10-Q
Q1twelve years--12-310001720580false0001720580us-gaap:FurnitureAndFixturesMember2022-03-310001720580us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001720580us-gaap:RetainedEarningsMember2022-01-012022-03-310001720580us-gaap:CommonStockMember2020-12-310001720580us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001720580us-gaap:FurnitureAndFixturesMember2022-01-012022-03-3100017205802020-12-310001720580acet:RegeneronPharmaceuticalsIncorporationMember2016-07-292016-07-290001720580acet:ContractLiabilityMember2021-01-012021-03-310001720580us-gaap:RetainedEarningsMember2020-12-310001720580acet:COVID19Member2021-01-012021-03-310001720580us-gaap:RestrictedStockUnitsRSUMember2022-03-310001720580us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001720580us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001720580srt:MaximumMember2021-01-012021-03-310001720580us-gaap:AdditionalPaidInCapitalMember2022-03-310001720580acet:OptionsAvailableForFutureGrantsMember2021-12-310001720580us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001720580us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001720580acet:RegeneronPharmaceuticalsIncorporationMember2017-01-012017-12-310001720580us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001720580acet:RegeneronPharmaceuticalsIncorporationMemberus-gaap:SeriesBPreferredStockMember2022-03-310001720580us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-03-310001720580us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001720580acet:TwoThousandEighteenEmployeeStockPurchasePlanMember2021-01-012021-01-010001720580us-gaap:RestrictedStockUnitsRSUMember2021-10-012021-10-310001720580us-gaap:ComputerEquipmentMember2021-12-310001720580acet:ContingentValueRightsAgreementMemberus-gaap:ChangeDuringPeriodFairValueDisclosureMember2020-12-310001720580us-gaap:RestrictedStockUnitsRSUMember2021-08-310001720580acet:SeptemberFifteenTwoThousandTwentyWarrantThreeMember2022-01-012022-03-310001720580us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001720580acet:TwoThousandEighteenEmployeeStockPurchasePlanMember2022-01-012022-03-310001720580us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001720580us-gaap:LeaseholdImprovementsMember2022-01-012022-03-310001720580acet:InducementGrantMember2022-01-012022-03-310001720580us-gaap:FairValueMeasurementsRecurringMember2021-12-310001720580us-gaap:ConstructionInProgressMember2021-12-310001720580us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001720580acet:SeptemberFifteenTwoThousandTwentyWarrantTwoMember2022-01-012022-03-310001720580us-gaap:RestrictedStockUnitsRSUMember2021-08-012021-08-310001720580acet:OptionsAvailableForFutureGrantsMember2022-03-3100017205802021-10-210001720580us-gaap:CommonStockMember2022-03-310001720580us-gaap:IPOMember2021-02-2800017205802022-01-012022-03-310001720580us-gaap:IPOMember2021-01-012021-12-310001720580acet:SeptemberFifteenTwoThousandTwentyWarrantOneMember2022-01-012022-03-310001720580us-gaap:CommonStockMember2021-12-3100017205802021-01-012021-06-300001720580acet:InducementGrantMember2022-03-310001720580acet:RegeneronPharmaceuticalsIncorporationMember2021-01-012021-03-310001720580us-gaap:FurnitureAndFixturesMember2021-12-310001720580acet:RegeneronPharmaceuticalsIncorporationMembersrt:MinimumMember2020-04-012020-06-300001720580us-gaap:EmployeeStockOptionMember2021-12-310001720580acet:TwoThousandFifteenStockIncentivePlanMember2022-03-310001720580acet:ContingentValueRightsAgreementMember2020-09-150001720580acet:ResTORbioMember2022-03-310001720580us-gaap:LeaseholdImprovementsMember2021-12-3100017205802022-03-310001720580acet:TwoThousandFourteenStockIncentivePlanMember2022-01-012022-03-310001720580acet:ContractLiabilityMember2021-03-310001720580us-gaap:IPOMember2021-02-012021-02-280001720580acet:LaboratoryEquipmentMember2021-12-310001720580acet:TwoThousandSeventeenAndTwoThousandEighteenStockIncentivePlanMember2022-01-012022-03-310001720580us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-03-310001720580acet:RegeneronPharmaceuticalsIncorporationMembersrt:MaximumMember2020-04-012020-06-300001720580us-gaap:AdditionalPaidInCapitalMember2020-12-310001720580acet:ResearchFundingAgreementMemberacet:NationalInstitutesOfHealthMember2022-01-012022-03-310001720580us-gaap:ConstructionInProgressMember2022-03-310001720580acet:RegeneronPharmaceuticalsIncorporationMember2020-04-012020-06-300001720580us-gaap:CommonStockMember2021-01-012021-03-310001720580acet:NationalInstitutesOfHealthMember2019-05-012019-05-310001720580us-gaap:ComputerEquipmentMember2022-01-012022-03-310001720580acet:NationalInstitutesOfHealthMember2022-01-012022-03-3100017205802021-09-300001720580us-gaap:ComputerEquipmentMember2022-03-310001720580srt:MinimumMember2021-01-012021-03-310001720580us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-3100017205802021-01-012021-03-310001720580acet:ContingentValueRightsAgreementMemberus-gaap:ChangeDuringPeriodFairValueDisclosureMember2021-12-310001720580acet:LaboratoryEquipmentMember2022-01-012022-03-310001720580us-gaap:InProcessResearchAndDevelopmentMember2021-12-310001720580us-gaap:AdditionalPaidInCapitalMember2021-03-310001720580us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2022-03-310001720580us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001720580us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001720580acet:RegeneronPharmaceuticalsIncorporationMember2022-01-282022-01-2800017205802020-01-012020-12-310001720580acet:ContingentValueRightsAgreementMember2021-12-3100017205802021-07-272021-07-270001720580acet:TwoThousandFourteenStockIncentivePlanMember2022-03-310001720580us-gaap:RetainedEarningsMember2021-01-012021-03-310001720580acet:RegeneronPharmaceuticalsIncorporationMembersrt:MaximumMember2022-01-012022-03-310001720580us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001720580acet:AdicetTherapeuticsIncMember2022-03-310001720580acet:TwoThousandFifteenStockIncentivePlanMember2022-01-012022-03-310001720580us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001720580acet:CommonStockWarrantsMember2022-03-310001720580acet:SeptemberFifteenTwoThousandTwentyWarrantThreeMember2022-03-310001720580us-gaap:EmployeeStockOptionMember2022-03-310001720580us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-03-310001720580acet:RegeneronPharmaceuticalsIncorporationMember2019-07-312019-07-310001720580us-gaap:LeaseholdImprovementsMember2022-03-310001720580us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001720580us-gaap:CommonStockMember2022-01-012022-03-310001720580us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001720580us-gaap:InProcessResearchAndDevelopmentMemberus-gaap:ChangeDuringPeriodFairValueDisclosureMember2021-12-310001720580us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001720580acet:LaboratoryEquipmentMember2022-03-310001720580acet:TwoThousandSeventeenAndTwoThousandEighteenStockIncentivePlanMember2022-03-310001720580acet:CommonStockWarrantsMember2021-12-310001720580us-gaap:InProcessResearchAndDevelopmentMember2020-09-150001720580acet:ContingentValueRightsAgreementMember2020-12-310001720580us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001720580us-gaap:CommonStockMember2021-03-310001720580acet:PerformanceRestrictedStockMember2021-05-310001720580acet:ContractLiabilityMember2022-01-012022-03-310001720580acet:SeptemberFifteenTwoThousandTwentyWarrantOneMember2022-03-310001720580acet:SeptemberFifteenTwoThousandTwentyWarrantFourMember2022-03-310001720580acet:RfsOpcoLlcMember2021-07-192021-07-1900017205802021-03-310001720580acet:ContractLiabilityMember2021-12-3100017205802021-12-310001720580acet:BostonPropertiesIncMember2022-03-3100017205802022-03-180001720580us-gaap:InProcessResearchAndDevelopmentMember2020-12-310001720580us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310001720580acet:SeptemberFifteenTwoThousandTwentyWarrantTwoMember2022-03-310001720580acet:RegeneronPharmaceuticalsIncorporationMember2018-01-012018-12-310001720580acet:ContractLiabilityMember2020-12-310001720580us-gaap:IPOMember2021-12-310001720580srt:MinimumMember2022-01-012022-03-310001720580us-gaap:FairValueMeasurementsRecurringMember2022-03-310001720580acet:SeptemberFifteenTwoThousandTwentyWarrantFourMember2022-01-012022-03-3100017205802021-01-012021-12-310001720580us-gaap:InProcessResearchAndDevelopmentMemberus-gaap:ChangeDuringPeriodFairValueDisclosureMember2020-12-310001720580us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-03-310001720580us-gaap:RetainedEarningsMember2021-03-310001720580acet:RegeneronPharmaceuticalsIncorporationMember2022-01-012022-03-310001720580acet:RfsOpcoLlcMember2021-07-190001720580us-gaap:RetainedEarningsMember2022-03-310001720580us-gaap:RetainedEarningsMember2021-12-310001720580acet:NationalInstitutesOfHealthMember2019-05-310001720580acet:COVID19Member2022-01-012022-03-310001720580us-gaap:AdditionalPaidInCapitalMember2021-12-310001720580srt:MaximumMember2022-01-012022-03-310001720580us-gaap:RestrictedStockUnitsRSUMember2021-12-310001720580acet:ContractLiabilityMember2022-03-310001720580acet:TwoThousandEighteenEmployeeStockPurchasePlanMember2022-01-012022-01-0100017205802022-05-090001720580us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2021-12-310001720580us-gaap:WarrantMember2021-01-012021-03-310001720580us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2022-01-012022-03-31xbrli:pureutr:sqftxbrli:sharesacet:Customeriso4217:USDxbrli:sharesiso4217:USD

