10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2019

OR

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

Commission File Number  001-37368

ADAPTIMMUNE THERAPEUTICS PLC

(Exact name of Registrant as specified in its charter)

England and Wales	Not Applicable
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

60 Jubilee Avenue, Milton Park

Abingdon, Oxfordshire OX14 4RX

United Kingdom

(Address of principal executive offices)

(44) 1235 430000

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol	Name of each exchange on which registered
American Depositary Shares, each representing 6 Ordinary Shares, par value £0.001 per share	ADAP	The Nasdaq Global Select 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “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 standard 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 5, 2019, the number of outstanding ordinary shares par value £0.001 per share of the Registrant is 630,993,866.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION		5
Item 1.	Financial Statements:	5
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	5
	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018	6
	Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2019 and 2018	7
	Unaudited Condensed Consolidated Statements of Change in Equity for the three and nine months ended September 30, 2019 and 2018	8
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018	10
	Notes to the Unaudited Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
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	82
Item 3.	Defaults Upon Senior Securities	82
Item 4.	Mine Safety Disclosures	82
Item 5.	Other Information	82
Item 6.	Exhibits	83
Signatures		84

2

General information

In this Quarterly Report on Form 10-Q (“Quarterly Report”), “Adaptimmune,” the “Group,” the “Company,” “we,” “us” and “our” refer to Adaptimmune Therapeutics plc and its consolidated subsidiaries, except where the context otherwise requires.

Information Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. All statements other than statements of historical fact in this Quarterly Report are forward-looking statements.

These forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results of operations, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. These forward-looking statements are based on assumptions regarding our present and future business strategies and the environment in which we expect to operate in the future. Important factors that could cause those differences include, but are not limited to:

● our ability to successfully advance our ADP-A2M4 (MAGE-A4) and ADP-A2AFP (AFP) products through clinical development and the timing within which we can recruit patients and treat patients in all of our clinical trials;

● our ability to fund our operations and continue as a going concern;

● our ability to successfully and reproducibly manufacture SPEAR T-cells in order to meet patient demand;

● our ability to further develop our commercial manufacturing process for our SPEAR T-cells, transfer such commercial process to third party contract manufacturers, if required, and for such third party contract manufacturers or ourselves to manufacture SPEAR T-cells to the quality and on the timescales we require;

● our ability to successfully advance our SPEAR T-cell technology platform to improve the safety and effectiveness of our existing SPEAR T-cell candidates and to submit Investigational New Drug Applications, or INDs, for new SPEAR T-cell candidates;

● the rate and degree of market acceptance of T-cell therapy generally, and of SPEAR T-cells;

● government regulation and approval, including, but not limited to, the expected regulatory approval timelines for SPEAR T-cells and the level of pricing and reimbursement for SPEAR T-cells, if approved for marketing;

● our ability to successfully commercialize any products;

● the existence of any third party patents preventing further development of any SPEAR T-cells, including, any inability to obtain appropriate third party licenses, or enforcement of patents against us or our collaborators;

● our ability to obtain granted patents covering any SPEAR T-cells and to enforce such patents against third parties;

● volatility in equity markets in general and in the biopharmaceutical sector in particular and our ability to maintain compliance with the Nasdaq Global Select Market closing bid price requirement;

● fluctuations in the price of materials and bought-in components;

● the scope and timing of performance of our ongoing collaboration with GlaxoSmithKline (“GSK”);

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● our relationships with suppliers, contract manufacturing organizations or CROs and other third-party providers including fluctuations in the price of materials and services, ability to obtain reagents particularly where such reagents are only available from a single source, and performance of third party providers;

● increased competition from other companies in the biotechnology and pharmaceutical industries including where such competition impacts ability to recruit patients in to clinical trials;

● claims for personal injury or death arising from the use of SPEAR T-cell candidates;

● our ability to attract and retain qualified personnel; and

● additional factors that are not known to us at this time.

Additional factors that could cause actual results, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results to differ materially include, but are not limited to, those discussed under “Risk Factors” in Part II, Item 1A in this Quarterly Report and in our other filings with the Securities and Exchange Commission (the “SEC”). Additional risks that we may currently deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this Quarterly Report not to occur. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements speak only at the date they were made, and we undertake no obligation to update or to review any estimate and/or forward-looking statement because of new information, future events or other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. Our future results may differ materially from those expressed in these estimates and forward-looking statements. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this Quarterly Report might not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive of, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	September 30,		December 31,
	2019		2018
Assets
Current assets
Cash and cash equivalents	$	39,409	$	68,379
Marketable securities - available-for-sale debt securities		63,451		136,755
Accounts receivable, net of allowance for doubtful accounts of $0 and $0		—		192
Other current assets and prepaid expenses (including current portion of clinical materials)		44,110		25,769
Total current assets		146,970		231,095
Restricted cash		4,318		4,097
Clinical materials		2,485		3,953
Operating lease right-of-use assets, net of accumulated amortization		20,563		—
Property, plant and equipment, net of accumulated depreciation of $20,818 (2018: $15,924)		31,641		36,118
Intangibles, net of accumulated amortization		2,274		1,473
Total assets	$	208,251	$	276,736
Liabilities and stockholders’ equity
Current liabilities
Accounts payable		5,535		4,083
Operating lease liabilities, current		2,337		—
Accrued expenses and other accrued liabilities		26,846		20,354
Deferred revenue		2,683		—
Total current liabilities		37,401		24,437
Operating lease liabilities, non-current		22,599		—
Other liabilities, non-current		568		5,414
Total liabilities		60,568		29,851
Stockholders’ equity
Common stock - Ordinary shares par value £0.001, 785,857,300 authorized and 630,952,736 issued and outstanding (2018: 701,103,126 authorized and 627,454,270 issued and outstanding)		943		939
Additional paid in capital		583,065		574,208
Accumulated other comprehensive loss		(10,025)		(9,763)
Accumulated deficit		(426,300)		(318,499)
Total stockholders' equity		147,683		246,885
Total liabilities and stockholders’ equity	$	208,251	$	276,736

See accompanying notes to unaudited condensed consolidated financial statements.

5

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

	Three months ended				Nine months ended
	September 30,				September 30,
	2019		2018		2019		2018
Development revenue		237		1,678		394		18,912
License revenue		—		39,114		—		39,114
Total revenue	$	237	$	40,792	$	394	$	58,026
Operating expenses
Research and development (including losses accrued on firm purchase commitments of $5,000, $-, $5,000 and $-)		(29,617)		(23,484)		(77,147)		(75,500)
General and administrative		(10,741)		(10,290)		(32,662)		(32,785)
Total operating expenses		(40,358)		(33,774)		(109,809)		(108,285)
Operating (loss) income		(40,121)		7,018		(109,415)		(50,259)
Interest income		615		606		2,324		1,805
Other income (expense), net		291		(2,249)		(556)		(10,525)
(Loss) income before income taxes		(39,215)		5,375		(107,647)		(58,979)
Income taxes		(87)		(133)		(154)		(362)
Net (loss) income attributable to ordinary shareholders	$	(39,302)	$	5,242	$	(107,801)	$	(59,341)
Net (loss) income per ordinary share - Basic and diluted
Basic	$	(0.06)	$	0.01	$	(0.17)	$	(0.10)
Diluted		(0.06)		0.01		(0.17)		(0.10)
Weighted average shares outstanding:
Basic		630,866,800		582,004,954		629,403,293		573,796,275
Diluted		630,866,800		621,764,201		629,403,293		573,796,275

See accompanying notes to unaudited condensed consolidated financial statements.

6

ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

	Three months ended				Nine months ended
	September 30,				September 30,
	2019		2018		2019		2018
Net (loss) income	$	(39,302)	$	5,242	$	(107,801)	$	(59,341)
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments, net of tax of $0, $0, $0 and $0		6,617		1,521		7,916		5,103
Foreign currency losses on intercompany loan of a long-term investment nature, net of tax of $0, $0, $0 and $0		(8,388)		—		(8,388)		—
Unrealized (gains) losses on available-for-sale debt securities
Unrealized holding (losses) gains on available-for-sale debt securities, net of tax of $0, $0, $0 and $0		(55)		85		223		1,252
Reclassification adjustment for (gains) losses on available-for-sale debt securities included in net loss, net of tax of $0, $0, $0 and $0		—		—		(13)		2,473
Total comprehensive (loss) income for the period	$	(41,128)	$	6,848	$	(108,063)	$	(50,513)

See accompanying notes to unaudited condensed consolidated financial statements.

