall take into account any reasonable comments and suggestions of Autolus in relation to the prosecution and
maintenance of the RQR8 Patent Rights; and
UCLB shall notify Autolus in advance of any step(s) UCLB proposes be taken which would change the specification or reduce the
scope of the claims of the RQR8 Patent Rights in the RQR8 Field, and having done so shall take into account any
reasonable comments and suggestions promptly proposed by Autolus in relation to such steps.
Section intentionally left blank.
Autolus and UCLB shall, promptly after the Effective Date, and thereafter throughout the Term appoint a designated and named
member of its respective personnel, experienced in and responsible for Intellectual Property matters, which person shall act as the
liaison between Autolus and UCLB (and UCLB’s other licensees as necessary) with respect to the Licensed Patents and obligations
thereto under this Agreement and shall make themselves available at reasonable times and on reasonable notice to address any
matters concerning the Licensed Patents.
Validation and Maintenance of Assigned Patents
Autolus shall have the sole discretion to determine, on a reasonable basis and following its notification to UCLB, in which countries to
maintain or Surrender the Assigned Patents. Notwithstanding the foregoing discretion, if Autolus wishes to Surrender any of the
Assigned Patents in any of the Core Countries then the following shall apply:
prior to taking any steps to Surrender an Assigned Patent in a Core Country, Autolus shall first provide UCLB with at least [***]
notice of its intention identifying the Assigned Patent and applicable Core Countries;
UCLB shall have a right of step-in (to be exercised within [***] of notice from Autolus under Clause 18.6.1) to take over such
Assigned Patent in the applicable Core Country and if it exercises such right (i) UCLB shall thereafter be responsible for all
costs and expenses associated with such Assigned Patent for that applicable Core Country; (ii) Autolus’s licence to that
Assigned Patent for that applicable Core Country shall continue in such Core Country and the Assigned Patent concerned
shall continue to be a Licensed Patent in respect of such Core Country; and,
if UCLB does not exercise its step-in right in accordance with Clause 18.6.2, then Autolus shall be entitled without breach of this
Agreement to Surrender such Assigned Patent in such Core Countries.
SPCs and Patent Notifications
Without the prior written consent of Autolus, UCLB shall not file any supplementary protection certificate or patent term extension
right (“SPC”) under any Retained Patents with respect to the issue of any Regulatory Approval (including any Marketing
Approval) for any product. Upon Autolus’s request, UCLB shall file and, at Autolus’s direction, control and expense,
prosecute an application for an SPC against any of the Retained Patents with respect to any product.
Where any country in the Territory requires the holder of a Regulatory Approval with respect to a medicinal product or medical
device to designate one or more Patent Rights as being Patent Rights that protect such medicinal product or medical device
(including the purple book listing required by the FDA) (an “Purple Book Reference”), then Autolus shall have the sole right
to specify which (if any) Patent Rights should be listed in such references and UCLB shall list any of the Retained Patents if
Autolus wishes to do so.
h.
Indemnity Conditions
53
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
i..
ii..
iii..
iv..
19.
a.
Autolus’s obligation to continue to indemnify UCLB pursuant to Clauses 18.2.1(iv) and 19.2.2(ii) is conditional upon:
UCLB taking those steps, doing those things or refraining from doing those things requested of it by Autolus for the duration of the
indemnification;
UCLB not making any admission or settlement (or taking steps to do so) concerning the proceedings without the prior written
consent of Autolus;
Autolus having sole conduct of the applicable proceedings for the duration of the indemnification;
any damages, account of profits, financial remedy or costs recovered from Third Parties (whether in UCLB’s name or otherwise)
in respect of the applicable proceedings being for the sole account of Autolus.
INTELLECTUAL PROPERTY ENFORCEMENT
A Party shall notify the other of any information it has regarding any Third Party infringement of (i) the Intellectual Property licensed
under or pursuant to this Agreement; and/or (ii) the Assigned Patents, in each case in so far as such infringements are related to any
products, services or processes.
b.
In respect of any alleged, threatened or actual infringement of the Intellectual Property licensed or sub-licensed hereunder
(“Enforcement Action”) the following, subject to Clause 19.3, shall apply:
i..
With respect to the Assigned Patents, Autolus shall have the sole right to determine whether or not it wishes to bring proceedings
for the Enforcement Action. With respect to other Licensed Patents, Autolus shall have the first right to determine whether or
not to bring such proceedings, and only if Autolus elects not to bring proceedings itself shall UCLB have the right to decide
whether or not to bring proceedings for the Enforcement Action (but in doing so UCLB shall have regard to the advice and
recommendations of Autolus);
ii..
where Autolus, in exercising its right under Clause 19.2.1, decides to enforce any of the Licensed Patents or other Intellectual
Property licensed hereunder, then:
xxxi.
xxxii.
at Autolus’s expense, Autolus shall have the right to control, direct and conduct such proceedings;
UCLB shall allow Autolus’s legal representatives to conduct any litigation in UCLB’s name (i) where required by law in
the country of the Enforcement Action or (ii) to the extent beneficial to the enforcement or relief sought; and (iii) in doing
so UCLB shall do (or not do) all such things as are directed by Autolus to enable Autolus to control, direct and conduct
such proceedings provided that Autolus indemnifies UCLB and/or its Affiliates for any Third Party costs, damages,
expenses or liability incurred by UCLB and/or its Affiliates directly as a result of assisting Autolus control, direct and
conduct such proceedings subject to Clause 18.8 (it being acknowledged that UCLB shall have the right to be
separately advised (but not represented before the proceedings) by its own counsel at UCLB’s own expense). Autolus
shall pay UCLB’s and/or its Affiliates’ costs for any reasonable (economy) travel and reasonable subsistence costs
incurred by UCLB and/or its Affiliates as a result of assisting Autolus under this Clause (ii);
UCLB shall use its reasonable endeavours to procure that UCL and MP shall do all such things as are reasonably
directed by Autolus to assist or enable Autolus to control, direct and conduct such proceedings;
Autolus shall have the right to nominate, change or amend any Purple Book Reference and UCLB shall co-operate in
such nomination, change or amendment to list any of the Licensed Patents if Autolus wishes to do so; and,
Autolus shall keep UCLB promptly and fully informed of any and all steps and events in any proceedings (including
promptly responding to any requests for information and allowing UCLB to attend any meetings) and shall give due
consideration to any reasonable comments and suggestions of UCLB with respect to such Enforcement Action;
UCLB shall keep Autolus promptly and fully informed of any and all steps and events in any proceedings (including promptly
xxxv.
xxxiii.
xxxiv.
responding to any requests for information and allowing Autolus to attend any meetings) which are not being
iii..
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
iv..
directed or controlled by Autolus relating to any of the Licensed Patents or other Intellectual Property licensed hereunder and
shall give due consideration to any reasonable comments and suggestions of Autolus with respect to such action;
any recovery of damages or other financial remedy obtained in respect of the Enforcement Action shall, after deduction of all
litigation costs (comprising attorney fees, expert fees, taxes, charges, disbursements, court fees and other costs incurred in
connection with proceedings), be (i) in the case of an Enforcement Action in respect of a Competitive Product be treated as
Net Sales, and (ii) in all other cases be for the account of Autolus; and,
v..
any defence of the validity of the Licensed Patents, where validity is put in issue after commencement of proceedings for the
Enforcement Action shall, notwithstanding the provisions of Clause 18 shall be subject to this Clause 19.
c.
For the avoidance of doubt, an Enforcement Action and Autolus’s right to conduct such action where the RQR8 Patent Right has been
infringed, shall only be in so far as the infringement is within the RQR8 Field.
d. Where either Party becomes aware of an infringement or potential infringement of the RQR8 Patent Rights, the Parties shall consult
with each other and with UCLB’s Third Party licensee outside of the RQR8 Field to decide the best way to respond to such
infringement. Where Autolus pursues any Enforcement Action of the RQR8 Patent Rights in accordance with Clause 19.3 and if the
alleged infringement is both within and outside the RQR8 Field or there is any challenge to the validity of the RQR8 Patent Rights,
Autolus shall co-operate with UCLB’s Third Party licensee in relation to the conduct of such action and its settlement.
CONFIDENTIALITY
The Parties acknowledge that in connection with this Agreement, either Party may disclose or may have disclosed itself or on its behalf
(a “Disclosing Party”) to the other Party (each a “Recipient Party”) information belonging to such Party which information is
marked or stated in writing to be “confidential” or “trade secret” information or where the circumstances of the disclosure and/or the
nature of the information otherwise reasonably give notice of the confidential character of the information (“Confidential
Information”). All such Confidential Information of a Disclosing Party shall, subject to Clause 20.3, be maintained in confidence by
each Recipient Party and shall not be used by the Recipient Party for any purpose except for its proper execution of its obligations
under this Agreement and the Exploitation of any Product or as otherwise expressly authorised (including, in respect of any
confidential Know-How to the extent such Know-How is licensed to the Receiving Party) under this Agreement or to the extent
otherwise agreed in writing by the Disclosing Party provided that the Recipient Party may disclose any Confidential Information
disclosed to it by the Disclosing Party to the extent that such disclosure by the Recipient Party is:
to its employees, directors, consultants or sub-contractors but only on a “need to know” basis provided each such employee,
director, consultant or sub-contractor is subject to obligations of confidentiality consistent with the obligations of confidentiality
in this Clause 20;
to its sub-licensees in respect of confidential Know-How that is licensed to the Recipient Party, but only on a “need to know” basis
provided each such sub-licensee is subject to obligations of confidentiality consistent with the obligations of confidentiality in
this Clause 20;
to an Ethics Committee or Regulatory Authority in connection with any Ethics Committee Application or seeking or maintaining
any Regulatory Approval for any product or therapy in accordance with this Agreement; provided, however, that reasonable
measures shall be taken to assure confidential treatment of such Information;
on a “need to know” and confidential basis to its, or its Affiliates’, legal and financial advisors to the extent such disclosure is
reasonably necessary in connection with such Party’s activities as expressly permitted by this Agreement or for the conduct
of its, or such Affiliates’, business;
to a prospective acquirer or licensee and such Third Party’s employees, advisors and representatives in each case on a “need to
know” confidential basis for the sole purpose of considering such transaction provided that such persons are
20.
a.
i..
ii..
iii..
iv..
v..