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-38359

 

Adicet Bio, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

81-3305277

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

200 Clarendon Street, Floor 6

Boston, MA

 

02116

(Address of principal executive offices)

 

(Zip Code)

 

(650) 503-9095

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

ACET

The Nasdaq Global Market

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, 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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of May 9, 2022, the registrant had 40,004,357 shares of common stock, $0.0001 par value per share, outstanding.

 

 


Table of Contents

 

 

 

Page

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

2

 

 

 

PART I.

FINANCIAL INFORMATION

4

Item 1.

Consolidated Financial Statements (Unaudited)

4

 

Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

4

 

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended March 31, 2022 and 2021

5

 

Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021

6

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021

8

 

Notes to Unaudited Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

33

PART II.

OTHER INFORMATION

35

Item 1.

Legal Proceedings

35

Item 1A.

Risk Factors

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

77

Item 3.

Defaults Upon Senior Securities

77

Item 4.

Mine Safety Disclosures

77

Item 5.

Other Information

77

Item 6.

Exhibits

78

Signatures

79

 

 

i


Summary of the Material Risks Associated with Our Business

 

We have a limited operating history and face significant challenges and expense as we build our capabilities.
Our business is highly dependent on the success of ADI-001. If we are unable to obtain approval for ADI-001 and effectively commercialize ADI-001 for the treatment of patients in our approved indications, our business would be significantly harmed.
Our gamma delta T cell candidates represent a novel approach to cancer treatment that creates significant challenges for us.
Our product candidates are based on novel technologies, which makes it difficult to predict the likely success of such product candidates and the time and cost of product candidate development and obtaining regulatory approval.
Our clinical trials may fail to demonstrate the safety and efficacy of any of our product candidates, which would prevent or delay regulatory approval and commercialization.
We may not be able to file investigational new drug (IND) applications to commence additional clinical trials on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed. We may encounter substantial delays in our clinical trials or may not be able to conduct our trials on the timelines we expect.
The market opportunities for our product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small.
We do not currently operate our own manufacturing facility and currently depend on the ability of our third-party suppliers and manufacturers with whom we contract to perform adequately, particularly with respect to the timely production and delivery of our product candidates, including ADI-001. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.
We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may materially and adversely affect our business and operations.
The current conflict between Russia and Ukraine may increase the likelihood of supply interruptions which could impact our ability to find the materials we need to make our product candidates. Supply disruptions make it more difficult for us to find favorable pricing and reliable sources for the materials we need, which increases pressure on our costs and increases the risk that we may be unable to acquire the necessary goods and services to successfully manufacture our product candidates.
Failure to achieve and maintain effective internal control over financial reporting could harm our business and negatively impact the value of our common stock.
If our collaboration agreement with Regeneron Pharmaceuticals, Inc. (Regeneron) is terminated, or if Regeneron materially breaches its obligations thereunder, our business, prospects, operating results, and financial condition would be materially harmed.
The U.S. Food and Drug Administration regulatory approval process is lengthy and time-consuming, and we may experience significant delays in the clinical development and regulatory approval of our product candidates.
If our efforts to protect the proprietary nature of the intellectual property related to our technologies are not adequate, we may not be able to compete effectively in our market.
We depend on intellectual property licensed from third parties and termination of any of these licenses could result in the loss of significant rights, which would harm our business.
We will need substantial additional financing to develop our product candidates and implement our operating plans. If we fail to obtain additional financing, we may be unable to complete the development and commercialization of our product candidates.