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ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY

(In thousands, except share data)

						Accumulated other
						comprehensive loss
								Accumulated
								unrealized
						Accumulated		(losses)
						foreign		gains on
				Additional		currency		available-for-				Total
	Common	Common		paid in		translation		sale debt		Accumulated		stockholders'
	stock	stock		capital		adjustments		securities		deficit		equity
Balance as of 1 January 2019	627,454,270	$	939	$	574,208	$	(9,607)	$	(156)	$	(318,499)	$	246,885
Net loss	—		—		—		—		—		(27,412)		(27,412)
Issuance of shares upon exercise of stock options	840,432		1		35		—		—		—		36
Foreign currency translation adjustments	—		—		—		(3,543)		—		—		(3,543)
Unrealized holding gains on available-for-sale debt securities, net of tax of $-	—		—		—		—		210		—		210
Share-based compensation expense	—		—		3,479		—		—		—		3,479
Balance as of March 31, 2019	628,294,702	$	940	$	577,722	$	(13,150)	$	54	$	(345,911)	$	219,655
Net loss	—		—		—		—		—		(41,087)		(41,087)
Issuance of shares upon exercise of stock options	2,377,876		3		327		—		—		—		330
Foreign currency translation adjustments	—		—		—		4,842		—		—		4,842
Unrealized holding gains on available-for-sale debt securities, net of tax of $-	—		—		—		—		68		—		68
Reclassification from accumulated other comprehensive income of gains on available-for-sale debt securities included in net income, net of tax of $-	—		—		—		—		(13)		—		(13)
Share-based compensation expense	—		—		3,196		—		—		—		3,196
Balance as of June 30, 2019	630,672,578	$	943	$	581,245	$	(8,308)	$	109	$	(386,998)	$	186,991
Net loss	—		—		—		—		—		(39,302)		(39,302)
Issuance of shares upon exercise of stock options	280,158		—		—		—		—		—		—
Foreign currency translation adjustments	—		—		—		6,617		—		—		6,617
Foreign currency losses on intercompany loan of a long-term investment nature, net of tax of $-	—		—		—		(8,388)		—		—		(8,388)
Unrealized holding losses on available-for-sale debt securities, net of tax of $-	—		—		—		—		(55)		—		(55)
Share-based compensation expense	—		—		1,820		—		—		—		1,820
Balance as of September 30, 2019	630,952,736	$	943	$	583,065	$	(10,079)	$	54	$	(426,300)	$	147,683

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ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY

(In thousands, except share data)

						Accumulated other
						comprehensive loss
								Accumulated
						Accumulated		unrealized
						foreign		losses on
				Additional		currency		available-for-				Total
	Common	Common		paid in		translation		sale debt		Accumulated		stockholders’
	stock	stock		capital		adjustments		securities		deficit		equity
Balance as of 1 January 2018 (under previous guidance)	562,119,334	$	854	$	455,401	$	(17,867)	$	(3,774)	$	(231,630)	$	202,984
Cumulative effect of applying new accounting standards	—		—		—		—		—		8,645		8,645
Balance as of 1 January 2018 (adjusted)	562,119,334		854		455,401		(17,867)		(3,774)		(222,985)		211,629
Net loss											(20,738)		(20,738)
Issuance of shares upon exercise of stock options	2,740,626		4		1,530		—		—		—		1,534
Other comprehensive loss before reclassifications
Foreign currency translation adjustments	—		—		—		(2,525)		—		—		(2,525)
Unrealized holding losses on available-for-sale debt securities, net of tax of $-	—		—		—		—		(4,056)		—		(4,056)
Reclassification from accumulated other comprehensive income of losses on available-for-sale debt securities included in net income, net of tax of $-	—		—		—		—		1,163		—		1,163
Share-based compensation expense	—		—		4,672		—		—		—		4,672
Balance as of March 31, 2018	564,859,960	$	858	$	461,603	$	(20,392)	$	(6,667)	$	(243,723)	$	191,679
Net loss											(43,845)		(43,845)
Issuance of shares upon exercise of stock options	1,636,440		2		887		—		—		—		889
Other comprehensive loss before reclassifications													—
Foreign currency translation adjustments	—		—		—		6,107		—		—		6,107
Unrealized holding gains on available-for-sale debt securities, net of tax of $-	—		—		—		—		5,223		—		5,223
Reclassification from accumulated other comprehensive loss of losses on available-for-sale debt securities included in net income, net of tax of $-	—		—		—		—		1,310		—		1,310
Share-based compensation expense	—		—		3,739		—		—		—		3,739
Balance as of June 30, 2018	566,496,400	$	860	$	466,229	$	(14,285)	$	(134)	$	(287,568)	$	165,102
Net income											5,242		5,242
Issuance of shares upon exercise of stock options	725,676		1		509		—		—		—		510
Issuance of shares upon completion of registered direct offering	60,000,000		78		99,575		—		—		—		99,653
Other comprehensive income before reclassifications													—
Foreign currency translation adjustments	—		—		—		1,521		—		—		1,521
Unrealized holding gains on available-for-sale debt securities, net of tax of $-	—		—		—		—		85		—		85
Share-based compensation expense	—		—		4,042		—		—		—		4,042
Balance as of September 30, 2018	627,222,076	$	939	$	570,355	$	(12,764)	$	(49)	$	(282,326)	$	276,155

See accompanying notes to unaudited condensed consolidated financial statements.

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ADAPTIMMUNE THERAPEUTICS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine months ended
	September 30,
	2019		2018
Cash flows from operating activities
Net loss	$	(107,801)	$	(59,341)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		5,406		5,248
Amortization		511		464
Share-based compensation expense		8,495		12,453
Realized (gain) loss on available-for-sale debt securities		(13)		2,473
Unrealized foreign exchange losses		522		4,921
Other		(195)		262
Changes in operating assets and liabilities:
Increase in receivables and other operating assets		(20,075)		(4,140)
Decrease in non-current operating assets		1,468		490
Increase (decrease) in payables and deferred revenue		11,703		(35,533)
Net cash used in operating activities		(99,979)		(72,703)
Cash flows from investing activities
Acquisition of property, plant and equipment		(1,425)		(3,823)
Acquisition of intangibles		(1,036)		(666)
Maturity or redemption of marketable securities		92,803		114,988
Investment in marketable securities		(19,080)		(75,545)
Net cash provided by investing activities		71,262		34,954
Cash flows from financing activities
Proceeds from issuance of common stock, net of issuance costs of $0 and $347		—		99,653
Proceeds from exercise of stock options		366		2,933
Net cash provided by financing activities		366		102,586
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash		(398)		4,111
Net (decrease) increase in cash and cash equivalents		(28,749)		68,948
Cash, cash equivalents and restricted cash at start of period		72,476		88,296
Cash, cash equivalents and restricted cash at end of period	$	43,727	$	157,244

See accompanying notes to unaudited condensed consolidated financial statements.

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ADAPTIMMUNE THERAPEUTICS PLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — General

Adaptimmune Therapeutics plc is registered in England and Wales. Its registered office is 60 Jubilee Avenue, Milton Park, Abingdon, Oxfordshire, OX14 4RX, United Kingdom. Adaptimmune Therapeutics plc and its subsidiaries (collectively “Adaptimmune” or the “Company”) is a clinical-stage biopharmaceutical company primarily focused on providing novel cell therapies to patients, particularly for the treatment of solid tumors. The Company’s proprietary SPEAR (Specific Peptide Enhanced Affinity Receptor) T-cell platform enables it to identify cancer targets, find and genetically engineer T-cell receptors (“TCRs”), and produce therapeutic candidates (“SPEAR T-cells”) for administration to patients. Using its affinity engineered TCRs, the Company aims to become the first company to have a TCR T-cell approved for the treatment of a solid tumor indication.

The Company is subject to a number of risks similar to other biopharmaceutical companies in the early stage of clinical development including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical programs or clinical programs, the need to obtain marketing approval for its SPEAR T-cells, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s SPEAR T-cells, the need to develop a reliable commercial manufacturing process, the need to commercialize any T-cell therapies that may be approved for marketing, and protection of proprietary technology. If the Company does not successfully commercialize any of its SPEAR T-cells, it will be unable to generate product revenue or achieve profitability. The Company had an accumulated deficit of $426.3 million as of September 30, 2019.

Note 2 — Summary of Significant Accounting Policies

(a)          Basis of presentation

The condensed consolidated interim financial statements of Adaptimmune Therapeutics plc and its subsidiaries and other financial information included in this Quarterly Report are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars. All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated on consolidation.

The unaudited condensed consolidated interim financial statements presented in this Quarterly Report should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2019 (the “Annual Report”). The balance sheet as of December 31, 2018 was derived from audited consolidated financial statements included in the Company’s Annual Report but does not include all disclosures required by U.S. GAAP. The Company’s significant accounting policies are described in Note 2 to those consolidated financial statements.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim period. The interim results are not necessarily indicative of results to be expected for the full year.

On January 1, 2019, the Company adopted new guidance on the accounting for leases, which has been codified within Accounting Standard Codification Topic 842, Leases (“ASC 842”). The Company has adopted the guidance using the modified retrospective approach, with the cumulative effect of initially applying the guidance recognized as an adjustment to the opening balance of equity at January 1, 2019. Therefore, the comparative financial information for the three and nine months ended September 30, 2018 and as of December 31, 2018 has not been restated and continues to be reported under previous guidance. The effect of adopting ASC 842 on the accumulated deficit, total stockholders’ equity and net assets as at January 1, 2019 was $0.

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(b)          Going concern analysis

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. As of September 30, 2019, the Company had cash and cash equivalents of $39.4 million, marketable securities of $63.5 million, and stockholders’ equity of $147.7 million. During the nine months ended September 30, 2019, the Company incurred a net loss of $107.8 million, used cash of $100.0 million in its operating activities, and generated revenues of $0.4 million. The Company has incurred net losses in most periods since inception, and it expects to incur operating losses in future periods. When considered with the Company’s projected expenditure for the next 12 months, these factors raise substantial doubt about its ability to continue as a going concern for at least one year from the issuance of these condensed consolidated financial statements. If the Company does not have sufficient funding for the next 12 months, it might result in a significant reduction in its research and development activities or other operations.

The Company is considering obtaining additional capital (whether non-dilutive or dilutive). In addition, the Company continues to review and prioritize clinical development projects and costs with the aim of focusing operations on the ADP-A2M4 SPEARHEAD-1, ADP-A2M4CD8 SURPASS and ADP-A2AFP trials. Management believes that with additional funds and cost reductions, it will have sufficient capital to meet the Company’s operating expenses and obligations. While management believes the Company has the ability to raise additional funds, there is no assurance that such plans will be successful and therefore there is substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued.

