SEC Filing | Adicet Bio

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10-Q

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 June 30, 2022


☐	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 Berkeley Street, 19th Floor 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 August 5, 2022, the registrant had 40,030,801 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 June 30, 2022 and December 31, 2021	4
	Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2022 and 2021	5
	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	76
Item 3.	Defaults Upon Senior Securities	76
Item 4.	Mine Safety Disclosures	76
Item 5.	Other Information	76
Item 6.	Exhibits	77
Signatures		78

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 U.S. Food and Drug Administration (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.

•

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 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 FDA 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.

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 our additional internal gamma delta T cell therapy programs in preclinical development and our research pipeline;

•

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.

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.

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

ADICET BIO, INC.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)


	June 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	260,642		$	277,544
Accounts receivable—related party		—			185
Prepaid expenses and other current assets		3,446			4,709
Total current assets		264,088			282,438
Property and equipment, net		23,167			14,643
Operating lease right-of-use asset		21,398			20,358
Goodwill		19,462			19,462
Restricted cash		—			150
Other non-current assets		1,789			1,887
Total assets	$	329,904		$	338,938
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	4,146		$	3,263
Contract liabilities — related party, current		—			4,805
Accrued and other current liabilities		9,991			6,682
Operating lease liability		2,261			1,567
Total current liabilities		16,398			16,317
Operating lease liability, net of current portion		20,124			19,377
Other non-current liabilities		115			115
Total liabilities		36,637			35,809
Stockholders’ equity:
Preferred stock, $0.0001 par value, 10,000,000 shares authorized as of June 30, 2022 and December 31, 2021, respectively; none issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		—			—
Common stock, $0.0001 par value, 150,000,000 shares authorized as of June 30, 2022 and December 31, 2021, respectively; 40,020,755 and 39,736,914 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		4			4
Additional paid-in capital		479,507			471,449
Accumulated deficit		(186,244	)		(168,324	)
Accumulated other comprehensive income		—			—
Total stockholders’ equity		293,267			303,129
Total liabilities and stockholders’ equity	$	329,904		$	338,938

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

ADICET BIO, INC.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenue—related party	$	—		$	4,814		$	24,990		$	833
Operating expenses:
Research and development		16,178			10,616			29,661			22,359
General and administrative		6,529			5,025			13,330			10,655
Total operating expenses		22,707			15,641			42,991			33,014
Loss from operations		(22,707	)		(10,827	)		(18,001	)		(32,181	)
Interest income		325			9			357			50
Interest expense		(18	)		(51	)		(36	)		(101	)
Other expense, net		(138	)		(62	)		(240	)		(66	)
Loss before income tax provision (benefit)		(22,538	)		(10,931	)		(17,920	)		(32,298	)
Income tax provision (benefit)		—			(77	)		—			(125	)
Net loss	$	(22,538	)	$	(10,854	)	$	(17,920	)	$	(32,173	)
Net loss per share, basic and diluted	$	(0.56	)	$	(0.34	)	$	(0.45	)	$	(1.11	)
Weighted-average common shares used in computing net loss per share, basic and diluted		40,075,060			31,824,405			39,975,503			28,977,993
Other comprehensive loss:
Unrealized loss on marketable debt securities, net of tax		—			(2	)		—			(24	)
Total other comprehensive loss		—			(2	)		—			(24	)
Comprehensive loss	$	(22,538	)	$	(10,856	)	$	(17,920	)	$	(32,197	)

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

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 income		—			—		—			4,618			4,618
Balance at March 31, 2022		39,885,816		$	4	$	474,786		$	(163,706	)	$	311,084
Issuance of common stock upon exercise of stock options		17,854			—		183			—		$	183
Issuance of common stock upon exercise of warrants		100,731			—		—			—			—
Purchase of common stock under ESPP		16,354			—		203			—			203
Stock-based compensation expense		—			—		4,335			—			4,335
Net loss		—			—		—			(22,538	)		(22,538	)
Balance at June 30, 2022		40,020,755		$	4	$	479,507		$	(186,244	)	$	293,267

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)			Equity
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
Issuance of common stock upon exercise of stock options		39,603	$	—	$	279	$	—		$	—		$	279
Stock-based compensation expense		—		—		2,659		—			—		$	2,659
Net loss		—		—		—		(10,854	)		—		$	(10,854	)
Other comprehensive loss		—		—		—		—			(2	)	$	(2	)
Balance at June 30, 2021		31,842,002	$	3	$	366,836	$	(138,498	)	$	-		$	228,341

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

ADICET BIO, INC.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Six Months Ended June 30,
	2022			2021
Cash flows from operating activities
Net loss	$	(17,920	)	$	(32,173	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense		757			785
Noncash lease expense		1,304			1,377
Stock-based compensation expense		8,685			5,702
Net amortization of premiums and accretion discounts on investments		—			10
Loss on disposal of property, plant, and equipment		18			—
Amortization of deferred debt issuance costs		18			100
Impairment of in-process research and development		—			1,190
Remeasurement of contingent consideration liability		—			(980	)
Changes in operating assets and liabilities:
Accounts receivable - related party		185			—
Prepaid expenses and other current assets		1,280			(1,240	)
Other non-current assets		408			(116	)
Accounts payable		(1,186	)		764
Contract liabilities — related party		(4,805	)		(833	)
Operating lease liability		(902	)		(1,098	)
Accrued and other current and non-current liabilities		1,558			(1,412	)
Net cash provided by (used in) operating activities		(10,600	)		(27,924	)
Cash flows from investing activities
Proceeds from sales of marketable debt securities		—			7,500
Proceeds from maturities of marketable debt securities		—			2,750
Purchases of property and equipment		(5,481	)		(2,790	)
Net cash provided by (used in) investing activities		(5,481	)		7,460
Cash flows from financing activities
Proceeds from issuance of common stock, net of issuance costs		—			143,754
Proceeds from Employee Stock Purchase Plan		203			—
Proceeds from exercise of stock options		277			1,255
Taxes withheld and paid related to net share settlement of equity awards		(1,106	)		—
Deferred issuance costs		(345	)		(149	)
Net cash provided by (used in) financing activities		(971	)		144,860
Net change in cash, cash equivalents and restricted cash		(17,052	)		124,396
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	$	260,642		$	213,253
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	260,642		$	208,726
Restricted cash		—			4,527
Cash, cash equivalents and restricted cash	$	260,642		$	213,253
Supplemental cash flow information
Cash received from tax refund	$	—		$	158
Supplemental disclosures of noncash investing and financing activities