 

 

 

1


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements include, among other things, statements about:

our ability to execute our clinical trials for ADI-001 in Non-Hodgkin’s lymphoma (NHL), including the ability to successfully complete our Phase 1 clinical trial and the period during which the results of the trial will become available;
our expectations regarding the availability, timing and announcement of data from our Phase 1 clinical trial;
the anticipated timing of our submission of Investigational New Drug (IND) applications or equivalent regulatory filings and initiation of future clinical trials, including the timing of the anticipated results;
the impact of the ongoing COVID-19 pandemic on our continuing operations, clinical development plans, including the timing of initiation and completion of studies or trials, financial forecasts and expectations, and other matters related to our business and operations;
the timing of and our ability to obtain and maintain regulatory approvals for our product candidates;
the rate and degree of acceptance and clinical utility of any products for which we receive regulatory approval;
our commercialization, marketing and manufacturing capabilities and strategy;
our intellectual property position and strategy;
our ability to identify additional product candidates with significant commercial potential;
our plans to enter into collaborations for the development and commercialization of product candidates;
the potential benefits of any future collaboration;
our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
the success of competing therapies that are or may become available;
developments relating to our competitors and our industry;
our ability to retain the continued service of our key professionals and to identify, hire, and retain additional qualified professionals;
our financial performance;
our expectations related to the use of cash, cash equivalents and marketable securities;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our ability to maintain effective internal control over financial reporting;
the impact of government laws and regulations; and
other risks and uncertainties, including those listed under the caption “Risk Factors.”

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or enter into.

2


You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed or incorporated by reference as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

This Quarterly Report on Form 10-Q includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We are responsible for all of the disclosure contained in this Quarterly Report on Form 10-Q, and we believe these industry publications and third-party research, surveys and studies are reliable.

3


PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

ADICET BIO, INC.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

March 31,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

277,883

 

 

$

277,544

 

Accounts receivable—related party

 

 

 

 

 

185

 

Prepaid expenses and other current assets

 

 

3,649

 

 

 

4,709

 

     Total current assets

 

 

281,532

 

 

 

282,438

 

Property and equipment, net

 

 

17,736

 

 

 

14,643

 

Operating lease right-of-use asset

 

 

19,713

 

 

 

20,358

 

Goodwill

 

 

19,462

 

 

 

19,462

 

Restricted cash

 

 

150

 

 

 

150

 

Other non-current assets

 

 

1,858

 

 

 

1,887

 

     Total assets

 

$

340,451

 

 

$

338,938

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,465

 

 

$

3,263

 

Contract liabilities — related party, current

 

 

 

 

 

4,805

 

Accrued and other current liabilities

 

 

5,203

 

 

 

6,682

 

Operating lease liability

 

 

1,733

 

 

 

1,567

 

Total current liabilities

 

 

10,401

 

 

 

16,317

 

Operating lease liability, net of current portion

 

 

18,851

 

 

 

19,377

 

Other non-current liabilities

 

 

115

 

 

 

115

 

Total liabilities

 

 

29,367

 

 

 

35,809

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 10,000,000 shares authorized as of March 31, 2022 and December 31, 2021, respectively; none issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Common stock, $0.0001 par value, 150,000,000 shares authorized as of March 31, 2022 and December 31, 2021, respectively; 39,885,816 and 39,736,914 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

474,786

 

 

 

471,449

 

Accumulated deficit

 

 

(163,706

)

 

 

(168,324

)

Accumulated other comprehensive income

 

 

 

 

 

 

Total stockholders’ equity

 

 

311,084

 

 

 

303,129

 

Total liabilities and stockholders’ equity

 

$

340,451

 

 

$

338,938

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


ADICET BIO, INC.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

 

2022

 

 

2021

 

 

Revenuerelated party

 

$

24,990

 

 

$

(3,981

)

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

 

13,483

 

 

 

11,743

 

 

General and administrative

 

 

6,801

 

 

 

5,630

 

 

Total operating expenses

 

 

20,284

 

 

 

17,373

 

 

Income (loss) from operations

 

 

4,706

 

 

 

(21,354

)

 

Interest income

 

 

32

 

 

 

41

 

 

Interest expense

 

 

(18

)

 

 

(50

)

 

Other expense, net

 

 

(102

)

 

 

(4

)

 

Income (loss) before income tax benefit

 

 

4,618

 

 

 

(21,367

)

 

Income tax benefit

 

 

 

 

 

(48

)

 

Net income (loss)

 

$

4,618

 

 

$

(21,319

)

 

Net income (loss) per share attributable to common stockholders, basic

 

$

0.12

 

 

$

(0.82

)

 

Net income (loss) per share attributable to common stockholders, diluted

 

$

0.10

 

 

$

(0.82

)

 

Weighted-average common shares used in computing net income (loss) per share attributable to common stockholders, basic

 

 

39,823,246

 

 

 

26,099,954

 

 

Weighted-average common shares used in computing net income (loss) per share attributable to common stockholders, diluted

 

 

45,958,941

 

 

 

26,099,954

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

Unrealized loss gain on marketable debt securities, net of tax

 

 

 

 

 

(22

)

 

Total other comprehensive loss

 

 

 

 

 

(22

)

 

Comprehensive income (loss)

 

$

4,618

 

 

$

(21,341

)

 

 

The accompanying notes are an integral part of these consolidated financial statements.