(c)          Use of estimates in interim financial statements

The preparation of interim financial statements, in conformity with U.S. GAAP and SEC regulations, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are primarily made in relation to the valuation of share options, valuation allowances relating to deferred tax assets, revenue recognition, estimating clinical trial expenses and estimating reimbursements from R&D tax and expenditure credits. If actual results differ from the Company’s estimates, or to the extent these estimates are adjusted in future periods, the Company’s results of operations could either benefit from, or be adversely affected by, any such change in estimate.

(d)          Fair value measurements

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The hierarchy defines three levels of valuation inputs:

Level 1 - Quoted prices in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 - Unobservable inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability

The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The fair value of marketable securities, which are measured at fair value on a recurring basis is detailed in Note 8, Fair value measurements.

(e)          Leases

On January 1, 2019, the Company adopted a new standard, Accounting Standard Update 2016-02 – Leases, which is codified in ASC 842. The comparative financial information for the three and nine months ended September 30, 2018 and as of December 31, 2018 has not been restated and is prepared in accordance with the accounting policies that are described in Note 2 to the consolidated financial statements included in the Annual Report.

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The Company determines whether an arrangement is a lease at contract inception by establishing if the contract conveys the right to use, or control the use of, identified property, plant, or equipment for a period of time in exchange for consideration. Leases may be classified as finance leases or operating leases. All the Company’s leases are classified as operating leases as they were previously classed as these and the lease classification is not reassessed on adoption of ASC 842. Operating lease right-of-use (ROU) assets and operating lease liabilities recognized in the Condensed Consolidated Balance Sheet represent the right to use an underlying asset for the lease term and an obligation to make lease payments arising from the lease respectively.

Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of minimum lease payments over the lease term. Since the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rates (the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment) based on the information available at commencement date in determining the discount rate used to calculate the present value of lease payments. As the Company has no external borrowings, the incremental borrowing rates are determined using information on indicative borrowing rates that would be available to the Company based on the value, currency and borrowing term provided by financial institutions, adjusted for company and market specific factors. The lease term is based on the non-cancellable period in the lease contract, and options to extend the lease are included when it is reasonably certain that the Company will exercise that option. Any termination fees are included in the calculation of the ROU asset and lease liability when it is assumed that the lease will be terminated.

The Company accounts for lease components (e.g. fixed payments including rent and termination costs) separately from non-lease components (e.g. common-area maintenance costs and service charges based on utilization) which are recognized over the period in which the obligation occurs.

At each reporting date, the operating lease liabilities are increased by interest and reduced by repayments made under the lease agreements. The right-of-use asset is subsequently measured for an operating lease at the amount of the remeasured lease liability (i.e. the present value of the remaining lease payments), adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, and any unamortized initial direct costs.

The Company has operating leases in relation to property for office and research facilities. All of the leases have termination options, and it is assumed that the initial termination options for the buildings will be activated for most of these. The maximum lease term without activation of termination options is to 2041.

The Company has elected not to recognize a right-of-use asset and lease liability for short-term leases. A short-term lease is a lease with a lease term of 12 months or less and which does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Operating lease costs are recognized on a straight line basis over the lease term, and they are categorized within Research and development and General and administrative expenses in the Condensed Consolidated Statement of Operations. The operating lease cash flows are categorized under Net cash used in operating activities in the Condensed Consolidated Statement of Cash Flows.

(f)          Foreign currency

The reporting currency of the Company is the U.S. dollar. The Company has determined the functional currency of the ultimate parent company, Adaptimmune Therapeutics plc, is U.S. dollars because it predominately raises finance and expends cash in U.S. dollars. The functional currency of subsidiary operations is the applicable local currency. Transactions in foreign currencies are translated into the functional currency of the subsidiary in which they occur at the foreign exchange rate in effect on at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the functional currency of the relevant subsidiary at the foreign exchange rate in effect on the balance sheet date. Foreign exchange differences arising on translation are recognized within other income (expense) in the consolidated statement of operations.

The results of operations for subsidiaries, whose functional currency is not the U.S. dollar, are translated at an average rate for the period where this rate approximates to the foreign exchange rates ruling at the dates of the transactions and the balance sheet are translated at foreign exchange rates ruling at the balance sheet date. Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income (loss). The Company’s subsidiary in the United Kingdom has an intercompany loan

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balance in U.S dollars payable to the ultimate parent company, Adaptimmune Therapeutics plc. Beginning on July 1, 2019, the intercompany loan will be considered of a long-term investment nature as repayment is not planned or anticipated in the foreseeable future. It is Adaptimmune Therapeutics plc’s intent not to request payment of the intercompany loan for the foreseeable future. The foreign exchange gains or losses arising on the revaluation of intercompany loans of a long-term investment nature are reported within other comprehensive income (loss).

(g)          New accounting pronouncements

Adopted in the period

Leases

On January 1, 2019, the Company adopted Accounting Standard Update 2016-02 – Leases, which is codified in ASC 842. The Company has adopted the guidance using the modified retrospective approach, with the cumulative effect of initially applying the guidance recognized as an adjustment to the opening balance of equity at January 1, 2019. Therefore, the comparative information has not been adjusted and continues to be reported under previous guidance. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed it to carry forward the historical lease classification of the Company’s leases as operating leases. The effect on the accumulated deficit, total stockholders’ equity and net assets as at January 1, 2019 was $0.

The adoption of ASC 842 has had a material impact on the Company’s financial statements. At January 1, 2019 the Company recognized right-of-use assets and liabilities for operating leases following the adoption date of $22.2 million and $26.9 million respectively and derecognized $4.7 million of other liabilities and prepayments that had been recognized under previous guidance.

To be adopted in future periods

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13 - Financial Instruments - Credit losses, which replaces the incurred loss impairment methodology for financial instruments in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods within that fiscal year. Early application is permitted for the fiscal year beginning January 1, 2019, including interim periods within that fiscal year. The FASB has issued a proposed Accounting Standards Update which could result in postponement of the effective date of the new guidance to the fiscal year beginning January 1, 2023. The guidance must be adopted using a modified-retrospective approach and a prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued ASU 2018-15 – Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods within that fiscal year. Early application is permitted for the fiscal year beginning January 1, 2019, including interim periods within that fiscal year. The guidance may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13 – Fair Value Measurement (Topic 820) - Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods

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within that fiscal year. Early application is permitted. Certain amendments apply prospectively with the all other amendments applied retrospectively to all periods presented upon their effective date. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

Note 3 — Revenue

Revenue from contracts with customers arises from one customer, which is GlaxoSmithKline (“GSK”), in one geographic location, which is the United Kingdom. Revenue comprises the following categories (in thousands):

	Three months ended		Three months ended		Nine months ended		Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2019		2018		2019		2018
Development	$	237	$	1,678	$	394	$	18,912
Licenses		—		39,114		—		39,114
	$	237	$	40,792	$	394	$	58,026

The Company has one contract with a customer, which is the GSK Collaboration and License Agreement. The GSK Collaboration and License Agreement consists of multiple performance obligations. In 2019, GSK nominated a third target under the Collaboration and License Agreement. Development of products to this target commenced during the nine months ended September 30, 2019.

The amount of the transaction price probable of being received that is allocated to performance obligations that are unsatisfied or partially satisfied at September 30, 2019 was $2.7 million. The revenue allocated to the third target program will be recognized over an estimated period up to the end of 2020 as the development of products to the target progresses.

The Company received $3.2 million from GSK following the nomination of the third target. Under the terms of the GSK Collaboration and License Agreement, the Company may also be entitled to development and regulatory milestones. The development and regulatory milestones are per product milestones and are dependent on achievement of certain obligations, the nature of the product being developed, stage of development of product, territory in which an obligation is achieved and type of indication or indications in relation to which the product is being developed. In addition, for any program multiple products may be developed to address different HLA-types. These amounts have not been included within the transaction price as of September 30, 2019 because they are not considered probable.

The Company may also receive commercialization milestones upon the first commercial sale of a product based on the indication and the territory and mid-single to low double-digit royalties on worldwide net sales. These amounts have not been included within the transaction price as of September 30, 2019 because they are sales or usage-based royalties promised in exchange for a license of intellectual property, which will be recognized when the subsequent sale or usage occurs.

Development and license revenue recognized in the three and nine months ended September 30, 2018 related to development of the second target program, PRAME, which ended in 2018, and the NY-ESO program, which was transferred to GSK on July 23, 2018.

The following table shows movements in deferred revenue for the nine months ended September 30, 2019 (in thousands):

	Deferred revenue
Deferred revenue at January 1, 2019	$	—
Amounts invoiced in the period		3,217
Revenue in the period		(394)
Foreign exchange arising on consolidation		(140)
Deferred revenue at September 30, 2019	$	2,683

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Note 4 – Operating leases

The following table shows the lease costs for the three and nine months ended September 30, 2019 (in thousands):

	Three months ended		Nine months ended
	September 30,		September 30,
	2019		2019
Lease cost:
Operating lease cost	$	989	$	3,003
Short-term lease cost		62		230
	$	1,051	$	3,233
			Nine months ended
			September 30,
			2019
Other information:
Operating cash flows from operating leases (in thousands)			$	3,176
			September 30,
			2019
Weighted-average remaining lease term - operating leases			7.5 years
Weighted-average discount rate - operating leases			7.2%

The maturities of operating lease liabilities are as follows (in thousands):

	Operating leases
2019	$	1,003
2020		4,033
2021		4,077
2022		4,082
2023		3,775
after 2023		16,076
Total lease payments		33,046
Less: Imputed interest		(8,111)
Present value of lease liability	$	24,935

The Company has operating leases in relation to property for office and research facilities. The maximum lease term without activation of termination options is to 2041.