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
under substantially similar obligations of confidentiality and non-use as the Recipient Party is pursuant to this Clause 20.
b.
Throughout the Term of this Agreement and thereafter, each Recipient Party shall exercise a reasonable degree of care being at least
the same degree of care as it uses to protect its own Confidential Information of similar nature to preserve the confidentiality of all
Confidential Information of the Disclosing Party. Each Recipient Party shall safeguard Confidential Information against disclosure to
third parties, including Affiliates, employees and persons working or consulting for such Party that do not have an established current
need to know such Confidential Information for purposes in connection with this Agreement or to whom the Recipient Party is not
entitled to disclose the same pursuant to this Clause 20.
c.
The obligation of confidentiality contained in this Clause 20 shall not apply to any part of any Confidential Information of the Disclosing
Party:
that was in the possession of the Recipient Party, without any restriction on use or disclosure, prior to receipt from the Disclosing
Party;
that was at the time of disclosure by or on behalf of the Disclosing Party, in the public domain by public use, publication or general
knowledge;
that became general or public knowledge through no fault of a Recipient Party following disclosure hereunder;
that was properly obtained, without confidentiality or non-use restrictions, by the Recipient Party from a Third Party who was not
under a confidentiality or non-use obligation to the Disclosing Party;
that was documented to have been independently developed by or on behalf of the Recipient Party without the assistance of the
Confidential Information of the Disclosing Party.
The foregoing obligations of confidentiality and non-use shall not be breached by a Recipient Party disclosing Confidential Information
of the Disclosing Party to the extent the same is required to be disclosed by order of any court, governmental authority, Regulatory
Authority or other regulatory body (including any listing authority or financial regulator) provided, however, that the Recipient Party
should give the Disclosing Party prior notice of any such disclosure so as to afford the Disclosing Party a reasonable opportunity to
seek, at the expense of the Disclosing Party such protective orders or other relief as may be available in the circumstances.
Except for any press release agreed by the Parties, neither party shall during the Term, disclose any financial terms of this Agreement
without the prior written consent of the other Party except for such disclosure as may be reasonably necessary to either Party's
bankers, investors, attorneys or other professional advisors or in connection with any actual or proposed merger, sale or acquisition
or as may be required by law in the offering of securities or in securities or regulatory filings or otherwise.
The Parties acknowledge that confidential information may have been disclosed pursuant to the CDA to employees, partners and
representatives of Syncona LLP who themselves may provide services or advice to or sit on the board of Autolus UCLB hereby
agrees that notwithstanding the terms of the CDA employees, partners and representatives of Syncona Management LLP, Syncona
Partners LLP and Syncona LLP who received confidential information from UCLB under the CDA shall be entitled to disclose the
same to Autolus and its employees, directors, consultants or sub-contractors subject to the terms of this Clause 20.
WARRANTIES AND COVENANTS
Autolus and UCLB each respectively represent and warrant to the other at the Effective Date that each of the warranties at Part A of
Schedule 9 in respect of itself, its Affiliates, its assets, its knowledge or its Intellectual Property is accurate as at the Effective Date.
UCLB represents and warrants to Autolus at the Effective Date that except as disclosed in a Disclosure Letter dated as of the Effective
Date each of the warranties at Part B of Schedule 9 is accurate at the Effective Date.
UCLB represents and warrants to Autolus at the Amendment Date that except as disclosed in a Disclosure Letter dated as of the
Amendment Date each of the warranties at Part C of Schedule 9 is accurate at the Amendment Date.
i..
ii..
iii..
iv..
v..
d.
e.
f.
21.
a.
b.
c.
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
d.
e.
f.
g.
h.
i..
ii..
22.
a.
UCLB represents and warrants to Autolus at the Third Amendment Date that except as disclosed in a Disclosure Letter dated as of the
Third Amendment Date each of the warranties at Part E of Schedule 9 is accurate at the Third Amendment Date.
For warranties given by UCLB in respect of its knowledge or awareness, such knowledge or awareness shall be limited to the actual
knowledge or awareness at the Effective Date or the Amendment Date, as applicable, (without having made any searches or
enquiries, other than of UCLB’s Biopharm marked database) of the senior management team of UCLB (director status and above)
and [***].
For warranties given by UCLB at the Second Amendment Date in respect of its knowledge or awareness, such knowledge or
awareness shall be limited to the actual knowledge or awareness at the Second Amendment Date, (without having made any
searches or enquiries, other than of UCLB’s Biopharm market database) of the senior management team of UCLB (director status
and above) and [***].
For warranties given by UCLB at the Third Amendment Date in respect of its knowledge or awareness, such knowledge or awareness
shall be limited to the actual knowledge or awareness at the Third Amendment Date, (without having made any searches or
enquiries, other than of UCLB’s Biopharm market database) of the senior management team of UCLB (director status and above)
and [***].
Save for the warranties and representations expressly set forth above by reference to Schedule 9, (i) the Parties exclude all other
warranties and representations of any kind, whether express or implied in connection with this Agreement, save that the foregoing
shall not exclude or limit any liability for fraud or fraudulent misrepresentation and (ii) without prejudice to the above, UCLB does not
give any warranty, representation or undertaking:
as to the efficacy, usefulness, fitness for purpose, quality, safety or commercial or technical viability of the Technology and/or any
Royalty Products;
that any of the Licensed Patents are or will be valid or will proceed to grant.
LIMITATION OF LIABILITY
Special, Indirect and Other Losses
In no event shall any Party or any of their respective Affiliates be liable for breach of contract, statutory duty, negligence or in any
other way for special, indirect, incidental, punitive or consequential damages or for any indirect economic loss or indirect loss of
profits suffered by any other Party or their respective Affiliates.
b.
No Exclusion
UCLB’s total aggregate liability to Autolus for any and all loss or damage suffered by Autolus as a result of breach of or otherwise in
connection with this Agreement and the Patent Assignment in respect to any and all claims arising under this Agreement or the
Patent Assignment shall be limited to GBP £[***], provided that in the event that any breach of warranty 1.5 and/or 1.6 of Schedule 9
gives rise to loss suffered by Autolus in excess of this cap, the cap shall be increased to the sum of GBP £[***] such that UCLB’s total
aggregate liability for any and all claims arising under or in connection with this Agreement shall be limited to the sum of GBP £[***].
Nothing in this Agreement shall limit or be construed to limit in any way any liability a Party (or its respective Affiliates) may have to the
other Party (or its Affiliates) under this Agreement in respect of (i) death or personal injury caused by that Party’s (or its respective
Affiliates’) negligence; (ii) any fraud or fraudulent misrepresentation or (iii) any other liability which, by rule of law, may not be
excluded or limited by contract between parties.
INDEMNITY AND INSURANCE
Subject to Clause 23.2, Autolus shall indemnify and hold harmless:
the CRUK Funders and their respective officers and employees as well as those researchers and contributors who participated in
the conduct of the CRUK Study, including Great Ormond Street Hospital NHS Foundation Trust (“CRUK Indemnified
Parties”), from and against any and all Third Party (excluding any of the Indemnified Parties) claims, proceedings, liabilities,
damages and expenses (including, reasonable legal fees) arising from or in connection with Autolus’s and/or its
sublicensees’ exercise of the CRUK Rights granted to Autolus hereunder;
c.
23.
a.
i..
ii..
UCLB and/or its Affiliates and any officers, employees, contractors and/or consultants of UCLB and/or its Affiliates (“UCLB
Indemnified Parties”), from and
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
iii..
against any and all Third Party (excluding any of the Indemnified Parties) claims, proceedings, liabilities, damages and
expenses (including, reasonable legal fees) arising from or in connection with Autolus’s and/or its sublicensees’ exercise of
any of the rights (i) granted to Autolus hereunder or (ii) assigned to Autolus under the Patent Assignment;
each of the foregoing Third Party claims, proceedings, liabilities, damages and expenses (including, reasonable legal fees) being
an “Indemnity Claim” and CRUK Indemnified Parties and UCLB Indemnified Parties collectively being the “Indemnified
Parties” or individually an “Indemnified Party”. For the purposes of this Clause, “CRUK Rights” shall mean those parts of
the licences hereunder to Autolus where (i) CRT is the head licensor to UCLB which includes the GD2 Clinical Study Results
and the [***]; or (ii) the CRUK Funders have directly funded the development of the licensed Intellectual Property being
certain of the BCMA Program IP.
b.