5


ADICET BIO, INC.

Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid In

 

 

Accumulated

 

 

Total
 Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

 

39,736,914

 

 

$

4

 

 

$

471,449

 

 

$

(168,324

)

 

$

303,129

 

Issuance of common stock upon exercise of stock options

 

 

10,099

 

 

 

 

 

 

93

 

 

 

 

 

 

93

 

Issuance of common stock upon vesting of restricted stock

 

 

224,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for taxes

 

 

(85,197

)

 

 

 

 

 

(1,106

)

 

 

 

 

 

(1,106

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,350

 

 

 

 

 

 

4,350

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

4,618

 

 

 

4,618

 

Balance at March 31, 2022

 

 

39,885,816

 

 

$

4

 

 

$

474,786

 

 

$

(163,706

)

 

$

311,084

 

 

 

 

6


ADICET BIO, INC.

Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

(Deficit)

 

Balance at December 31, 2020

 

 

19,677,249

 

 

$

2

 

 

$

216,126

 

 

$

(106,325

)

 

$

24

 

 

$

109,827

 

Issuance of common stock upon exercise of stock options

 

 

393,991

 

 

 

 

 

 

976

 

 

 

 

 

 

 

 

 

976

 

Issuance of common stock related to financing

 

 

11,729,353

 

 

 

1

 

 

 

143,753

 

 

 

 

 

 

 

 

 

143,754

 

Exercise of warrant

 

 

1,806

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,043

 

 

 

 

 

 

 

 

 

3,043

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(21,319

)

 

 

 

 

 

(21,319

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22

)

 

 

(22

)

Balance at March 31, 2021

 

 

31,802,399

 

 

$

3

 

 

$

363,898

 

 

$

(127,644

)

 

$

2

 

 

$

236,259

 

 

The accompanying notes are an integral part of these consolidated financial statements.

7


ADICET BIO, INC.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net income (loss)

 

$

4,618

 

 

$

(21,319

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization expense

 

 

352

 

 

 

326

 

Noncash lease expense

 

 

645

 

 

 

686

 

Stock-based compensation expense

 

 

4,350

 

 

 

3,043

 

Net amortization of premiums and accretion discounts on investments

 

 

 

 

 

9

 

Loss on disposal of property, plant, and equipment

 

 

18

 

 

 

 

Amortization of deferred debt issuance costs

 

 

18

 

 

 

184

 

Impairment of in-process research and development

 

 

 

 

 

460

 

Reduction to revenue

 

 

 

 

 

3,981

 

Remeasurement of contingent consideration liability

 

 

 

 

 

(380

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable - related party

 

 

185

 

 

 

 

Prepaid expenses and other current assets

 

 

1,077

 

 

 

36

 

Other non-current assets

 

 

117

 

 

 

(377

)

Accounts payable

 

 

(612

)

 

 

196

 

Contract liabilities — related party

 

 

(4,805

)

 

 

 

Operating lease liability

 

 

(361

)

 

 

(438

)

Accrued and other current and non-current liabilities

 

 

(1,497

)

 

 

(1,553

)

Net cash provided by (used in) operating activities

 

 

4,105

 

 

 

(15,146

)

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from sales of marketable debt securities

 

 

 

 

 

7,500

 

Proceeds from maturities of marketable debt securities

 

 

 

 

 

1,000

 

Purchases of property and equipment

 

 

(2,632

)

 

 

(658

)

Net cash provided by (used in) investing activities

 

 

(2,632

)

 

 

7,842

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

 

 

 

143,754

 

Proceeds from exercise of stock options

 

 

94

 

 

 

976

 

Taxes withheld and paid related to net share settlement of equity awards

 

 

(1,106

)

 

 

 

Deferred issuance costs

 

 

(122

)

 

 

157

 

Net cash provided by (used in) financing activities

 

 

(1,134

)

 

 

144,887

 

Net change in cash, cash equivalents and restricted cash

 

 

339

 

 

 

137,583

 

Cash, cash equivalents and restricted cash, at the beginning of period

 

 

277,694

 

 

 

88,857

 

Cash, cash equivalents and restricted cash, at the end of period

 

$

278,033

 

 

$

226,440

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

277,883

 

 

$

221,667

 

Restricted cash

 

 

150

 

 

 

4,773

 

Cash, cash equivalents and restricted cash

 

$

278,033

 

 

$

226,440

 

Supplemental cash flow information

 

 

 

 

 

 

Cash received from tax refund

 

$

 

 

$

158

 

Supplemental disclosures of noncash investing and financing activities

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and accrued expenses

 

$

1,481

 

 

$

67

 

Adjustment to goodwill

 

$

 

 

$

56

 

 

The accompanying notes are an integral part of these consolidated financial statements.