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Note 5 — Other income (expense), net

Other expense, net consisted of the following (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2019		2018		2019		2018
Foreign exchange gains (losses)	$	235	$	(2,185)	$	(778)	$	(7,790)
Gains (losses) on redemption or maturity of available-for-sale debt securities		—		—		13		(2,473)
Other		56		(64)		209		(262)
	$	291	$	(2,249)	$	(556)	$	(10,525)

Note 6 — Loss per share

The numerator for the basic and diluted (loss) income per share is as follows (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2019		2018		2019		2018
Net (loss) income attributable to ordinary shareholders	$	(39,302)	$	5,242	$	(107,801)	$	(59,341)
Numerator for basic (loss) income per share		(39,302)		5,242		(107,801)		(59,341)
Numerator for diluted (loss) income per share		(39,302)		5,242		(107,801)		(59,341)

The denominator for the basic and diluted (loss) income per share is as follows:

	Three months ended		Nine months ended
	September 30,		September 30,
	2019	2018	2019	2018
Denominator for basic (loss) income per share - Weighted average shares outstanding	630,866,800	582,004,954	629,403,293	573,796,275
Effect of dilutive securities:
Employee stock options	—	39,759,247	—	—
Denominator for diluted (loss) income per share	630,866,800	621,764,201	629,403,293	573,796,275

The dilutive effect of 90,072,300 stock options outstanding as of September 30, 2019 have been excluded from the diluted loss per share calculation for the three and nine months ended September 30, 2019, because they would have an antidilutive effect on the loss per share for the period.

The dilutive effect of 2,791,651 and 88,869,497 stock options have been excluded from the diluted earnings (loss) per share calculation for the three and nine months ended September 30, 2018, respectively, because they would have an antidilutive effect on the earnings (loss) per share for the period.

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Note 7 — Accumulated other comprehensive (loss) income

The following amounts were reclassified out of other comprehensive (loss) income during the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Amount reclassified				Amount reclassified
	Three months ended		Three months ended		Nine months ended		Nine months ended
	September 30,		September 30,		September 30,		September 30,
Component of accumulated other comprehensive income	2019		2018		2019		2018
Unrealized (gains) losses on available-for-sale securities
Reclassification adjustment for (gains) losses on available-for-sale debt securities	$	—	$	—	$	(13)	$	2,473

The affected line in the Condensed Consolidated Statement of Operations for the amounts reclassified out of other comprehensive income above is “Other income (expense), net”.

Note 8 — Fair value measurements

Assets and liabilities measured at fair value on a recurring basis based on Level 1, Level 2, and Level 3 fair value measurement criteria as of September 30, 2019 are as follows (in thousands):

			Fair value measurements using
	September 30,		Level 1		Level 2		Level 3
	2019
Assets:
Marketable securities:
Corporate debt securities	$	59,430	$	59,430	$	—	$	—
Agency bond		4,021		—		4,021		—
	$	63,451	$	59,430	$	4,021	$	—

The Company estimates the fair value of available-for-sale debt securities with the aid of a third party valuation service, which uses actual trade and indicative prices sourced from third-party providers on a daily basis to estimate the fair value. If observed market prices are not available (for example securities with short maturities and infrequent secondary market trades), the securities are priced using a valuation model maximizing observable inputs, including market interest rates.

Note 9 — Available-for-sale debt securities

As of September 30, 2019, the Company has the following investments in available-for-sale debt securities (in thousands):

				Gross		Gross		Aggregate
	Remaining	Amortized		Unrealized		Unrealized		Estimated
	Contractual Maturity	Cost		Gains		Losses		Fair Value
Cash equivalents:
Money market funds	Less than 3 months	$	19,157	$	—	$	—	$	19,157
		$	19,157	$	—	$	—	$	19,157
Marketable securities:
Corporate debt securities	Less than 3 months	$	24,670	$	10	$	—	$	24,680
Corporate debt securities	3 months to 1 year		34,707		45		(2)		34,750
Agency bond	3 months to 1 year		4,019		2		—		4,021
		$	63,396	$	57	$	(2)	$	63,451

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Maturity information above is categorized by the period remaining after the reporting period until the maturity date. As of September 30, 2019 and December 31, 2018, the aggregate fair value of securities held by the Company in an unrealized loss position was $7.2 million and $117.2 million respectively, which consisted of 3 and 37 separate securities, respectively. No securities have been in an unrealized loss position for more than one year. As of September 30, 2019, the securities in an unrealized loss position are not considered to be other than temporarily impaired because the impairments are not severe, have been for a short duration and are due to normal market fluctuations. Furthermore, the Company does not intend to sell the debt securities in an unrealized loss position, and it is unlikely that the Company will be required to sell these securities before the recovery of the amortized cost.

Note 10 — Other current assets

Other current assets consisted of the following (in thousands):

	September 30,		December 31,
	2019		2018
Corporate tax receivable	$	30,341	$	16,459
Prepayments		10,391		6,279
Clinical materials		1,522		1,087
VAT receivable		1,385		1,505
Other current assets		471		439
	$	44,110	$	25,769

In October 2019, the Company received $15.8 million of the above Corporate tax receivable balance, which related to qualifying research and development expenditure in 2018. The remainder of the corporate tax receivable balance above relates to 2019.

Note 11 — Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	September 30,		December 31,
	2019		2018
Accrued clinical and development expenditure	$	11,708	$	9,637
Accrued employee expenses		6,910		7,553
Other accrued expenditure		2,641		2,422
Accrued purchase commitments		5,000		—
Other		587		742
	$	26,846	$	20,354

In 2016, the Company entered into a supply agreement with ThermoFisher for the supply of the Dynabeads® CD3/CD28 technology. The supply agreement runs until December 31, 2025. Under the supply agreement, the Company is required to purchase its requirements for CD3/CD28 magnetic bead product exclusively from ThermoFisher for a period of 5 years. There are minimum purchasing obligations of $5.0 million payable in 2020, which have been recognized in research and development expense in the three months ended September 30, 2019.  The related per-share amount for both the three and nine months ended September 30, 2019 is $(0.01). Management regularly updates the assessment of the utility of the Dynabeads, and in the three months ended September 30, 2019, considers that there is sufficient uncertainty surrounding the utility of the Dynabeads, which is dependent upon current study trajectories, the Company’s clinical pipeline, manufacturing methods and undetermined future projects, to result in the $5.0 million purchase commitment being recognized in the period.

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Note 12 — Share-based compensation

The following table shows the total share-based compensation expense included in the unaudited consolidated statements of operations (in thousands):

		Three months ended			Nine months ended
		September 30,			September 30,
	2019		2018		2019		2018
Research and development	$	144	$	2,053	$	2,951	$	6,338
General and administrative		1,676		1,989		5,544		6,115
	$	1,820	$	4,042	$	8,495	$	12,453

The following table shows information about share options and options which have a nominal exercise price (similar to restricted stock units (RSUs)) granted:

		Three months ended			Nine months ended
		September 30,			September 30,
	2019		2018		2019		2018
Number of options over ordinary shares granted		3,733,359		757,273		15,477,255		12,187,614
Weighted average fair value of ordinary shares options	$	0.31	$	1.09	$	0.48	$	0.82
Number of additional options with a nominal exercise price granted		743,292		1,259,760		7,700,658		7,966,716
Weighted average fair value of options with a nominal exercise price	$	0.51	$	1.67	$	0.89	$	1.40

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2018, included in our Annual Report on Form 10-K that was filed with the SEC on February 27, 2019. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report, our actual results could differ materially from the results described in, or implied by, these forward-looking statements.

Overview

We are a clinical-stage biopharmaceutical company primarily focused on providing novel cell therapies to patients, particularly for the treatment of solid tumors. The Company’s proprietary SPEAR (Specific Peptide Enhanced Affinity Receptor) T-cell platform enables it to identify cancer targets, find and genetically engineer T-cell receptors (“TCRs”), and produce therapeutic candidates (“SPEAR T-cells”) for administration to patients. Using its affinity engineered TCRs, the Company aims to become the first company to have a TCR T-cell approved for the treatment of a solid tumor indication.

Update on Clinical Pipeline Progress

Wholly owned SPEAR T-cells

We have clinical trials ongoing in a total of ten solid tumor types including non-small cell lung cancer (“NSCLC”), head and neck cancer, ovarian, urothelial, melanoma, hepatocellular, esophageal, gastric, synovial sarcoma and myxoid round cell liposarcoma (“MRCLS”) cancers. We continue to prioritise the ADP-A2M4 SPEARHEAD-1, ADP-A2M4CD8 and ADP-A2AFP trials.

● ADP-A2M4

Clinical trials are ongoing with our ADP-A2M4 SPEAR T-cell in multiple indications and the FDA has granted Orphan Drug Designation (ODD) to ADP-A2M4 for the treatment of soft tissue sarcomas. In addition, planning is ongoing for initiation of a clinical trial combining ADP-A2M4 with a PD-1 / PD-L1 pathway inhibitor in 2020.

Phase 1 multi-tumor trial

A Phase 1 clinical trial is ongoing in nine tumor indications, namely urothelial, melanoma, head and neck, ovarian, NSCLC, esophageal and gastric cancers, synovial sarcoma and MRCLS. Patients are currently being enrolled in the Expansion Phase of the trial.