Autolus’s obligation to indemnify the Indemnified Parties in respect of an Indemnity Claim is dependent upon compliance with the
following provisions:
i..
ii..
iii..
promptly after receipt by an Indemnified Party of any claim or alleged claim or notice of the commencement of any action,
administrative or legal proceeding, or investigation to which the indemnity provided for in Clause 23.1 may apply, UCLB or
the Indemnified Party shall give written notice to Autolus of such fact and provide all information available to it and relevant to
the Indemnity Claim to Autolus;
the Indemnified Party shall permit Autolus to have sole control, conduct, defence and settlement of the Indemnity Claim and shall
not make any admission or reach any settlement with the Third Party other than at Autolus’s written direction or with
Autolus’s prior written consent;
the Indemnified Party shall co-operate in good faith with Autolus in the conduct of any defence or settlement and shall provide
reasonable assistance and do all things as may be reasonably required to enable any Indemnified Claim to be defended and
shall provide promptly to Autolus (i) copies (or originals where available) of all correspondence and documents relevant to
the Indemnified Claim; (ii) reasonable access to all personnel of the Indemnified Party (including its consultants) to assist
with defence of the Indemnified Claim and (iii) all other information, documents or assistance as may be reasonably required;
iv..
Autolus shall have the right at its sole discretion to bring any counterclaim in the name of:
xxxvi.
xxxvii.
any CRUK Indemnified Parties provided it receives the prior written consent of the applicable CRUK Indemnified Parties
(such consent not to be unreasonably withheld or delayed) to bring such counterclaim; and/or,
any UCLB Indemnified Parties provided it first notifies the applicable UCLB Indemnified Parties of its intention to bring
such counterclaim.
v..
Autolus shall have the right at its sole discretion to settle or compromise any Indemnity Claim except that Autolus shall not without
the prior written consent of the Indemnified Party:
xxxviii.
xxxix.
admit any liability on the part of any Indemnified Party; or,
in respect of any product liability claims the subject of the Indemnity Claim, not make any public statement that amounts
to any admission of wrongdoing on the part of the Indemnified Party.
Should any damages, financial remedy, costs or other recovery be made in favour of the Indemnified Party or Autolus, such sums
shall be for the sole account of Autolus.
Autolus shall consult with the Indemnified Party on the defence and/or settlement of any Indemnified Claim and in so far as is
reasonable, Autolus shall consider any reasonable suggestions of the Indemnified Party in the conduct of the defence or settlement
of the Indemnity Claim.
vi..
c.
d.
Should Autolus assume conduct of the defence the Indemnified Party may retain separate legal advisers at its sole cost and expense,
save that if Autolus denies the applicability of the indemnity or reserves its position in relation to the same, the indemnity
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
e.
f.
24.
a.
b.
c.
d.
i..
in Clause 23.1 shall extend to the Indemnified Party’s costs and expenses so incurred if Autolus’s position is established to be
substantively incorrect.
Upon termination or expiry of this Agreement, Autolus’s obligation to provide an indemnity to the Indemnified Parties pursuant to
Clause 23.1 for any actions or proceedings shall expire [***] after the termination or expiry of the Agreement, save in respect of any
product liability actions or proceedings in which case no limit of time shall apply.
Autolus shall maintain, at its own cost, comprehensive and customary insurance including product liability insurance in an amount and
for a period sufficient to cover Autolus’s liabilities under this Agreement. [***] Autolus shall upon UCLB’s request, provide UCLB with
a copy of the latest certificate evidencing the coverage required hereby, and the amount thereof. UCLB shall be entitled to provide a
copy of such certificate to CRT. Such insurance shall be with a reputable insurance company.
TERMINATION
This Agreement shall take effect on the Effective Date and shall continue thereafter unless and until terminated in accordance with this
Clause 24 or if earlier until such time as the Royalty Term in each country in the Territory has expired and no further Sublicence Or
Patent Sale Payments or Milestone Payments are due, in which case all Licences, the Manufacturing Licence and UCL Background
Licence granted hereunder shall automatically convert to a perpetual, irrevocable, royalty free licence (the “Term”).
The Parties may, by mutual written agreement, agree that this Agreement be terminated in whole or on a Program Licence by Program
Licence basis.
Autolus may terminate this Agreement upon thirty (30) days prior written notice to UCLB on a (i) Program Licence by Program Licence
basis; or (ii) in respect of all Licences.
Either Party (a “Non-Defaulting Party”) may terminate this Agreement (without prejudice to its other rights and remedies) with
immediate effect by written notice to the other Party (the “Defaulting Party”) if:
the Defaulting Party commits a material breach of its material obligations under this Agreement (it being acknowledged that UCLB
may not terminate under this Clause for any breach of Clause 11) and, if the breach is capable of remedy, fails to remedy it
during the longer period of (i) [***] or (ii) such other period as the Parties may, acting in good faith having regard to the nature
of the breach and the time required to remedy the same, agree in writing (the “Notice Period”), in each case starting on the
date of receipt of notice from the Non-Defaulting Party which specifies the breach in reasonable detail and requires it to be
remedied. If the Defaulting Party in good faith disputes that it has committed a material breach under this Agreement, or that
it has not cured the claimed breach within the Notice Period, it may refer the matter to the dispute resolution procedure under
Clause 33 provided that the termination shall not be effective until conclusion of all dispute resolution procedures pursued by
any Party including any proceedings before a court to determine the validity of the termination notice; or
the Defaulting Party suffers an Insolvency Event.
ii..
e. Without prejudice to Clause 24.4, UCLB may (unless the non-payment is remedied in the [***]) terminate this Agreement upon [***]
prior written notice if Autolus has not paid sums in excess of £[***] which are properly due under this Agreement, provided that the
sums are not subject to a bona fide dispute between the Parties. In the event of a payment dispute:
each Party shall provide the other with written reasons as to why it believes any disputed sums are either not payable or payable
(as applicable):
the Parties shall attempt to resolve the payment dispute by following the escalation process for dispute resolution set out in
Clause 33.2; and
where the Parties are unable to resolve the payment dispute by way of the escalation process set out in Clause 33.2, the Parties
shall seek to resolve the dispute by following the dispute resolution procedure set out in Clauses 33.3 and/or 33.9.
Following resolution of any payment dispute, Autolus shall pay UCLB any amount agreed or adjudged to be due, together with interest
thereon, such interest shall be payable at a rate of [***], for the period from when such amount was originally due until the date that
UCLB receives the agreed or adjudged sums. If Autolus fails to pay UCLB the requisite payment within [***] of the date of receipt of
invoice from UCLB requesting the agreed or
i..
ii..
iii..
f.
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
g.
h.
i.
25.
a.
i..
ii..
iii..
adjudged sums, UCLB shall be entitled to terminate this Agreement with immediate effect by written notice at the end of the [***].
If the disputed amount is a part of a larger payment, Autolus shall pay UCLB the non-disputed amount no later than [***] after receipt of
the invoice from UCLB requesting the non-disputed amount, failing which UCLB shall be entitled to terminate the Agreement
pursuant to the provisions of Clause 24.5.
The Parties shall continue to perform their obligations under this Agreement, notwithstanding any dispute between the Parties with
respect to payment.
Save as provided under this Clause 24 (but without prejudice to the rights to terminate individual Program Licences under Clause 11),
the Parties shall have no other right to terminate this Agreement including under any right according to common law.
CONSEQUENCES OF TERMINATION
Upon termination of a Program Licence under Clause 24, other than the Background Licence granted pursuant to Clause 2.1.2 and the
Manufacturing Licence granted pursuant to Clause 2.3.2:
the applicable Program Licence shall automatically terminate;
Autolus shall, at its expense, assign to UCLB any Assigned Patents relating solely to such Program Licence; and,
Autolus shall cease to have rights under this Agreement to Exploit the Royalty Product applicable to such Program Licence and
all of its rights and obligations under this Agreement concerning such Royalty Product shall cease including the rights under
Clauses 2.1.1 and 2.3.1 applicable to such Program Licence.
b.
Upon termination of a Program Licence under Clause 11.1.5, 11.2.3, or 11.3.2 other than the Background Licence granted pursuant to
i..
ii..
iii..
iv..
c.
d.
i..
ii..
iii..
iv..
Clause 2.1.2 and the Manufacturing Licence granted pursuant to Clause 2.3.2:
the applicable Program Licence shall automatically terminate;
Autolus shall, at its expense, assign to UCLB any Assigned Patents relating solely to such Program Licence;
Autolus shall cease to have rights under this Agreement to Exploit the Royalty Products applicable to such Program Licence and
all of its rights and obligations under this Agreement concerning such Royalty Products shall cease including the rights under
Clauses 2.1.1 and 2.3.1 applicable to such Program Licence; and,
subject to Clause 25.3, UCLB shall have the option to negotiate with Autolus to agree terms for the grant of an exclusive licence
to those Autolus Improvements Controlled by Autolus and free of any restriction or encumbrance, such licence to be limited
to the Exploitation of those Autolus Improvements relating to the specific Program Licence relating to Program IP that has
been terminated, provided that those Autolus Improvements are only used together with that same applicable Program IP.