8


ADICET BIO, INC.

Notes to Interim Consolidated Financial Statements (Unaudited)

1. Organization and Nature of the Business

Adicet Bio, Inc. (formerly resTORbio, Inc. (resTORbio)), together with its subsidiaries, (the Company) is a clinical stage biotechnology company discovering and developing allogeneic gamma delta T cell therapies for cancer. The Company is advancing a pipeline of off-the-shelf gamma delta T cells, engineered with chimeric antigen receptors (CARs) and T cell receptor-like antibodies to enhance selective tumor targeting, facilitate innate and adaptive anti-tumor immune response, and improve persistence for durable activity in patients. The Company's approach to activate, engineer, and manufacture allogeneic gamma delta T cell product candidates derived from the peripheral blood cells of unrelated donors allows it to generate new product candidates in a rapid and cost-efficient manner.

Adicet Bio, Inc. (when referred to prior to the merger, Former Adicet) was incorporated in November 2014 in Delaware. On September 15, 2020, Former Adicet completed a merger with resTORbio, pursuant to which Former Adicet merged with a wholly owned subsidiary of resTORbio in an all-stock transaction with Former Adicet surviving as a wholly owned subsidiary of resTORbio and changing its name to “Adicet Therapeutics, Inc.” (Adicet Therapeutics). In connection with the merger, the Company changed its name from “resTORbio, Inc.” to “Adicet Bio, Inc.” The Company’s principal executive offices are located in Boston, Massachusetts. The Company also has another office in Menlo Park, California.

Adicet Bio Israel Ltd. (formerly Applied Immune Technologies Ltd.) (Adicet Israel) is a wholly owned subsidiary of the Company and is located in Haifa, Israel. Adicet Israel was founded in 2006. During 2019, the Company consolidated its operations, including research and development activities, in the United States and as a result, substantially reduced its operations in Israel.

Liquidity

The Company has incurred significant net operating losses and negative cash flows from operations and has an accumulated deficit of $163.7 million as of March 31, 2022. The Company has historically financed its operations primarily through a collaboration and licensing arrangement, through the public and private placements of equity securities and debt, and cash received in the merger with resTORbio. To date, none of the Company’s product candidates have been approved for sale and therefore the Company has not generated any revenue from product sales. Management expects operating losses and negative cash flows to continue for the foreseeable future, until such time, if ever, that it can generate significant sales of its product candidates currently in development.

In February 2021, the Company completed an underwritten public offering of 10,575,513 shares of its common stock at a public offering price of $13.00 per share. The Company received aggregate gross proceeds from the offering, before deducting underwriting discounts and commissions and offering expenses of approximately $137.5 million. In connection with the offering, the Company also entered into a stock purchase agreement with certain existing investors for $15.0 million of shares of the Company’s common stock at a price per share equal to the public offering price, with an initial closing for certain investors held simultaneously with the closing of the offering and a subsequent closing for certain additional investors.

In December 2021, the Company closed an underwritten public offering of 7,187,500 shares of its common stock at a public offering price of $14.00 per share. The Company received net proceeds from the offering, after deducting underwriting discounts and commissions and offering expenses, of approximately $94.2 million.

The Company expects that its cash and cash equivalents, including the gross proceeds it received in February 2021 and December 2021 from its underwritten public offerings and the proceeds received from a stock purchase agreement with certain existing investors, will be sufficient to fund its forecasted operating expenses, capital expenditure requirements and debt service payments for at least the next twelve months from the issuance of these interim consolidated financial statements.

All of the Company’s revenue to date is generated from a collaboration and license agreement with Regeneron Pharmaceuticals Inc, (Regeneron). The Company does not expect to generate any significant product revenue until it obtains regulatory approval of and commercializes any of the Company’s product candidates or enters into additional collaborative agreements with third parties, and it does not know when, or if, either will occur. The Company expects to continue to incur significant losses for the foreseeable future, and it expects the losses to increase as the Company continues the development of, and seeks regulatory approvals for, its product candidates and begins to commercialize any approved products. The Company is subject to all of the risks typically related to the development of new product candidates, including, but not limited to, raising additional capital, development by its competitors of new technological innovations, risk of failure in preclinical and clinical studies, safety and efficacy of its product candidates in clinical trials, the risk of relying on external

9


parties such as contract research organizations (CROs) and contract manufacturing organizations (CMOs), the regulatory approval process, market acceptance of the Company’s products once approved, lack of marketing and sales history, dependence on key personnel and protection of proprietary technology and it may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect its business.

