10-Q
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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 September 30, 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 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 November 4, 2022, the registrant had 42,851,342 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 September 30, 2022 and December 31, 2021

4

 

Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021

5

 

Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021

6

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 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

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32

Item 4.

Controls and Procedures

33

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

 

 

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 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.
Unstable market and economic conditions, including the uncertainty tied to rising interest rates and inflation, may have serious adverse consequences on our business, financial condition, results of operations and stock price.
Our business is affected by macroeconomic conditions, including rising inflation, interest rates and supply chain constraints.

 

 

 

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 our additional internal gamma delta T cell therapy programs, including ADI-925, 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;
our expectations regarding the impact of unstable market and economic conditions, including impacts of inflation, on our business, results of operations or financial conditions;
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 current and 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

2


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.

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)

 

 

 

September 30,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

282,679

 

 

$

277,544

 

Accounts receivable—related party

 

 

29

 

 

 

185

 

Prepaid expenses and other current assets

 

 

3,029

 

 

 

4,709

 

     Total current assets

 

 

285,737

 

 

 

282,438

 

Property and equipment, net

 

 

26,832

 

 

 

14,643

 

Operating lease right-of-use asset

 

 

20,991

 

 

 

20,358

 

Goodwill

 

 

19,462

 

 

 

19,462

 

Restricted cash

 

 

 

 

 

150

 

Other non-current assets

 

 

1,281

 

 

 

1,887

 

     Total assets

 

$

354,303

 

 

$

338,938

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,570

 

 

$

3,263

 

Contract liabilities — related party, current

 

 

 

 

 

4,805

 

Accrued and other current liabilities

 

 

10,242

 

 

 

6,682

 

Operating lease liability

 

 

2,409

 

 

 

1,567

 

Total current liabilities

 

 

17,221

 

 

 

16,317

 

Operating lease liability, net of current portion

 

 

19,308

 

 

 

19,377

 

Other non-current liabilities

 

 

116

 

 

 

115

 

Total liabilities

 

 

36,645

 

 

 

35,809

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 10,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively; none issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Common stock, $0.0001 par value, 150,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively; 42,787,657 and 39,736,914 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

525,894

 

 

 

471,449

 

Accumulated deficit

 

 

(208,240

)

 

 

(168,324

)

Accumulated other comprehensive income

 

 

 

 

 

 

Total stockholders’ equity

 

 

317,658

 

 

 

303,129

 

Total liabilities and stockholders’ equity

 

$

354,303

 

 

$

338,938

 

 

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

4


ADICET BIO, INC.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenuerelated party

 

$

 

 

$

3,429

 

 

$

24,990

 

 

$

4,262

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

16,570

 

 

 

11,926

 

 

 

46,231

 

 

 

34,285

 

General and administrative

 

 

6,415

 

 

 

5,213

 

 

 

19,745

 

 

 

15,868

 

Total operating expenses

 

 

22,985

 

 

 

17,139

 

 

 

65,976

 

 

 

50,153

 

Loss from operations

 

 

(22,985

)

 

 

(13,710

)

 

 

(40,986

)

 

 

(45,891

)

Interest income

 

 

1,224

 

 

 

4

 

 

 

1,581

 

 

 

54

 

Interest expense

 

 

(18

)

 

 

(50

)

 

 

(54

)

 

 

(151

)

Other expense, net

 

 

(217

)

 

 

(246

)

 

 

(456

)

 

 

(312

)

Loss before income tax provision

 

 

(21,996

)

 

 

(14,002

)

 

 

(39,915

)

 

 

(46,300

)

Income tax provision

 

 

 

 

 

11

 

 

 

 

 

 

(114

)

Net loss

 

$

(21,996

)

 

$

(14,013

)

 

$

(39,915

)

 

$

(46,186

)

Net loss per share, basic and diluted

 

$

(0.53

)

 

$

(0.44

)

 

$

(0.98

)

 

$

(1.54

)

Weighted-average common shares used in computing net loss per share, basic and diluted

 

 

41,642,815

 

 

 

31,876,016

 

 

 

40,547,792

 

 

 

29,954,616

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable debt securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

(24

)

Total other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(24

)

Comprehensive loss

 

$

(21,996

)

 

$

(14,013

)

 

$

(39,915

)

 

$

(46,210

)

 

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 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 Employee Stock Purchase Plan

 

 

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

 

Issuance of common stock upon exercise of stock options

 

 

23,216

 

 

 

 

 

 

191

 

 

 

 

 

$

191

 

Issuance of common stock upon vesting of restricted stock

 

 

209,375

 

 

 

 

 

 

 

 

 

 

 

$

 

Shares withheld for taxes

 

 

(77,412

)

 

 

 

 

 

(1,355

)

 

 

 

 

$

(1,355

)

Issuance of common stock pursuant to at-the-market offering, net of issuance costs of $1.6 million

 

 

2,611,723

 

 

 

 

 

 

43,360

 

 

 

 

 

$

43,360

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,191

 

 

 

 

 

$

4,191

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(21,996

)

 

$

(21,996

)

Balance at September 30, 2022

 

 

42,787,657

 

 

$

4

 

 

$

525,894

 

 

$

(208,240

)

 

$

317,658

 

 

 

 

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)

 

 

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

 

Issuance of common stock upon exercise of stock options

 

 

113,048

 

 

$

 

 

$

367

 

 

$

 

 

$

 

 

$

367

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,529

 

 

 

 

 

 

 

 

$

2,529

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(14,013

)

 

 

 

 

$

(14,013

)

Balance at September 30, 2021

 

 

31,955,050

 

 

$

3

 

 

$

369,732

 

 

$

(152,511

)

 

$

 

 

$

217,224

 

 

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

7


ADICET BIO, INC.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(39,915