Upon termination of a Program Licence under Clause 11.4.3, UCLB and Autolus shall negotiate the terms for any licence pursuant to
Clause 25.2.3 in good faith and seeking fair and reasonable commercial terms and UCLB’s right to negotiate with Autolus shall
expire [***] following notice of termination.
Upon termination of this Agreement as a whole under Clause 24:
all Licences other than the Background Licence granted pursuant to Clause 2.1.2 and the Manufacturing Licence granted
pursuant to Clause 2.3.2 shall automatically terminate;
Autolus shall, at its expense, assign to UCLB any Assigned Patents;
Autolus shall cease to have rights under this Agreement to Exploit any Royalty Products and all of its rights and obligations under
this Agreement concerning Royalty Products shall cease; and,
where termination is effected by UCLB for Autolus’s breach, UCLB shall have the option to negotiate with Autolus to agree terms
for the grant of an exclusive licence to those Autolus Improvements Controlled by Autolus and free of any restriction or
encumbrance, such licence to be limited to the Exploitation of those Improvements together with the Technology, such option
and negotiation rights to expire [***] following notice of termination served under Clause 24.
e.
The termination of any Licence hereunder shall be without prejudice to the survival of any sub-licence novated to UCLB pursuant to the
conditions under Clause 3.3.3.
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
f.
26.
a.
b.
c.
27.
a.
b.
c.
Termination or expiry of this Agreement for whatever reason shall not affect the accrued rights (including those relating to any
payments due or payable hereunder) of any Party arising under or out of this Agreement at the date of termination or expiry and all
provisions which are expressed to survive this Agreement or continue after the Term and the provisions of Clauses, 3.3.3, 4.1, 18.9,
22, 23, 25, 30, 31 and 33 shall survive termination or expiry and remain in full force and effect
FORCE MAJEURE
In this Agreement “force majeure” shall mean any cause preventing a Party from performing any or all of its obligations (other than an
obligation to pay sums due) which arises from or is attributable to acts, events, omissions or accidents beyond the reasonable control
of the Party so prevented including to the extent that these are beyond such control industrial disputes, nuclear accident or acts of
God, war or terrorist activity, riot, civil commotion, malicious damage, accident, fire, flood, storm.
If a Party is prevented from performance of any of its obligations under this Agreement by force majeure, that Party shall as soon as
reasonably possible serve notice in writing on the other Parties specifying the nature and extent of the circumstances giving rise to
force majeure, and shall subject to service of such notice have no liability in respect of any delay in performance or any non-
performance of any such obligation save for any payment obligation which shall continue in full force and effect (and the time for
performance shall be extended accordingly) to the extent that the delay or non-performance is due to force majeure.
If a Party is prevented from performance of substantially all or all of its obligations by force majeure for a continuous period of more
than [***] in total, the other Party may terminate this Agreement forthwith on service of written notice upon the Party so prevented, in
which case the Parties shall not have any liability to the other except that rights and liabilities which accrued prior to such termination
shall continue to subsist.
FURTHER ASSURANCE
During the Term, UCLB shall at its own cost execute all such documents and do or cause to be done all such other things as Autolus
may from time to time require in order to enable and provide Autolus with the benefit of the Licences granted to it hereunder and
otherwise to give full effect to this Agreement.
During the Term UCLB shall comply with its obligations under Clauses 9.1 to 9.5 so it may facilitate Autolus using its commercially
reasonable endeavours in accordance with its obligations under Clause 11.
Without limiting its obligations under Clause 27.1, UCLB shall complete (or procure the completion of) such documents and take such
other steps as shall be necessary or desirable to enable Autolus to be recorded on any registry as the licensee of the Intellectual
Property licensed to it hereunder.
d.
UCLB shall procure the assistance of UCL and require UCL to do or refrain from doing things which would otherwise constitute a
28.
a.
breach of the terms of this Agreement.
PUBLICITY
Upon execution of this Agreement, the Parties shall agree the content and timing for a joint public statement release. Until the [***]
anniversary of the Effective Date, if either Party wishes to make any formal press release regarding the development of any Royalty
Products, the Parties will, acting reasonably and in good faith, agree the terms of the publicity statement. Thereafter should Autolus
wish to include UCL’s or UCLB’s name in a press release or if a press release by Autolus concerns the launch of a Royalty Product,
again the Parties will, acting reasonably and in good faith, agree the terms of the publicity statement. Notwithstanding anything in this
Agreement to the contrary, a Party shall not be prevented from complying with its obligations to make public statements regarding
this Agreement, its subject matter or developments under this Agreement pursuant to the rules of any stock market or other laws
applicable to it.
b.
In order to enable UCLB and UCL to monitor the benefit that they are providing, and to enable UCL to demonstrate the impact of its
research activities, to society and the economy, as reasonably requested by UCLB, Autolus shall provide to UCLB non confidential
information on how it has used the Technology and the societal and economic benefits generated therefrom.
c.
Autolus acknowledges that UCLB and UCL shall be entitled to make use of any information received from Autolus (and the information
contained therein) pursuant to
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
29.
a.
b.
Clause 28.2 in applications for research or other granted related funding and in submissions to Higher Education funding bodies
such as HEFCE and/or HEIF (or any replacements for either of those entities) and like entities, and to use Autolus’s name in their
general publicity materials subject to Autolus’s prior written approval, which approval shall not be unreasonably withheld.
ASSIGNMENT
Save as provided in Clause 29, neither Party shall without the prior written consent of the other Party assign any of its rights or
obligations under this Agreement, or purport to do any of the same. Any purported assignment in breach of this clause shall confer
no rights on the purported assignee.
Subject to Clause 29.3 and 29.4, Autolus shall be entitled to assign its rights together with its obligations under this Agreement to any
Affiliate of Autolus or to any acquirer of all or substantially all of Autolus’s business provided that such assignee agrees in writing to
be bound by all of the terms and conditions of this Agreement and provided also that the provisions of Clause 3.1 and 3.2 shall apply
with respect to any proposed assignment as if it were a sub-licence. No assignment shall be valid or effective unless or until the
assignee shall agree, in writing, to be bound by the provisions of this Agreement.
c. Without prejudice to UCLB’s right to terminate the Agreement pursuant to Clause 24.4.2 (where Autolus suffers an Insolvency Event),
Autolus may grant security over or assign by way of security any of its rights and obligations under this Agreement provided that any
such assignment shall comply with the provisions of Clause 29.2.
d.
e.
f.
30.
Autolus shall not be entitled to assign the Agreement during the grace periods (20 or 30 days) referred to in the definition of Insolvency
Event and any assignment of the Agreement during this period shall not be valid or effective.
UCLB shall not assign any of the Technology to any Third Party nor grant any mortgage, charge or other encumbrance over the
Technology.
In the event of termination of the agreement pursuant to which UCLB is granted (i) a sub-licensable licence with respect to the [***] in
relation to the TRBC1/2 Product and the CRUK Study Results; (ii) a right to grant an option to a licence for certain TRBC1/2
improvements made by a student funded by CRUK; and (iii) a right to grant an option to a licence to a [***] project funded by [***],
provided that Autolus is not in breach of its obligations under this Agreement and provided Autolus agrees to pay CRUK the sums
equivalent to those sums otherwise payable by UCLB to CRUK for the aforementioned licences and rights, Autolus shall receive a
direct licence from CRUK with respect to the [***] and the CRUK Study Results and the options or licences with respect to the
TRBC1/2 improvements and the [***] project (“Direct Licence”). The scope of such Direct Licence shall be the same as the scope of
the corresponding licences and rights under this Agreement and shall not impose more onerous obligations on Autolus. On receipt of
the Direct Licence from CRUK, Autolus shall be entitled to deduct an amount equivalent to any sums Autolus pays CRUK under the
Direct Licence from any amount Autolus is due to pay UCLB with respect to the GD2 Product, the TRBC1/2 Product (including the
[***]) and the BCMA Product. Nothing in this Clause shall limit or exclude or operate to waive any liability of UCLB should UCLB's
licences from CRUK terminate or expire.
NOTICES
All notices required to be served by the Parties to this Agreement under the terms hereof shall be sufficiently served if dispatched by
first class post or commercial courier to the addresses of each of the Parties set out below. All such notices shall be deemed
received within five (5) days after such dispatch.
If to:
Autolus
UCLB
Forest House, 58 Wood Lane, London, W12 7RZ
Attn. General Counsel
The Network Building, 97 Tottenham Court Road, London, W1T 4TP
and any modification or amendment to such address must itself be notified in writing to the other Parties in accordance with the
terms of this Clause.
MISCELLANEOUS PROVISIONS
Entire Agreement
31.
a.
62
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
i..
ii..
iii..
iv..
b.
i..
ii..
This Agreement and any variations, amendments or other modifications in relation to this Agreement constitutes the entire
agreement between the Parties relating to its subject matter and save for the CDA supersedes all prior agreements and
understandings, both written and oral, between the Parties with respect to the Programs, the Program IP, the Manufacturing
Know-How and the UCL Background IP.
Each Party acknowledges that in entering into this Agreement it does not do so on the basis of and does not rely on any
representation, warranty, or other provision except as expressly provided in this Agreement and all conditions, warranties
and other terms implied by statute or common law are hereby excluded to the fullest extent permitted by law provided that
nothing in this Clause should be construed as limiting or excluding liability for fraud.