Until such time as the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operations through the sale of equity, debt financings, collaborative or other arrangements with corporate or other sources of financing. Adequate funding may not be available to the Company on acceptable terms or at all. The Company’s failure to raise capital as and when needed could have a negative impact on its financial condition and the Company’s ability to pursue its business strategies. Although the Company continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

2. Summary of Significant Accounting Policies

Basis of Presentation

The unaudited interim consolidated financial statements and related disclosures have been prepared in conformity with accounting principles generally accepted in the United States of America (United States GAAP or GAAP).

Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to the significant accounting policies during the three months ended March 31, 2022.

Unaudited Interim Financial Information

The accompanying unaudited consolidated financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021, have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial position as of March 31, 2022 and consolidated results of operations for the three months ended March 31, 2022 and 2021 and consolidated cash flows for the three months ended March 31, 2022 and 2021 have been made. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2022.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents. The Company’s cash and cash equivalents are held at two financial institutions in the U.S. and one financial institution in Israel and such amounts may, at times, exceed insured limits. The Company invests its cash equivalents in money market funds. The Company limits its credit risk associated with cash equivalents by placing them with banks and institutions it believes are highly creditworthy and in highly rated investments. The Company has not experienced any losses on its deposits of cash and cash equivalents to date.

The Company has one customer, Regeneron, which represents all of the Company’s revenue for the three months ended March 31, 2022 and 2021 (see Note 8).

Risks and Uncertainties

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, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing

10


to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies, clinical trials, and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting.

The Company’s product candidates are still in development and, to date, none of the Company’s product candidates have been approved for sale and, therefore, the Company has not generated any revenue from product sales.

There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained or maintained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies.

The current COVID-19 (coronavirus) pandemic, which is impacting worldwide economic activity, poses the risk that the Company or its employees, contractors, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities. The extent to which the coronavirus impacts the Company’s operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that will emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others. COVID-19 may impact the timing of regulatory review and clearance of investigational new drugs (INDs) for clinical trials, the enrollment of any clinical trials that are allowed to proceed, the availability of clinical trial materials and regulatory approval and commercialization of our product candidates. COVID-19 may also impact the Company’s ability to access capital, which could negatively impact short-term and long-term liquidity.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date, unless otherwise discussed below.

Recently Adopted Accounting Pronouncements

In July 2021, FASB issued ASU No. 2021-05, Lease (Topic 842), Lessors - Certain Leases with Variable Lease Payments (ASU 2021-05). ASU 2021-05 amends the lease classification requirements for lessors when classifying and accounting for a lease with variable lease payments that do not depend on a reference rate index or a rate. The update provides criteria, that if met, the lease would be classified and accounted for as an operating lease. ASU 2021-05 is effective for reporting periods beginning after December 15, 2021, with early adoption permitted. The Company adopted ASU 2021-05 in the first quarter of 2022. The impact on its consolidated financial statements and related disclosures was not material.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. This ASU replaces the existing incurred loss impairment model with an expected loss model. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. For SEC filers that are eligible to be smaller reporting companies, this ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted. The Company plans to adopt the provisions of ASU 2016-13 effective January 1, 2023 and is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). The new guidance simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. SEC filers that are eligible to be smaller reporting companies should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2022. The amendment should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company plans to adopt the provisions of ASU 2017-04 effective January 1, 2023 and is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures.

11


3. Goodwill and Other Intangible Assets

On September 15, 2020, Former Adicet completed its merger with resTORbio. The merger was accounted for as a business combination which requires that assets acquired, and liabilities assumed be recognized at their fair value as of the acquisition date. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations.

As part of the transaction the Company recognized goodwill of $19.5 million, which is not tax deductible and represents the excess of the consideration paid over the fair value of assets acquired and liabilities assumed. Goodwill is mainly attributable to the enhanced value of the combined company.