● As of September 3, 2019, data from 12 evaluable patients with synovial sarcoma treated in the expansion phase of this trial demonstrated an overall response rate of 58% (including both confirmed and unconfirmed partial responses (PRs)). 11 out of 12 evaluable patients had evidence of disease control (with best overall responses of partial response or stable disease) A clinical update was provided at the European Society for Medical Oncology (ESMO) Congress in September 2019.

● To date, ADP-A2M4 continues to exhibit a favorable safety profile with no evidence of toxicity related to off-target binding or alloreactivity, and most adverse events were consistent with those typically experienced by cancer patients undergoing chemotherapy or other immunotherapies. Prolonged severe pancytopenia with aplastic anemia has been reported in one patient treated with the highest lymphodepletion regimen (fludarabine (30mg/m²/day) for 4 days and cyclophosphamide (1800 mg/m²/day) for 3 days). Neurotoxicity and stroke were reported in a different patient who also received this lymphodepletion regimen. The protocol for this trial has been amended to mitigate the risk of prolonged severe pancytopenia and stroke in patients. These changes have been communicated to, and acknowledged by, the FDA. Further information on reported adverse events can be found in the Risk Factors section below.

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Phase 2 trial - SPEARHEAD-1

A Phase 2 clinical trial has been initiated in synovial sarcoma and MRCLS. The trial will take place at sites in the United States, Canada and Europe. The trial will include up to 60 patients at a selected dose of up to 10 billion transduced ADP-A2M4 SPEAR T-cells. Primary responses will be assessed by overall response rate by RECIST v1.1. The lymphodepletion regimen will be fludarabine (30mg/m²/day) for 4 days and cyclophosphamide (600 mg/m²/day) for 3 days.

Radiation Sub-study

Our radiation sub-study is continuing at the MD Anderson Cancer Center.

● ADP-A2M4CD8 - SURPASS Trial

Enrollment has started in a Phase 1 trial for a next generation SPEAR T-cell, ADP-A2M4CD8 (the SURPASS Trial). This next generation SPEAR T-cell utilizes the same engineered T-cell receptor as ADP-A2M4, but with the addition of a CD8α homodimer. The addition of the CD8α homodimer has been shown in vitro to increase cytokine release and SPEAR T-cell potency.

The SURPASS trial will enroll up to 30 patients across multiple solid tumor indications. Similar to our other trials, the SURPASS trial will be a three-cohort dose escalation study. Unlike the other trials, the stagger between patients will be shorter and the starting dose in the first cohort will be 0.8 to 1.2 billion SPEAR T-cells, instead of 100 million SPEAR T-cells, as was previously the case. Each dose cohort will enroll three patients and can be expanded to six patients if a dose limiting toxicity occurs. The dose ranges for the other two cohorts are: 1.2 to 3 billion and 3 to 6 billion SPEAR T-cells. After dose escalation is complete, there is an Expansion Phase with doses up to 10 billion cells. The lymphodepletion regimen will be fludarabine (30mg/m²/day) for 4 days and cyclophosphamide (600 mg/m²/day) for 3 days.

● ADP-A2AFP

We continue dosing patients in our Phase 1, open-label, dose-escalation study designed to evaluate the safety and anti-tumor activity of our alpha fetoprotein (“AFP”) therapeutic candidate for the treatment of hepatocellular carcinoma (“HCC”). The trial is open in the United States, United Kingdom and Spain. Data from the first HCC patient treated in Cohort 2 of the trial was presented at AACR and a further update will be provided in the first half of 2020. Patients are now enrolling in Cohort 3 and are being treated with target doses of 5 billion SPEAR T-cells (range 1.2 to 6 billion). Most adverse events to date are consistent with those typically experienced by cancer patients undergoing cytotoxic chemotherapy or other cancer immunotherapies.

● ADP-A2M10

Two Phase 1 clinical trials are currently ongoing with ADP-A2M10 for the treatment of (i) NSCLC, and (ii) urothelial, melanoma and head and neck cancers in the United States, Canada, the United Kingdom and Spain. Enrollment in the trials is planned to close shortly and prior to the end of 2019.

Ongoing GSK Collaboration Agreement Programs

The third target program under the Collaboration and License Agreement remains ongoing. GSK is currently entitled to nominate a fourth target program and, upon satisfying other conditions, may have the right to nominate a fifth program under the GSK Collaboration and License Agreement, in each case excluding our ongoing wholly-owned development programs.

Significant Events in the Three Months Ended September 30, 2019

● On August 27, 2019, we announced entry into a collaboration and license agreement with Noile-Immune Biotech, Inc., to develop next-generation SPEAR T-cell products which incorporate Noile-Immune’s proliferation inducing and migration enhancing technology. This collaboration will further enhance Adaptimmune’s efforts to design and develop next-generation SPEAR T-cell therapies.

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● On September 1, 2019, Adrian Rawcliffe, previously Chief Financial Officer (CFO) of the Company, succeeded James Noble as Chief Executive Officer (CEO). This transition occurred following the retirement of James Noble from his executive duties and transition to a non-executive director role on the Company’s Board of Directors on September 1, 2019.

● On August 1, 2019, we announced that Dr. Rafael Amado, President of Research and Development, would leave the Company on August 12, 2019 and that John Lunger was appointed as Chief Patient Supply Officer on August 1, 2019.

Subsequent Events since September 30, 2019

● On October 1, 2019, Michael Garone was appointed as Interim Chief Financial Officer effective from October 1, 2019.

Financial Operations Overview

New standards

On January 1, 2019, we adopted new accounting guidance on lease recognition, which has been codified within Accounting Standard Codification Topic 842, Leases (“ASC 842”). We adopted the guidance using the modified retrospective approach, with the cumulative effect of initially applying the guidance recognized as an adjustment to the opening balance of equity at January 1, 2019. Therefore, the comparative information has not been adjusted and continues to be reported under previous guidance. The effect on the accumulated deficit, total stockholders’ equity and net assets as at January 1, 2019 was $0.

Revenue

The Company has one contract with a customer, which is the GSK Collaboration and License Agreement. The GSK Collaboration and License Agreement consists of multiple performance obligations. GSK has nominated its third target under the Collaboration and License Agreement. Development of products to this target commenced in the nine months ended September 30, 2019, and the Company received $3.2 million following the nomination of the target. The development of products to the third target is a separate performance obligation, which is expected to be recognized by the end of 2020 as the development of products to the target progresses.

Future revenues will depend on the progress of the development programs within the Collaboration and License Agreement, and GSK’s progress with the NY-ESO program, which are difficult to predict.

Research and Development Expenses

Research and development expenses consist principally of the following:

● salaries for research and development staff and related expenses, including benefits;

● costs for production of preclinical compounds and drug substances by contract manufacturers;

● fees and other costs paid to contract research organizations in connection with additional preclinical testing and the performance of clinical trials;

● costs associated with the development of a process to manufacture and supply our lentiviral vector and SPEAR T-cells for use in clinical trials;

● costs to develop manufacturing capability at our U.S. facility for manufacture of SPEAR T-cells for use in clinical trials;

● costs relating to facilities, materials and equipment used in research and development;

● costs of acquired or in-licensed research and development which does not have alternative future use;

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● amortization and depreciation of property, plant and equipment and intangible assets used to develop our SPEAR T-cells; and

● share-based compensation expenses;

offset by:

● reimbursements from government grants; and

● reimbursable tax and expenditure credits from the U.K. government.

Research and development expenditures are expensed as incurred.

Research and development expenditure is presented net of reimbursements from reimbursable tax and expenditure credits from the U.K. government. As a company that carries out extensive research and development activities, we benefit from the U.K. research and development tax credit regime for small and medium sized companies (“SME R&D Tax Credit Scheme”), whereby our principal research subsidiary company, Adaptimmune Limited, is able to surrender the trading losses that arise from its research and development activities for a payable tax credit of up to approximately 33.4% of eligible research and development expenditures. Qualifying expenditures largely comprise employment costs for research staff, consumables and certain internal overhead costs incurred as part of research projects for which we do not receive income. Subcontracted research expenditures are eligible for a cash rebate of up to approximately 21.7%. A large proportion of costs in relation to our pipeline research, clinical trials management and manufacturing development activities, all of which are being carried out by Adaptimmune Limited, are eligible for inclusion within these tax credit cash rebate claims.

Expenditures incurred in conjunction with the GSK Collaboration and License Agreement are not qualifying expenditures under the SME R&D Tax Credit Scheme but certain of these expenditures can be reimbursed through the U.K. research and development expenditure credit scheme (the “RDEC Scheme”). Under the RDEC Scheme tax relief is given at 12% of allowable R&D costs, which may result in a payable tax credit at an effective rate of approximately 9.7% of qualifying expenditure.

Our research and development expenses may vary substantially from period to period based on the timing of our research and development activities, which depends upon the timing of initiation of clinical trials and the rate of enrollment of patients in clinical trials. The duration, costs, and timing of clinical trials and development of our SPEAR T-cells will depend on a variety of factors, including:

● the scope, rate of progress, and expense of our ongoing as well as any additional clinical trials and other research and development activities;

● uncertainties in clinical trial enrollment rates;

● future clinical trial results;

● significant and changing government regulation;

● the timing and receipt of any regulatory approvals; and

● supply and manufacture of lentiviral vector and SPEAR T-cells for clinical trials.