Except as otherwise provided in this Agreement, the only remedy available to a Party for breach of this Agreement shall be for
breach of contract under the terms of this Agreement and no Party shall be liable in tort or otherwise arising from such
breach. The rights and remedies provided by this Agreement are cumulative and (except as otherwise provided in this
Agreement) are not exclusive of any rights or remedies provided by law.
Nothing in this Clause 31 shall limit or exclude any liability for fraud or fraudulent misrepresentation.
Amendment and Waiver
Any agreement to amend, vary or modify the terms of this Agreement in any manner shall be valid only if the amendment,
variation or modification is effected in writing and signed by duly authorised representatives of each of the Parties hereto.
No delay by any Party in enforcing any of the provisions of this Agreement shall be deemed a waiver of that Party’s right
subsequently to enforce such provision.
c.
Severability
i..
ii..
iii..
If any term or provision of any part thereof contained herein shall be declared or become unenforceable invalid or illegal in any
respect under the law of any relevant jurisdiction:
such term or provision or part thereof shall be deemed to have been severed from the remaining terms of this Agreement and the
terms and conditions hereof shall remain in full force and effect as if this Agreement had been executed without the offending
provision appearing herein; and
the Parties shall endeavour to agree an amendment which to the fullest extent possible will give lawful effect to their intentions as
expressed in any term or provision severed under Clause 31.3.1;
If any restriction in this Agreement is held by any court or other competent authority to be invalid or unenforceable, then the Party
against whom such restriction was intended to apply agrees to be bound by a restriction the same as the terms of the most
onerous restriction which the court or other competent authority would have allowed in place of the affected restriction.
d.
Status of the Parties
Except as otherwise provided, each Party shall bear its own costs and expenses in connection with the preparation, negotiation,
execution and performance of this Agreement and the documents referred to in it.
No Party is authorised to act as the agent of the other for any purpose whatsoever and no Party shall on behalf of the other(s)
enter into, or make, or purport to enter into or make or represent that it has any authority to enter into or make any
representation or warranty.
Nothing in this Agreement shall be deemed to constitute a partnership or joint venture company between any or all of the Parties
and none of the Parties shall do or suffer to be done anything whereby it might be represented as a partner of the other
Parties.
Each Party shall be directly responsible to the other Parties for all actions or omissions of its respective Affiliates, agents and sub-
contractors relating to the subject matter of this Agreement and shall be responsible for and liable for the fulfilment and
observance by itself and its Affiliates, agents and sub-contractors of the applicable obligations and restrictions on it and its
Affiliates, agents and sub-
i..
ii..
iii..
iv..
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
v..
32.
33.
a.
b.
c.
contractors hereunder (or to be imposed on them pursuant to the terms hereunder).
A person who is not a Party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any
term of this Agreement but this does not affect any right or remedy of a Third Party which exists or is available apart from that
Act. Notwithstanding the above, (i) an Indemnified Party which is not a Party to this Agreement may enforce the provisions of
Clause 23.1 where it has the benefit of the indemnity provided in Clause 23.1; and (ii) the Wellcome Trust, the Chairman of
the Wellcome Trust and the Appointed Expert may enforce the provisions of Clause 3.2.3. The rights of the Parties to
terminate, rescind or agree any variation, waiver or settlement under this Agreement are not subject to the consent of any
person that is not a Party to this Agreement, including any Indemnified Party or the Wellcome Trust, the Chairman of the
Wellcome Trust or the Appointed Expert, provided that the Parties may not vary or waive the rights of the Wellcome Trust,
the Chairman of the Wellcome Trust or the Appointed Expert under Clause 3.2.3 without their prior written consent.
COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the Parties to it on separate counterparts, each of which
shall be an original but all of which together shall constitute one and the same instrument, and shall not be effective until each of the
Parties has executed at least one counterpart.
DISPUTE RESOLUTION, GOVERNING LAW AND JURISDICTION
All controversies or claims of whatever nature arising out of or relating in any manner whatsoever to this Agreement or any of the
documents referred to in this Agreement, including but not limited to a controversy or claim involving the validity, enforceability,
interpretation or construction of this Agreement or any of the documents referred to in this Agreement, shall be governed by and
construed in all respects in accordance with the laws of England.
In the event of any dispute, difference or question arising in connection with this Agreement, either Party shall be entitled but not
obliged to escalate the matter to the Parties’ Executive Officers by serving a written notice on the other Party’s Executive Officer, in
which case the Parties’ Executive Officers shall make themselves available to discuss the dispute, difference or question, as the
case may be (the “Unresolved Matter”), and use good faith efforts to resolve such Unresolved Matter within the thirty (30) days
following the delivery of such notice.
If the Parties agree to submit, they shall submit to non-binding mediation by a neutral mediator (with the understanding that the role of
the mediator shall not be to render a decision but to assist the Parties in reaching a mutually acceptable resolution) who shall be
accredited by the Centre of Dispute Resolution (“CEDR”) or otherwise appropriately qualified, and the mediation regarding the
Unresolved Matter shall take place in London UK (or such other location as may be mutually agreed upon by the Parties). The
mediator shall be chosen by agreement of the Parties, or if they are unable to agree on a mediator within fourteen (14) days of a
request from one Party to the other or if the agreed mediator is unable or unwilling to act, either Party may apply to CEDR to appoint
a mediator.
d. Within fourteen (14) days of the mediator being appointed, the Parties shall seek guidance from the mediator on a programme for the
exchange of information and the structure to be adopted for negotiations. Either Party may request a preliminary meeting with the
mediator for this purpose which shall be attended by both Parties.
Unless otherwise agreed, all negotiations concerning the dispute shall be conducted in confidence and shall be without prejudice to the
rights of the parties in any future proceedings. The mediation is non-binding and Parties shall not be obliged to accept or follow any
recommendation of the mediator.
If the Parties reach agreement on the resolution of the dispute, the agreement shall be reduced to writing and shall be binding on the
Parties once it is signed by their duly authorised representatives.
If the Unresolved Matter is not resolved by mediation within sixty (60) days of appointment of the mediator, either Party may, subject to
Clause 33.9, make any claim or application before the court as it sees fit.
e.
f.
g.
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h.
i.
Notwithstanding the provisions of Clause 33.2 or of Clause 33.3, subject to Clause 33.9, each Party shall be free to seek temporary
injunctive relief in court as the situation may necessitate based upon any irreparable harm which may ensue.
Each Party acknowledges and agrees that the courts of England shall have exclusive jurisdiction to resolve any controversy or claim of
whatsoever nature arising out of or relating in any manner to this Agreement, any terms of this Agreement, or any breach of this
Agreement or any such terms.
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Schedule 1.
The Programs
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Schedule 2.
Program IP
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Schedule 3.
Manufacturing Know-How
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Disclosure Process[***]
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Part A: Existing Licences[***]
Schedule 4.
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[***][***][***][***][***][***][***]
(L)
: Commercial Agreements
101
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permitted Studies[***]
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Schedule 5.
Part A:Net Sales Definition
◦
◦
◦
◦
◦
Net Sales shall mean, subject to the remainder of Part A of this Schedule, the gross sum received by Autolus or its Sub-Licensees
(excluding Net Receipts) or Assignee Entities from the supply of a Royalty Product by Autolus or its Sub-Licensees or Assignee
Entities to a Third Party in a bona fide, arm’s length transaction, less the following:
i.
ii.
normal and customary trade and quantity discounts actually granted;
amounts repaid or credited by reasons of defects, rejection, recalls, returns, rebates and allowances of goods or because of
retroactive price reductions;
chargebacks and other amounts paid on sale of the Royalty Product;
amounts payable resulting from government/regulator-mandated rebate programs including pursuant to indigent patient
programs and patient discount programs;
tariffs, duties, excise, sales, value-added and other taxes, identified in the relevant invoice;
retroactive price reductions that are actually allowed or granted;
cash discounts or credits for timely payment;
delayed ship order credits; and,
all freight, postage, storage, shipping and insurance, identified in the relevant invoice.
iii.
iv.
v.
vi.
vii.
viii.
ix.
Net Sales will not include:
x.
xi.
xii.
any transfers between Autolus, its Affiliates and any Sub-Licensees or Assignee Entities, or for the supply of any Royalty
Products for clinical trial activities, research purposes, charitable donations or compassionate use;
for the purposes of calculating sales thresholds or triggering any Milestone, any Complementary Diagnostic Products;
any sums for any products, services or processes that are not Royalty Products.
Where Autolus or any Sub-Licensee or Assignee Entity sells any Royalty Products other than on normal arms-length commercial
terms exclusively for money, the Net Sales of the Royalty Product supplied shall be determined as the fair market value of such
Royalty Product.