The fair value of acquired in-process research and development (IPR&D) is related to the research and development of RTB101 for a COVID-19 related indication. The RTB101 compound IPR&D project was valued using an income approach, specifically a projected discounted cash flow method, adjusted for the probability of technical success (PTS). The projected discounted cash flow models used to estimate the Company’s IPR&D reflect significant assumptions regarding the estimates a market participant would make in order to evaluate a drug development asset, including the following:

Estimates of potential cash flows to be generated by the project and resulting asset, which was developed utilizing estimates of total patient population, market penetration rates, demand risk adjustment factors, and product pricing;
Estimates regarding the timing of and the expected costs of goods sold, research and development expenses, selling, general and administrative expenses to advance the clinical programs to commercialization, cash flow adjustments and partner profit split;
The projected cash flows were then adjusted using PTS factors that were selected considering both the current state of clinical development and the nature of the proposed indication, (i.e., respiratory therapeutics); and
Finally, the resulting probability adjusted cash flows were discounted to a present value using a risk-adjusted discount rate, developed considering the market risk present in the forecast and the size of the asset.

This IPR&D intangible asset is not amortized, but rather is reviewed for impairment on an annual basis or more frequently if indicators of impairment are present, until the project is completed, abandoned, or transferred to a third party. On July 27, 2021, the Company sent Novartis a termination notice. Termination will automatically take effect as of 60 days from the date of delivery of the termination notice to Novartis, but in no event later than October 1, 2021 without any further notice or action required of either Novartis or the Company. Upon the review of impairment of IPR&D during the second quarter of 2021, the Company concluded that the IPR&D was fully impaired and recorded an impairment charge within research and development expenses in the consolidated statement of operations and comprehensive loss for the remaining balance of the IPR&D intangible asset as of June 30, 2021. The Company recognized IPR&D impairment charges of $2.3 million, $0.5 million, and $0.7 million for the quarters ended as of December 31, 2020, March 31, 2021, and June 30, 2021.

In connection with the merger, the Company entered into a Contingent Value Rights Agreement (the CVR Agreement). The contingent consideration for the contingent value right (CVR) was valued using an income approach, leveraging the probability adjusted discounted cash flow used in the valuation of the IPR&D and then deducting the administrative fee to be retained by the combined company and other permitted deductions in order to arrive at the net cash expected to be paid out to the CVR holders. The probability adjusted cash flow includes significant estimates and assumptions pertaining to commercialization events and cash consideration received by the Company for the grant of rights to commercialize RTB101 during the term of the CVR Agreement. These cash flows were then discounted to present value using the same discount rate applied in the valuation of the IPR&D. For additional background on the CVR Agreement and IPR&D, see to Note 3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

12


The following tables present changes in the Company’s IPR&D and CVR since the merger (in thousands):

 

 

 

Acquisition Date
Fair value as of
September 15, 2020

 

 

Change in
Fair value

 

 

As of
December 31,
2020

 

 

Change in
Fair value

 

 

As of
December 31,
2021

 

In-process research and development

 

$

3,490

 

 

$

(2,300

)

 

$

1,190

 

 

$

(1,190

)

 

$

 

Contingent Value Rights

 

$

2,880

 

 

$

(1,900

)

 

$

980

 

 

$

(980

)

 

$

 

 

4. Fair Value Measurements

The Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy which establishes three level of inputs that may be used to measure fair value, as follows:

Level 1 — Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

 

 

 

March 31, 2022

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1) (2)

 

$

147,075

 

 

$

 

 

$

 

 

$

147,075

 

Total fair value of assets

 

$

147,075

 

 

$

 

 

$

 

 

$

147,075

 

 

 

 

December 31, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1) (2)

 

$

147,071

 

 

$

 

 

$

 

 

$

147,071

 

Total fair value of assets

 

$

147,071

 

 

$

 

 

$

 

 

$

147,071

 

 

13


 

(1)
Included in cash and cash equivalents in the consolidated balance sheets.
(2)
Money market funds are included within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

 

 

 

March 31,
2022

 

 

December 31,
2021

 

Prepaid insurance

 

$

1,414

 

 

$

1,021

 

Prepayments to CROs

 

 

1,031

 

 

 

1,658

 

Prepaid maintenance

 

 

1,128

 

 

 

115

 

Prepayments to CMOs

 

 

31

 

 

 

1,884

 

Other prepaid expenses and current assets

 

 

45

 

 

 

31

 

Total prepaid expenses and other current assets

 

$

3,649

 

 

$

4,709

 

 

6. Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

 

 

 

Useful life
(in years)

 

March 31,
2022

 

 

December 31,
2021

 

Laboratory equipment

 

3

 

$

5,641

 

 

$

5,502

 

Leasehold improvements

 

Lesser of useful life or lease term

 

 

1,606

 

 

 

1,614

 

Furniture and fixtures

 

3

 

 

303

 

 

 

303

 

Construction in progress

 

 

 

16,328

 

 

 

13,014