For further detail please see Part II — Item 1A Risk Factors — Risks Related to the Development of our SPEAR T-cells of our Quarterly Report

A change in the outcome of any of these variables may significantly change the costs and timing associated with the development of that SPEAR T-cell. For example, if the FDA, or another regulatory authority, requires us to conduct clinical trials beyond those that we currently anticipate will be required for regulatory approval, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

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General and Administrative Expenses

Our general and administrative expenses consist principally of:

● salaries for employees other than research and development staff, including benefits;

● business development expenses, including travel expenses;

● professional fees for auditors, lawyers and other consulting expenses;

● costs of facilities, communication, and office expenses;

● information technology expenses;

● amortization and depreciation of property, plant and equipment and intangible assets not related to research and development activities; and

● share-based compensation expenses.

Other Income (Expense), net

Other income (expense), net primarily comprises foreign exchange gains (losses). We are exposed to foreign exchange rate risk because we currently operate in the United Kingdom and United States. Our revenue from the GSK Collaboration and License Agreement is denominated in pounds sterling and is generated by our U.K.-based subsidiary, which has a pounds sterling functional currency. As a result, these sales are subject to translation into U.S. dollars when we consolidate our financial statements. Our expenses are generally denominated in the currency in which our operations are located, which are the United Kingdom and United States. However, our U.K.-based subsidiary incurs significant research and development costs in U.S. dollars and, to a lesser extent, Euros. Until July 2018, our U.K. subsidiary with a pound sterling functional currency held our investments in marketable securities, which were predominately denominated in U.S. dollars. The entire change in the fair value of a foreign currency-denominated security, including the change due to foreign exchange, was included in other comprehensive income. Our U.K. subsidiary has an intercompany loan balance in U.S dollars payable to the ultimate parent company, Adaptimmune Therapeutics plc. Beginning on July 1, 2019, the intercompany loan will be considered of a long-term investment nature as repayment is not planned or anticipated in the foreseeable future. It is Adaptimmune Therapeutics plc’s intent not to request payment of the intercompany loan for the foreseeable future. The foreign exchange gains or losses arising on the revaluation of intercompany loans of a long-term investment nature are reported within other comprehensive income (loss).

Our results of operations and cash flows will be subject to fluctuations due to changes in foreign currency exchange rates, which could harm our business in the future. We seek to minimize this exposure by maintaining currency cash balances at levels appropriate to meet foreseeable expenses in U.S. dollars and pounds sterling. To date, we have not used hedging contracts to manage exchange rate exposure, although we may do so in the future.

Taxation

We are subject to corporate taxation in the United Kingdom and the United States. We incur tax losses and tax credit carryforwards in the United Kingdom. No deferred tax assets are recognized on our U.K. losses and tax credit carryforwards because there is currently no indication that we will make sufficient taxable profits to utilize these tax losses and tax credit carryforwards.

We benefit from reimbursable tax credits in the United Kingdom through the SME R&D Tax Credit Scheme as well as the RDEC Scheme which are presented as a deduction to research and development expenditure.

Our subsidiary in the United States has generated taxable profits due to a Service Agreement between our U.S. and U.K. operating subsidiaries and is subject to U.S. federal corporate income tax of 21% for the year ended December 31, 2018. Due to its activity in the United States, and the sourcing of its revenue, the U.S. subsidiary is not currently subject to any state or local income taxes. The Company also benefits from the U.S Research Tax Credit and Orphan Drug Credit.

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In the future, if we generate taxable income in the United Kingdom, we may benefit from the United Kingdom’s “patent box” regime, which would allow certain profits attributable to revenues from patented products to be taxed at a rate of 10%. As we have many different patents covering our products, future upfront fees, milestone fees, product revenues, and royalties may be taxed at this favorably low tax rate.

U.K. Value Added Tax (“VAT”) is charged on all qualifying goods and services by VAT-registered businesses. An amount of 20% of the value of the goods or services is added to all relevant sales invoices and is payable to the U.K. tax authorities. Similarly, VAT paid on purchase invoices paid by Adaptimmune Limited and Adaptimmune Therapeutics plc is reclaimable from the U.K. tax authorities.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the revenues and expenses incurred during the reported periods. We base our estimates on historical experience and on various other factors that we believe are relevant under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting policies considered to be critical to the judgments and estimates used in the preparation of our financial statements are disclosed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report.

Results of Operations

Comparison of Three Months Ended September 30, 2019 and 2018

The following table summarizes the results of our operations for the three months ended September 30, 2019 and 2018, together with the changes to those items (in thousands).

	Three months ended
	September 30,
	2019		2018		Increase/decrease
Development revenue	$	237	$	1,678	$	(1,441)	(86)	%
License revenue		—		39,114		(39,114)	(100)	%
Total revenue		237		40,792		(40,555)	(99)	%
Research and development expenses		(29,617)		(23,484)		(6,133)	26	%
General and administrative expenses		(10,741)		(10,290)		(451)	4	%
Total operating expenses		(40,358)		(33,774)		(6,584)	19	%
Operating (loss) income		(40,121)		7,018		(47,139)	(672)	%
Interest income		615		606		9	1	%
Other income (expense), net		291		(2,249)		2,540	113	%
(Loss) income before income taxes		(39,215)		5,375		(44,590)	(830)	%
Income taxes		(87)		(133)		46	(35)	%
(Loss) income for the period	$	(39,302)	$	5,242	$	(44,544)	(850)	%

Revenue

Revenue decreased by $40.6 million to $0.2 million in the three months ended September 30, 2019 compared to $40.8 million for the three months ended September 30, 2018.

The revenue recognized for the three months ended September 30, 2019 is due to continued development work of products to the third target nominated by GSK under the Collaboration and License Agreement. The development and license revenue for the three months ended September 30, 2018 was recognized due to the performance under the NY-ESO transition program and the PRAME development plan, which were completed in 2018.

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Future revenues will depend on the progress of the third target program, the development of programs for additional targets, and GSK’s progress with the NY-ESO program, which are difficult to predict. We anticipate that the remaining $2.7 million of revenue from the $3.2 million received following nomination of the third target should be recognized by the end of 2020.

Research and Development Expenses

Research and development expenses increased by 26% to $29.6 million for the three months ended September 30, 2019 from $23.5 million for the three months ended September 30, 2018. The Company continues to review and prioritise clinical development projects and costs with the aim of focussing operations and prioritising recruitment in the ADP-A2M4 SPEARHEAD-1, ADP-A2M4CD8 SURPASS and ADP-A2AFP trials. The ADP-A2M10 program has been deprioritised and will cease enrolment shortly.

Our research and development expenses comprise the following (in thousands):

	Three months ended
	September 30,
	2019		2018		Increase/decrease
Salaries, materials, equipment, depreciation of property, plant and equipment and other employee-related costs(1)	$	15,465	$	15,213	$	252	2	%
Subcontracted expenditure		9,528		8,637		891	10	%
Manufacturing facility expenditure		1,877		1,379		498	36	%
Accrued purchase commitments		5,000		—		5,000	NA
Share-based compensation expense		144		2,053		(1,909)	(93)	%
Payments for in-process research and development		2,476		—		2,476	NA
Reimbursements for research and development tax and expenditure credits		(4,873)		(3,798)		(1,075)	28	%
	$	29,617	$	23,484	$	6,133	26	%

(1) These costs are not analyzed by project since employees may be engaged in multiple projects simultaneously.

The net increase in our research and development expenses of $6.1 million for the three months ended September 30, 2019 compared to the same period in 2018 was primarily due to the following:

● an increase of $0.9 million in subcontracted expenditures, including clinical trial expenses, contract research organization (CRO) costs and subcontracted manufacturing costs. This is primarily driven by an increase in subcontracted clinical trial costs following the commencement of our SPEARHEAD and SURPASS clinical trials in the three months ended September 30, 2019

● an increase in manufacturing facility expenditure of $0.5 million due to increased activity at our U.S. facility in Philadelphia and the development of a dedicated vector manufacturing capability in Stevenage, Hertfordshire, United Kingdom;

● an increase of $5.0 million in accrued purchase commitments, which relate to the supply of the Dynabeads® CD3/CD28 technology. Management considers that there is sufficient uncertainty surrounding the utility of the Dynabeads, which is dependent upon current clinical trial plans, the Company’s clinical pipeline, manufacturing methods and undetermined future projects, to result in the purchase commitment being recognized in Research and Development expenses in the period. Further details of the purchase commitment can be found in Note 11 of the Condensed Consolidated Financial Statements.

● a decrease in share-based compensation expense of $1.9 million due to options forfeitures;

● an increase of $2.5 million in payments for in-process research and development after entering into a collaboration agreement relating to the development of next-generation SPEAR T-cell products with Noile-Immune Biotech, Inc. on August 27, 2019; and

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● an increase in reimbursements for research and development tax and expenditure credits of $1.1 million due to an increased proportion of expenditure qualifying under the SME R&D Tax Credit Scheme.

Our subcontracted costs for the three months ended September 30, 2019 were $9.5 million, compared to $8.6 million in the same period of 2018. This includes $3.9 million of costs associated with our ADP-A2M10, ADP-A2M4, and ADP-A2AFP SPEAR T-cells and $5.6 million of other development costs.

Our research and development expenses are highly dependent on the phases and progression of our research projects and will fluctuate depending on the outcome of ongoing clinical trials.

General and Administrative Expenses

General and administrative expenses increased by 4% to $10.7 million for the three months ended September 30, 2019 from $10.3 million in the same period in 2018. We continue to evaluate and review general administrative expenses with the aim of ensuring that operating efficiency continues to improve and focusing operations on the ongoing clinical programs.