Where Autolus or any Sub-Licensee or Assignee Entity sells a product that consists of a Royalty Product in combination with, co-
formulated with, or co-packaged with a product that contains one or more non-cellular therapeutically active agents(s) (which are not
expressed or produced by the Royalty Product itself) (“Combination Product”), then the Net Sales of the Royalty Product in the
country of sale shall be calculated as follows:
xiii.
xiv.
if the Royalty Product(s) (on the one hand) and the non-cellular therapy product(s) (together or separately) each are sold
separately in commercially reasonable quantities in such country, Net Sales will be calculated by multiplying the total sales of
the Combination Product by the fraction A/(A+B), where A is the average gross selling price in such country of the Royalty
Product(s) contained in the Combination Product sold separately during the calendar quarter in the same formulation and
dosage, and B is the sum of the gross selling price in such country of the non-cellular therapeutic product(s) contained in the
Combination Product sold separately during the calendar quarter in the same formulation and dosage; and
if the Royalty Product(s) (on the one hand) and/or the non-cellular therapeutic product(s) (together or separately) are not sold
separately in commercially relevant quantities in a country during a particular payment period, or if they are sold separately
but the average gross selling price of either the Royalty Product(s) (on the one hand) or the non-cellular therapeutic
product(s) (together or separately) cannot be determined, in such country, then the Parties will meet and negotiate in good
faith an appropriate mechanism for determining the royalty payable on such Combination Product. If the Parties are unable
to agree an appropriate mechanism, the Parties shall refer to an expert for determination of the agreed mechanism by
following the provisions of Part C of this Schedule.
Where Autolus or any Sub-Licensee or Assignee Entity sells a Royalty Product as part of a package that includes services that relate
to the manipulation of, administration of, or
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delivery of the applicable Royalty Product then the Net Sales of the Royalty Product as part of the package shall be calculated as a
proportion of the package price fairly attributed to the Royalty Product alone.
Where Autolus or any Sub-Licensee or Assignee Entity sells a Royalty Product as a Combination Product, and such Combination
Product is sold as part of a package that includes services that relate to the manipulation of, administration of, or delivery of the
applicable Combination Product, then the Net Sales of the Royalty Product as part of the Combination Product and as part of the
package shall be calculated in the following order (i) firstly the value attributable to the Combination Product shall be calculated as a
proportion of the package price fairly attributed to the Combination Product alone; and (ii) secondly the value of the Royalty Product
as part of the Combination Product shall be determined in accordance with paragraph 4.
Where Autolus or any Sub-Licensee or Assignee Entity sells a product that is not a Combination Product but which consists of a
Royalty Product in combination with, co-formulated with, or co-packaged with any other product or components (not covered by
paragraphs 4, 5 or 6 above), then no apportionment of the Net Sales between such Royalty Product and the other product or
components shall apply save that where a Royalty Product is sold in combination with, co-formulated with, or co-packaged with
another cellular therapeutically active agent which does not use the Technology, for the purpose of calculating the Net Sales with
respect to the Royalty Product, the Parties shall in good faith discuss and agree the apportionment.
Any dispute as to the determination of a fair market value that cannot be resolved through discussion between the Parties shall be
referred to an expert for resolution in accordance with the provisions of part C of this Schedule 8.
◦
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Schedule 6.
: Net Receipts Definition
◦
◦
Net Receipts shall mean, subject to the remainder of Part B of this Schedule, the gross sums received by Autolus pursuant to (i) a
Sublicence in so far as they are attributable to the Technology so licensed, or (ii) a Patent Sale in so far as they are attributable to the
Assigned Patents so assigned less all tariffs, duties, taxes, excise, sales and value added taxes.
The calculation of Net Receipts shall be subject to the following:
i.
Net Receipts will include (i) payments for the grant of a sublicence, or in the case of the Assigned Patent, a licence or
assignment of such Assigned Patent, including up front signing fees, stage payments and milestone payments (ii) payments
for options for a sublicence, or in the case of the Assigned Patent, an option for a licence or an assignment of such Assigned
Patent or for the exercise of such options; and (iii) in return for the grant of a sublicence, or in the case of an Assigned
Patent, the grant of a licence or an assignment of such Assigned Patent, the cash paid by a sublicensee (or its Affiliate) or
Assignee Entity (or its Affiliate) for purchasing shares, options or other securities in Autolus but only to the extent that the
price paid for such shares, options or other securities exceeds the fair market value calculated at the time of subscription; If
Autolus grants a sub-licence, or in the case of an Assigned Patent, a licence or an assignment of such Assigned Patent in
return for non-cash consideration, Autolus shall agree with UCLB what (if any) cash value will be attributed to such non-cash
consideration from which cash value the Net Receipts will be calculated and when any such Net Receipts shall be paid, such
agreement to be reached within [***] of closing the deal and provided that either party shall be entitled to refer the matter to
the Expert for determination in the event that agreement cannot be reached by the parties.
Net receipts will exclude (i) any damages or account of profits due, paid or recoverable; (ii) any settlement fees or costs; (iii)
payments under or by virtue of any indemnity; (iii) any royalty payments, profit share or other compensation calculated,
directly or indirectly by reference to volume or units of Royalty Products sold, provided UCLB received Royalties in respect of
the same; (iv) any sums received by way of transfer pricing; (v) any sums received or bona fide sums paid for Royalty
Products supplied by Autolus or its Affiliates or Assignee Entities, provided UCLB received Royalties in respect of the same;
(vi) litigation costs and fees, or other payments received in respect of the enforcement or defence of any Intellectual Property
rights; (vii) any sums received for any products, services or processes that are not Royalty Products; and (viii) any service
fees, FTE payments or other payments received to cover a contractual expense.
ii.
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Schedule 7.
: Expert Procedure
Any dispute arising out of or in connection with Clauses 15.1.3, 15.2.1, 16.7 of this Agreement and paragraphs 3, 4, 5, 6 or 7 of Part
A of Schedule 8 or paragraph 2a of Part B of Schedule 8 to this Agreement and/or its performance shall be referred to an expert by
either Party serving on the other Party notice (“Referral Notice”) that it wishes to refer the dispute to an expert. For the avoidance of
doubt, no reference shall be made to the expert as to what product or therapy constitutes a Royalty Product and any dispute in that
regard shall be determined in accordance with Clause 33.3 and/or Clause 33.9 of the Agreement. If either Party challenges whether
a product or therapy constitutes a Combination Product that dispute shall be determined in accordance with Clause 33.3 and/or
Clause 33.9 of the Agreement.
The dispute shall be determined by a single independent impartial expert who shall be agreed between the Parties or, in the absence
of agreement between the parties within [***] of the service of a Referral Notice, be appointed by the then President of the Institute of
Chartered Accountants or any successor organisatcion thereto.
The seat of the dispute resolution shall be the normal place of residence of the expert.
The language of the dispute resolution shall be English.
The expert shall not have power to alter, amend or add to the provisions of this Agreement, except that the expert shall have the
power to decide all procedural matters relating to the dispute, and may call for a one day hearing if desirable and appropriate.
The expert shall have the power to request copies of any documents in the possession and/or control of the parties which may be
relevant to the dispute. The parties shall forthwith provide to the expert and the other party copies of any documents so requested by
the expert.
The expert shall decide the dispute as an expert and not as an arbitrator.
The decision of the expert shall be final and binding upon both parties except in the case of manifest error. The parties hereby
exclude any rights of application or appeal to any court, to the extent that they may validly so agree, and in particular in connection
with any question of law arising in the course of the reference out of the award.
The expert shall determine the proportions in which the parties shall pay the costs of the expert's procedure. The expert shall have
the authority to order that all or a part of the legal or other costs of a party shall be paid by the other party. UCLB’s liability in this
regard shall not be subject to the cap on liability under Clause 22.
All documents and information disclosed in the course of the expert proceedings and the decision and award of the expert shall be
kept strictly confidential by the recipient and shall not be used by the recipient for any purpose except for the purposes of the
proceedings and/or the enforcement of the expert’s decision and award.
◦
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Schedule 8.
Warranties and Covenants
Part A. : Mutual Warranties & Representations
In respect of each Party making the warranty and representation:
it is a company duly organised, validly existing, and in good standing under the laws of England;
it has full corporate power and authority to execute, deliver, and perform this Agreement and has taken all corporate action required
by law and its organisational documents to authorise the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement;
this Agreement constitutes a valid and binding agreement enforceable against it in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally and laws restricting
the availability of equitable remedies and may be subject to general principles of equity whether or not such enforceability is
considered in a proceeding at law or in equity);
the execution and delivery of this Agreement and all other instruments and documents required to be executed pursuant to this
Agreement and the consummation of the transactions contemplated hereby and thereby do not and shall not (i) conflict with or result
in a breach of any provision of its organisational documents, (ii) result in a breach of any agreement to which it is a party; or (iii)
violate any law.