Other Income (Expense), Net

Other income (expense), net was income of $0.3 million for the three months ended September 30, 2019 compared to an expense of $2.2 million for the three months ended September 30, 2018. Other expense, net primarily relates to unrealized foreign exchange gains and losses on cash, cash equivalents and on intercompany loans held in U.S. dollars by our U.K. subsidiary, other than those of a long-term investment nature, where repayment is not planned or anticipated in the foreseeable. Beginning on July 1, 2019, the intercompany loan will be considered of a long-term investment nature as repayment is not planned or anticipated in the foreseeable future. It is Adaptimmune Therapeutics plc’s intent not to request payment of the intercompany loan for the foreseeable future. The foreign exchange gains or losses arising on the revaluation of intercompany loans of a long-term investment nature are reported within other comprehensive income (loss).

Income Taxes

Income taxes decreased to a charge of $87,000 for the three months ended September 30, 2019 from a charge of $133,000 for the three months ended September 30, 2018. Income taxes arise in the United States due to our U.S. subsidiary generating taxable profits. We incur losses in the United Kingdom.

Comparison of Nine Months Ended September 30, 2019 and 2018

The following table summarizes the results of our operations for the nine months ended September 30, 2019 and 2018, together with the changes to those items (in thousands).

	Nine months ended
	September 30,
	2019		2018		Increase/decrease
Development revenue	$	394	$	18,912	$	(18,518)	(98)	%
License revenue		—		39,114		(39,114)	(100)	%
Total revenue		394		58,026		(57,632)	(99)	%
Research and development expenses		(77,147)		(75,500)		(1,647)	2	%
General and administrative expenses		(32,662)		(32,785)		123	(0)	%
Total operating expenses		(109,809)		(108,285)		(1,524)	1	%
Operating loss		(109,415)		(50,259)		(59,156)	118	%
Interest income		2,324		1,805		519	29	%
Other expense, net		(556)		(10,525)		9,969	(95)	%
Loss before income taxes		(107,647)		(58,979)		(48,668)	83	%
Income taxes		(154)		(362)		208	(57)	%
Loss for the period	$	(107,801)	$	(59,341)	$	(48,460)	82	%

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Revenue

Revenue decreased by $57.6 million to $0.4 million in the nine months ended September 30, 2019 compared to $58.0 million for the nine months ended September 30, 2018.

The revenue recognized for the nine months ended September 30, 2019 is due to the commencement of development of products to the third target nominated by GSK under the Collaboration and License Agreement. The development and license revenue for the nine months ended September 30, 2018 was recognized due to the PRAME development plan and performance under the NY-ESO transition program, which were completed in 2018.

Future revenues will depend on the progress of the development program for additional targets, and GSK’s progress with the NY-ESO program, which are difficult to predict. We anticipate that the remaining $2.7 million of revenue from the $3.2 million received following nomination of the third target will be recognized by the end of 2020.

Research and Development Expenses

Research and development expenses increased by 2% to $77.1 million for the nine months ended September 30, 2019 from $75.5 million for the nine months ended September 30, 2018. The Company continues to review and prioritise clinical development projects and costs with the aim of focussing operations and prioritising recruitment in the ADP-A2M4 SPEARHEAD-1, ADP-A2M4CD8 SURPASS and ADP-A2AFP trials. The ADP-A2M10 program has been deprioritised and will cease enrolment shortly.

Our research and development expenses comprise the following (in thousands):

	Nine months ended
	September 30,
	2019		2018		Increase/decrease
Salaries, materials, equipment, depreciation of property, plant and equipment and other employee-related costs(1)	$	48,872	$	45,809	$	3,063	7	%
Subcontracted expenditure		25,554		31,595		(6,041)	(19)	%
Manufacturing facility expenditure		5,221		3,440		1,781	52	%
Accrued purchase commitments		5,000		—		5,000	NA
Share-based compensation expense		2,951		6,338		(3,387)	(53)	%
Payments for in-process research and development		4,463		—		4,463	NA
Reimbursements for research and development tax and expenditure credits		(14,914)		(11,682)		(3,232)	28	%
	$	77,147	$	75,500	$	1,647	2	%

(1) These costs are not analyzed by project since employees may be engaged in multiple projects at a time.

The net increase in our research and development expenses of $1.6 million for the nine months ended September 30, 2019 compared to the same period in 2018 was primarily due to the following:

● an increase of $3.1 million in salaries, materials, equipment, depreciation of property, plant and equipment and other employee-related costs. The driver for these is the increase in the average number of employees engaged in research and development from 314 to 325.

● a decrease of $6.0 million in subcontracted expenditures, including clinical trial expenses, contract research organization (CRO) costs, and subcontracted manufacturing costs. This was primarily driven by a decrease in subcontracted expenses and clinical trial costs due to the transfer of NY-ESO to GSK on July 23, 2018;

● an increase in manufacturing facility expenditure of $1.8 million due to increased activity at our U.S. facility in Philadelphia and the development of a dedicated vector manufacturing capability in Stevenage, Hertfordshire, United Kingdom.

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● an increase of $5.0 million in accrued purchase commitments, which relate to the supply of the Dynabeads® CD3/CD28 technology. Management considers that there is sufficient uncertainty surrounding the utility of the Dynabeads, which is dependent upon current clinical study plans, the Company’s clinical pipeline, manufacturing methods and undetermined future projects, to result in the purchase commitment being recognized in Research and Development expenses in the period. Further details of the purchase commitment can be found in Note 11 of the Condensed Consolidated Financial Statements.

● a decrease in share-based compensation expense of $3.4 million due to option forfeitures;

● an increase of $4.5 million in payments for in-process research and development after entering into collaboration agreements relating to the development of next-generation SPEAR T-cell products with Alpine Immune Sciences, Inc. on May 14, 2019 and with Noile-Immune Biotech, Inc. on August 27, 2019; and

● an increase in reimbursements for research and development tax and expenditure credits of $3.2 million due to an increased proportion of expenditure qualifying under the SME R&D Tax Credit Scheme.

Our subcontracted costs for the nine months ended September 30, 2019 were $25.6 million, compared to $31.6 million in the same period of 2018. This includes $10.5 million of costs associated with our ADP-A2M10, ADP-A2M4, and ADP-A2AFP SPEAR T-cells and $15.1 million of other development costs.

Our research and development expenses are highly dependent on the phases and progression of our research projects and will fluctuate depending on the outcome of ongoing clinical trials.

General and Administrative Expenses

General and administrative expenses decreased by $0.1 million to $32.7 million for the nine months ended September 30, 2019 from $32.8 million in the same period in 2018. We continue to evaluate and review general administrative expenses with the aim of ensuring that operating efficiency continues to improve and we are able to focus operations on the ongoing clinical programs.

Other Expense, Net

Other expense, net was an expense of $0.6 million for the nine months ended September 30, 2019 compared to an expense of $10.5 million for the nine months ended September 30, 2018. Other expense, net primarily relates to unrealized foreign exchange gains and losses on cash, cash equivalents and on intercompany loans held in U.S. dollars by our U.K. subsidiary, other than those of a long-term investment nature, where repayment is not planned or anticipated in the foreseeable future. Beginning on July 1, 2019, the intercompany loan will be considered of a long-term investment nature as repayment is not planned or anticipated in the foreseeable future. It is Adaptimmune Therapeutics plc’s intent not to request payment of the intercompany loan for the foreseeable future. The foreign exchange gains or losses arising on the revaluation of intercompany loans of a long-term investment nature are reported within other comprehensive income (loss).

Income taxes

Income taxes decreased to $154,000 for the nine months ended September 30, 2019 from a charge of $362,000 for the nine months ended September 30, 2018. Income taxes arise in the United States due to our U.S. subsidiary generating taxable profits. We incur losses in the United Kingdom.

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Liquidity and Capital Resources

Sources of Funds

Since our inception, we have incurred significant net losses and negative cash flows from operations. We financed our operations primarily through sales of equity securities, cash receipts under our GSK Collaboration and License Agreement, government grants and research and development tax and expenditure credits. From inception through to September 30, 2019, we have raised:

● $513.8 million, net of issuance costs, through the issuance of shares, including $99.7 million raised through a registered direct offering in September 2018;

● $151.4 million upfront fees, milestones and exercise fees under our GSK Collaboration and License Agreement;

● $2.8 million of income in the form of government grants; and

● $24.6 million in the form of reimbursable U.K. research and development tax credits and receipts from the U.K. RDEC Scheme.

We use a non-GAAP measure, Total Liquidity, which is defined as the total of cash and cash equivalents and marketable securities, to evaluate the funds available to us in the near-term. A description of Total Liquidity and reconciliation to cash and cash equivalents, the most directly comparable U.S. GAAP measure, are provided below under “Non-GAAP measures”.

As of September 30, 2019, we had cash and cash equivalents of $39.4 million and Total Liquidity of $102.9 million. In addition, we also received $15.8 million of U.K. research and development tax credits in October 2019. We regularly assess Total Liquidity against our activities and make decisions regarding prioritization of those activities and deployment of Total Liquidity. We believe that our Total Liquidity will be sufficient to fund our operations, based upon our currently anticipated research and development activities and planned capital spending, through the third quarter of 2020.

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. As of September 30, 2019, the Company had cash and cash equivalents of $39.4 million, marketable securities of $63.5 million, and stockholders’ equity of $147.7 million. During the nine months ended September 30, 2019, the Company incurred a net loss of $107.8 million, used cash of $100.0 million in its operating activities, and generated revenues of $0.4 million. The Company has incurred net losses in most periods since inception, and it expects to incur operating losses in future periods. When considered with the Company’s projected expenditure for the next 12 months, these factors raise substantial doubt about its ability to continue as a going concern for at least one year from the issuance of our condensed consolidated financial statements. If the Company does not have sufficient funding for the next 12 months, it might result in a significant reduction in its research and development activities or other operations.