Part B. : UCLB Warranties & Covenants at the Effective Date
UCLB warrants and represents to Autolus that as at the Effective Date:
Material Information
the information set out in the Schedules at the Effective Date is accurate and so far as UCLB is aware is materially complete;
all the information which is contained in the Disclosure Letter dated as of the Effective Date and the documents (if any) annexed to it
is complete and accurate and not misleading;
each statement of opinion or belief which is attributed in the Disclosure Letter dated as of the Effective Date is honestly held by the
members of the UCLB senior management team;
each document if annexed to the Disclosure Letter dated as of the Effective Date is a complete and accurate copy of the original, and
no such document has been amended (orally or in writing) or superseded;
Intellectual Property
it is the sole and exclusive owner, free of all encumbrances, of all right, title and interest in and to the Original Licensed Patents;
in respect of the Original Program IP, Manufacturing Know-How and UCL Background IP it is either:
i.
ii.
the sole and exclusive owner, free of all encumbrances, of all right, title and interest in and to such Intellectual Property; or
a licensee with the right to grant the licences granted herein on the terms granted herein in respect of such Intellectual
Property;
it has not granted, or agreed to grant, any licences or entered into any agreements which may adversely affect or conflict with this
Agreement and/or with any of the Licences granted hereunder and/or options to licences granted hereunder as at the Effective Date;
it has not granted, or agreed to grant, any assurance or waiver not to enforce in respect of any of the Intellectual Property licensed
hereunder as at the Effective Date in so far as such consents, assurances or waivers would enable the Third Party to develop, free of
infringement, any product or therapy that is Covered by or has been developed using or uses any of the Intellectual Property licensed
hereunder as at the Effective Date;
there is no other Patent Right (beyond the Original Licensed Patents) owned by UCLB as at the Effective Date that is required for the
use and practise of any of the Original
i.
a.
b.
c.
d.
i.
e.
f.
g.
h.
i.
j.
k.
l.
m.
107
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
Program IP, UCL Background IP, having regard to UCLB’s understanding of Autolus’s development plan for the period of [***] after
the Effective Date;
as at the Effective Date no invention disclosure forms have been logged in UCLB’s database and categorised as “Biopharm” and
with the status “being assessed”, disclosing patentable inventions in respect of which (if patent applications were filed for such
inventions within [***] of the Effective Date) to the best of UCLB’s knowledge and belief a licence would be required for the use and
practise of any of the Original Program IP, UCL Background IP, having regard to UCLB’s understanding of Autolus’s development
plan for the period of [***] after the Effective Date;
it has provided Autolus with details of Third Party Patent Rights of which it is aware, and which to the best of its knowledge and belief
not having (i) conducted any professional freedom to operate searches or (ii) sought advice from a qualified patent attorney or
solicitor, may be relevant to the development of any Original Royalty Product on the basis of UCLB’s understanding of Autolus’s
development plan for the period of [***] after the Effective Date;
it is not aware that the disclosure to Autolus of Know-How forming part of the Original Program IP, Manufacturing Know-How or UCL
Background IP will amount to a breach of any obligation of confidentiality owed by UCL, MP or UCLB to any Third Party;
it is not aware of any material breach by UCLB, UCL or MP of any Third Party contracts set out in Schedule 6;
it has not received any negative opinion from any patent office as to the validity of the Original Licensed Patents;
there is no on-going litigation to which UCL or UCLB is a party concerning any of the Original Program IP, Manufacturing Know-How
or UCL Background IP;
Clinical Studies
there has been no clinical use of any of the Materials.
n.
o.
p.
q.
r.
s.
t.
Part C. : UCLB Warranties & Covenants at the Amendment Date
UCLB warrants and represents to Autolus that as at the Amendment Date:
Material Information
the information included as at the Amendment Date to the Schedules is accurate and so far as UCLB is aware is materially complete;
all the information which is contained in the Disclosure Letter dated as of the Amendment Date and the documents (if any) annexed
to it is complete and accurate and not misleading;
each statement of opinion or belief which is attributed in the Disclosure Letter dated as of the Amendment Date is honestly held by
the members of the UCLB senior management team;
each document if annexed to the Disclosure Letter dated as of the Amendment Date is a complete and accurate copy of the original,
and no such document has been amended (orally or in writing) or superseded;
Intellectual Property
it is the sole and exclusive owner, free of all encumbrances, of all right, title and interest in and to the Additional Licensed Patents;
it has not granted, or agreed to grant, any licences or entered into any agreements in respect of the Additional Licensed Patents
which may adversely affect or conflict with this Agreement and/or with any of the Licences granted hereunder;
it has not granted, or agreed to grant, any assurance or waiver not to enforce in respect of any of the Additional Licensed Patents in
so far as such consents, assurances or waivers would enable the Third Party to develop, free of infringement, any product or therapy
that is Covered by any of the Additional Licensed Patents licensed hereunder;
there is no other Patent Right (beyond the Licensed Patents) owned by UCLB as at the Effective Date that is required for the use and
practise of any of the Additional Licensed Patents having regard to UCLB’s understanding of Autolus’s development plan for the
period of [***] after the Effective Date;
as at the Effective Date no invention disclosure forms have been logged in UCLB’s database and categorised as “Biopharm” and
with the status “being assessed”, disclosing patentable inventions in respect of which (if patent applications were filed for such
i.
1.
2.
3.
4.
5.
6.
7.
8.
9.
108
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
inventions within [***] of the Effective Date) to the best of UCLB’s knowledge and belief a licence would be required for the use and
practise of any of the Additional Licensed Patents, having regard to UCLB’s understanding of Autolus’s development plan for the
period of [***] after the Effective Date;
it has provided Autolus with details of Third Party Patent Rights of which it is aware, and which to the best of its knowledge and belief
not having (i) conducted any professional freedom to operate searches or (ii) sought advice from a qualified patent attorney or
solicitor, may be relevant to the development of any Additional Royalty Product (except for a TRBC2 Dx Product) on the basis of
UCLB’s understanding of Autolus’s development plan for the period of [***] after the Effective Date;
it has not received any negative opinion from any patent office as to the validity of the Additional Licensed Patents;
there is no on-going litigation to which UCL or UCLB is a party concerning any of the Additional Licensed Patents.
10.
11.
12.
Part D. UCLB Warranties & Covenants at the Second Amendment Date
UCLB warrants and represents to Autolus that as at the Second Amendment Date:
Material Information
except as disclosed in a Disclosure Letter dated as of the Second Amendment Date, the information included as at the Second
Amendment Date to the Schedules is accurate and so far as UCLB is aware is materially complete;
all the information which is contained in the Disclosure Letter dated as of the Second Amendment Date and the documents (if any)
annexed to it is complete and accurate and not misleading;
each statement of opinion or belief which is attributed in the Disclosure Letter dated as of the Second Amendment Date is honestly
held by the members of the UCLB senior management team;
each document if annexed to the Disclosure Letter dated as of the Second Amendment Date is a complete and accurate copy of the
original, and no such document has been amended (orally or in writing) or superseded;
Intellectual Property
it is the sole and exclusive owner, free of all encumbrances, of all right, title and interest in and to the CAT19 Program IP;
it has not granted, or agreed to grant, any licences or entered into any agreements in respect of the CAT19 Program IP which may
adversely affect or conflict with this Agreement and/or with any of the Licences granted hereunder;
it has not granted, or agreed to grant, any assurance or waiver not to enforce in respect of any of the CAT19 Program IP in so far as
such consents, assurances or waivers would enable the Third Party to develop, free of infringement, any product or therapy that is
Covered by any of the CAT19 Program IP licensed hereunder;
there is no other Patent Right (beyond the Licensed Patents) owned by UCLB as at the Effective Date that is required for the use and
practise of any of the CAT19 Program IP having regard to UCLB’s understanding of Autolus’s development plan for the period of [***]
after the Effective Date;
as at the Effective Date no invention disclosure forms have been logged in UCLB’s database and categorised as “Biopharm” and
with the status “being assessed”, disclosing patentable inventions in respect of which (if patent applications were filed for such
inventions within [***] of the Effective Date) to the best of UCLB’s knowledge and belief a licence would be required for the use and
practise of any of the CAT19 Program IP, having regard to UCLB’s understanding of Autolus’s development plan for the period of [***]
after the Effective Date;
it has provided Autolus with details of Third Party Patent Rights of which it is aware, and which to the best of its knowledge and belief
not having (i) conducted any professional freedom to operate searches or (ii) sought advice from a qualified patent attorney or
solicitor, may be relevant to the development of any CAT19 Product on the basis of UCLB’s understanding of Autolus’s development
plan for the period of [***] after the Effective Date;
i.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
109
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
11.
12.
it has not received any negative opinion from any patent office as to the validity of the CAT19 Patent Rights;
there is no on-going litigation to which UCL or UCLB is a party concerning any of the CAT19 Program IP.
Part E. UCLB Warranties & Covenants at the Third Amendment Date
UCLB warrants and represents to Autolus that as at the Third Amendment Date:
Material Information
the information included as at the Third Amendment Date to Schedule 1 and Schedule 2 under the titles TRBC2 Dx Program and
CAROUSEL Study is accurate and so far as UCLB is aware is materially complete;
Intellectual Property
Immediately prior to the assignment of the Assigned Patents pursuant to the Patent Assignment, with the exception of the TRBC2 Dx
Patent Rights which are jointly owned by UCLB and Autolus, it is the sole and exclusive owner, free of all encumbrances, of all right,
title and interest in and to the Assigned Patents;
it has not granted, or agreed to grant, any licences or entered into any agreements in respect of the TRBC2 Dx Patent Rights which
may adversely affect or conflict with this Agreement and/or with any of the Licences granted hereunder;
it has not granted, or agreed to grant, any assurance or waiver not to enforce in respect of any of the TRBC2 Dx Patent Rights in so
far as such consents, assurances or waivers would enable the Third Party to develop, free of infringement, any product or therapy
that is Covered by any of the TRBC2 Dx Patent Rights;
there is no other Patent Right (beyond the Retained Patents) owned by UCLB as at the Third Amendment Date that is required for
the use and practise of the TRBC2 Dx Program IP or the CAROUSEL Program IP, having regard to UCLB’s understanding of
Autolus’s development plan for the period of [***] after the Effective Date;
as at the Third Amendment Date no invention disclosure forms have been logged in UCLB’s database and categorised as
“Biopharm” and with the status “being assessed”, disclosing patentable inventions in respect of which (if patent applications were
filed for such inventions within [***] of the Third Amendment Date) to the best of UCLB’s knowledge and belief a licence would be
required for the use and practise of the TRBC2 Dx Program IP or the CAROUSEL Program IP, having regard to UCLB’s
understanding of Autolus’s development plan for the period of [***] after the Effective Date;
it has provided Autolus with details of Third Party Patent Rights of which it is aware, and which to the best of its knowledge and belief
not having (i) conducted any professional freedom to operate searches or (ii) sought advice from a qualified patent attorney or
solicitor, may be relevant to the development of the TRBC2 Dx Product or the CAT19 CNS Product on the basis of UCLB’s
understanding of Autolus’s development plan for the period of [***] after the Effective Date;
there is no on-going litigation to which UCL or UCLB is a party concerning any of the TRBC2 Dx Patent Rights.
i.
1.
2.
3.
4.
5.
6.
7.
8.
110
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
1.
Royalty and Net Receipts Statements
1.
In respect of each country where Royalty Products were supplied during that Quarter:
a.
the Net Sales of each type of Royalty Product supplied expressed both in local currency and in British pounds sterling
together with conversion rates used;
the royalty rate applicable to each type of Royalty Product supplied in that country;
the calculation of the royalties payable in respect of each type of Royalty Product; and
the total amount of royalties payable in respect of that country;
b.
c.
d.
For the world as a whole:
a.
b.
c.
In respect of any Royalty Products supplied to which the provisions of paragraph 3 of Part A of Schedule 8 are applicable:
the total amount of royalties payable under Clause 14.1;
the amount of any reduction or deduction made pursuant to Clauses 14.4 to 14.10, inclusive; and
the amount of any withholding tax deducted pursuant to Clause 16.5.
2.
3.
a.
b.
the amount of each type of Royalty Product supplied; and
the actual price at which the Royalty Products were supplied and the nature and value of any other consideration provided
for the Royalty Products.
4.
In respect of any Royalty Products supplied to which the provisions of paragraphs 4, 5, 6 or 7 of Part A of Schedule 8 are applicable:
a.
b.
the amount and description of any Combination Product or any packages of products or services supplied; and
the actual price at which the package of any Combination Product or any products or services were supplied and the
proportion of the sales price attributed to the Royalty Product in the relevant supply contract.
5.
In respect of any Net Receipts, the calculation of sums payable in accordance with Clause 15 and Part B of Schedule 8.
111
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
6.
CARPALL and ALLCAR19 Patient Clinical Data generated before the Second Amendment Date:
Release of Patient Clinical Data
1. CARPALL and ALLCAR19 Patient Clinical Data shall be released by sponsor once the sponsor has received confirmation from
the trials sites that [***].
CARPALL and ALLCAR19 Patient Clinical Data generated after the Second Amendment Date:
2. Trial management reports produced for the benefit of the trial management groups for the CARPALL Study and the
ALLCAR19 Study shall be released by the sponsor to Autolus at the same time as their formal release to relevant trial
management group. For information only, at the Second Amendment Date such reports are produced at a frequency of
approximately [***]. These trial management reports shall include a final report at the end of [***] of each study accompanied
by release of all supporting clinical data. The next trial management group data releases are scheduled for the CARPALL
Study on [***], and for the ALLCAR19 Study [***]. UCLB accepts no liability if the frequency of such reporting shall change for
any reason and shall not be obliged to make available such reports before they are received by the relevant trial management
group.
3. Raw data comprising the CARPALL and ALLCAR19 Patient Clinical Data shall be released by the sponsor to Autolus (i)
following the treatment of [***] in the relevant study, or (ii) [***], whichever is the shorter period of time. As a minimum
requirement, the raw data comprising [***] will be verified by the sponsor prior to such release Autolus acknowledges the data
is subject to change until database lock at the end of the respective study.
4. During the long term follow up phase of the study the CARPALL and ALLCAR19 Patient Clinical Data shall be released by the
sponsor to Autolus [***], or at the same time as their formal release to the trial management group provided that occurs [***].
5. Autolus shall promptly reimburse UCL for any sums (including internal costs) that UCL incurs in order to comply with UCL’s
obligations to Autolus as set out in Paragraphs 1.2 to 1.4 above (inclusive) and which would not have otherwise been incurred
by UCL in the absence of these obligations. Such reimbursement shall be subject to further terms agreed in any collaboration
agreement entered into in accordance with Clause 4.12.
CAROUSEL Patient Clinical Data
6. Trial management reports produced for the benefit of the trial management groups for the CAROUSEL Study shall be released
by the sponsor to Autolus at the same time as their formal release to relevant trial management group. These trial
management reports shall include a final report at the end of [***] of each study accompanied by release of all supporting
clinical data. UCLB accepts no liability if the frequency of such reporting shall change for any reason and shall not be obliged
to make available such reports before they are received by the relevant trial management group.
7. Raw data comprising the CAROUSEL Patient Clinical Data shall be released by the sponsor to Autolus (i) following the
treatment of [***] in the relevant study, or (ii) [***], whichever is the shorter period of time. As a minimum requirement, the raw
data comprising the [***] will be verified by the sponsor prior to such release Autolus acknowledges the data is subject to
change until database lock at the end of the respective study.
8. During the long term follow up phase of the study the CAROUSEL Patient Clinical Data shall be released by the sponsor to
Autolus [***], or at the same time as their formal release to the trial management group provided that occurs [***].
9. Autolus shall promptly reimburse UCL for any sums (including internal costs) that UCL incurs in order to comply with UCL’s
obligations to Autolus as set out in Paragraphs 1.6 and 1.7 above and which would not have otherwise been incurred by UCL
in the absence of these obligations.
112
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
113
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
7.
CD19 SEQUENCE[***]
114
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
8.
(i)
[***]
9.
115
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
ASSIGNED PATENTS[***]
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IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENTS, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT
IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
IN WITNESS WHEREOF, the Parties hereto have caused their duly authorised officers to execute and acknowledge this Agreement as of
the date first written above.
SIGNED by a director on behalf of AUTOLUS
LIMITED
SIGNED by a director on behalf of UCL
BUSINESS LTD
)
)
)
)
)
)
Signature……………………………………………..
Print Name…………………………………………...
Signature……………………………………………..
Print Name…………………………………………...
I, Martin Pule, of [***], have read, understand and accept the provisions of this Agreement and how it relates to my research and the MP
Laboratory.
Signed ___________________________________ Date : _____________________
124
Certification by the Principal Executive Officer pursuant to
Securities Exchange Act Rules 13a-14(a) and 15d-14(a)
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Christian Itin, certify that:
1.
2.
3.
4.
(a)
(b)
(c)
(d)
I have reviewed this annual report on Form 20-F of Autolus Therapeutics plc (the “Company”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the Company and have:
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the
period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting; and
5.
(a)
(b)
The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the
equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial
information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting.
Date: March 4, 2021
/s/ Christian Itin, Ph.D.
Name: Christian Itin, Ph.D.
Title: Chief Executive Officer and Chairman of the Board of Directors
(Principal Executive Officer)
Certification by the Principal Financial Officer pursuant to
Securities Exchange Act Rules 13a-14(a) and 15d-14(a)
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Andrew J. Oakley, certify that:
1.
2.
3.
4.
(a)
(b)
(c)
(d)
I have reviewed this annual report on Form 20-F of Autolus Therapeutics plc (the “Company”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the Company and have:
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the
period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting; and
5.
(a)
(b)
The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the
equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial
information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting.
Date: March 4, 2021
/s/ Andrew J. Oakley
Name: Andrew J. Oakley
Title: Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
Certification by the Principal Executive Officer and Principal Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 1350 of
Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Christian Itin, Chief Executive Officer of Autolus Therapeutics plc (the “Company”),
and Andrew J. Oakley, Senior Vice President and Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:
(1)
(2)
The Company’s Annual Report on Form 20-F for the year ended December 31, 2020, to which this Certification is attached as Exhibit 13.1
(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Date: March 4, 2021
/s/ Christian Itin, Ph.D.
Name: Christian Itin, Ph.D.
Title: Chief Executive Officer and Chairman of the Board of Directors
(Principal Executive Officer)
/s/ Andrew J. Oakley
Name: Andrew J. Oakley
Title: Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
We consent to the incorporation by reference in the following Registration Statements:
Consent of Independent Registered Public Accounting Firm
(1) Registration Statement (Form S-8 No. 333-226457) pertaining to the Autolus Limited 2017 Share Option Plan and Autolus
Therapeutics plc 2018 Equity Incentive Plan, and
(2) Registration Statement (Form F-3 No. 333-232690) of Autolus Therapeutics plc and in the related Prospectus
of our report dated March 4, 2021, with respect to the consolidated financial statements of Autolus Therapeutics plc included in this Annual
Report (Form 20-F) of Autolus Therapeutics plc for the year ended December 31, 2020.
/s/ Ernst & Young LLP
Reading, United Kingdom
March 4, 2021