The Company is considering obtaining additional capital (whether non-dilutive or dilutive). In addition, the Company continues to review and prioritize clinical development projects and costs with the aim of focusing operations on the ADP-A2M4 SPEARHEAD-1, ADP-A2M4CD8 SURPASS and ADP-A2AFP trials. Management believes that with additional funds and cost reductions, it will have sufficient capital to meet the Company’s operating expenses and obligations. While management believes the Company has the ability to raise additional funds, there is no assurance that such plans will be successful and therefore there is substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued.

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Cash Flows

The following table summarizes the results of our cash flows for the nine months ended September 30, 2019 and 2018 (in thousands).

		Nine months ended
		September 30,
	2019		2018
Net cash used in operating activities	$	(99,979)	$	(72,703)
Net cash provided by investing activities		71,262		34,954
Net cash provided by financing activities		366		102,586
Cash, cash equivalents and restricted cash		43,727		157,244

Operating Activities

Net cash used in operating activities increased by $27.3 million to $100.0 million for the nine months ended September 30, 2019 from $72.7 million for the nine months ended September 30, 2018. The increase in cash used in operations is primarily due to the receipt of $30.1 million from GSK in the nine months ended September 30, 2018, compared with $3.2 million received in the nine months ended September 30, 2019.

Net cash used in operating activities of $100.0 million for the nine months ended September 30, 2019 comprised a net loss of $107.8 million, a net cash outflow of $6.9 million from changes in operating assets and liabilities, offset by non-cash items of $14.7 million. The non-cash items consisted primarily of depreciation expense on plant and equipment of $5.4 million, share-based compensation expense of $8.5 million and unrealized foreign exchange losses of $0.5 million.

Investing Activities

Net cash provided by investing activities of $71.3 million and $35.0 million for the nine months ended September 30, 2019 and September 30, 2018, respectively consisted of:

● purchases of property and equipment of $1.4 million and $3.8 million for the nine months ended September 30, 2019 and 2018, respectively;

● purchases of intangible assets of $1.0 million and $0.7 million primarily relating to development of internal-use software for the nine months ended September 30, 2019 and 2018, respectively; and

● cash outflows from investment in marketable securities of $19.1 million and $75.5 million for the nine months ended September 30, 2019 and 2018, respectively, and cash inflows from maturity or redemption of marketable securities of $92.8 million and $115.0 million for the nine months ended September 30, 2019 and 2018, respectively.

Financing Activities

Net cash from financing activities of $0.4 million and $102.6 million for the nine months ended September 30, 2019 and 2018, respectively, consisted of proceeds from share option exercises of $0.4 million and $2.9 million respectively, and proceeds from a registered direct offering in September 2018 of $99.7 million for the nine months ended September 30, 2018.

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Non-GAAP Measures

Total Liquidity (a non-GAAP financial measure)

Total Liquidity (a non-GAAP financial measure) is the total of cash and cash equivalents and marketable securities. Each of these components appears in the consolidated balance sheet. The U.S. GAAP financial measure most directly comparable to Total Liquidity is cash and cash equivalents as reported in the consolidated financial statements, which reconciles to Total Liquidity as follows (in thousands):

	September 30,		December 31,
	2019		2018
Cash and cash equivalents	$	39,409	$	68,379
Marketable securities		63,451		136,755
Total Liquidity	$	102,860	$	205,134

We believe that the presentation of Total Liquidity provides useful information to investors because management reviews Total Liquidity as part of its management of overall liquidity, financial flexibility, capital structure and leverage. The definition of Total Liquidity includes investments, which are highly-liquid and available to use in our current operations, such as marketable securities.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Contractual Obligations

For a discussion of our contractual obligations, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2018 Annual Report on Form 10-K.

Alpine Immune Sciences, Inc. (“Alpine”)

On May 14, 2019, we entered into a Collaboration Agreement relating to the development of next-generation SPEAR T-cell products with Alpine.

We paid an upfront exclusive license option fee of $2 million to Alpine in June 2019. Under the agreement, Adaptimmune will pay Alpine for ongoing research and development funding costs and development and commercialization milestone payments up to a maximum of $288 million may be payable if all possible targets are selected and milestones achieved. The upfront payment of $2 million and the payments for ongoing research are recognized within Research and development. Alpine would also receive low single-digit royalties on worldwide net sales of applicable products.

Noile-Immune Biotech, Inc. (“Noile-Immune”)

On August 26, 2019, we entered into a collaboration and license agreement relating to the development of next-generation SPEAR T-cell products with Noile-Immune.

An upfront exclusive license option fee of $2.5 million is payable to Noile-Immune in 2019. This has been recognized within Research and Development in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2019. Under the agreement, development and commercialization milestone payments up to a maximum of $312 million may be payable if all possible targets are selected and milestones achieved. Noile-Immune would also receive mid-single-digit royalties on net sales of resulting products.

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Safe Harbor

See the section titled “Information Regarding Forward-Looking Statements” at the beginning of this Quarterly Report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

For a discussion of our quantitative and qualitative disclosures about market risk, see “Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our 2018 Annual Report on Form 10-K. There have been no material changes in the six months ended September 30, 2019.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”) as of September 30, 2019. Based on such evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that, as of September 30, 2019, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive and Interim Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

In January 2019, we adopted new guidance on lease recognition, which has been codified within Accounting Standard Codification Topic 842, Leases (“ASC 842”). As a consequence of the new guidance, management implemented several new internal controls, including controls to identify lease arrangements and to ensure that they are appropriately measured, in the quarter ended September 30, 2019.

No changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

As of September 30, 2019, we were not a party to any material legal proceedings.

Item 1A. Risk Factors.

Our business has significant risks. You should carefully consider the following risk factors as well as all other information contained in this Quarterly Report, including our condensed consolidated financial statements and the related notes, before making an investment decision regarding our securities. The risks and uncertainties described below are those significant risk factors currently known and specific to us that we believe are relevant to our business, results of operations and financial condition. Additional risks and uncertainties not currently known to us or that we now deem immaterial may also impair our business, results of operations and financial condition.

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Risks Related to Our Financial Condition and Capital Requirements

We are a clinical-stage biopharmaceutical company with no commercial products and prediction of future performance is very difficult.

We are a clinical-stage biopharmaceutical company focused on novel cancer immunotherapy products. We have no products or therapeutics approved for commercial sale and have not generated any revenue from product supplies or royalties. Our therapeutic candidates are based on engineered TCRs and are new and largely unproven. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. Our inability to address these risks successfully would have a materially adverse effect on our business and prospects.

We have incurred net losses every year since our inception and expect to continue to incur net losses in the future.

We have generated losses since our inception in 2008, during which time we have devoted substantially all of our resources to research and development efforts relating to our SPEAR T-cells (including the NY-ESO SPEAR T-cell), including engaging in activities to manufacture and supply our SPEAR T-cells for clinical trials in compliance with current good manufacturing practice, or cGMP, conducting clinical trials of our SPEAR T-cells, providing general and administrative support for these operations and protecting our intellectual property. We do not have any products approved for sale and have not generated any revenue from product supplies or royalties. Based on our current plans, we do not expect to generate product or royalty revenues unless and until we obtain marketing approval for, and commercialize, any of our SPEAR T-cells.

For the nine months ended September 30, 2019, the years ended December 31, 2018, 2017, 2016 and the six months ended December 31, 2015 and the year ended June 30, 2015, we incurred net losses of $107.8 million, $95.5 million, $70.1 million, $71.6 million, $23.0 million and $22.1 million, respectively. As of September 30, 2019, we had accumulated losses of $426.3 million. We expect to continue incurring significant losses as we continue with our research and development programs and to incur general and administrative costs associated with our operations. The extent of funding required to develop our product candidates is difficult to estimate given the novel nature of our SPEAR T-cells and their un-proven route to market. Our profitability is dependent upon the successful development, approval, and commercialization of our SPEAR T-cells, further development of the NY-ESO SPEAR T-cells by GSK (given the NY-ESO program has now been transitioned to GSK), achieving GSK milestones (for both the NY-ESO program, the third SPEAR T-cell program and any future SPEAR T-cell programs under the GSK Collaboration and License Agreement) and achieving a level of revenues adequate to support our cost structure. We may never achieve profitability, and unless and until we do, we will continue to need to raise additional cash or alternative funding.

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Although our financial statements have been prepared on a going concern basis, our current liquidity position means we must obtain additional capital to fund our operations in order to continue as a going concern.

As of September 30, 2019, the Company had cash and cash equivalents of $39.4 million, marketable securities of $63.5 million, and stockholders’ equity of $147.7 million. During the nine months ended September 30, 2019, the Company incurred a net loss of $107.8 million, used cash of $100.0 million in its operating activities, and generated revenues of $0.4 million. The Company has incurred net losses in most periods since inception and it expects to incur operating losses in future periods. When considered with the Company’s projected expenditure for the next 12 months, these factors raise substantial doubt about its ability to continue as a going concern. Accordingly, we must obtain additional capital to continue funding planned operations. There is no assurance that the Company will be able to obtain sufficient additional capital to continue funding its operations or, if we do, that it will be on terms that are favourable to our shareholders. Any future fundraising is likely to be highly dilutive to our existing shareholders and may also divert our management from its day-to-day activities.

If the Company fails to obtain additional funding, it may be required to:

● significantly reduce research and development activities or other operations in order to reduce ongoing expenditure. Any such reduction in research and development activities would impact the progress of ongoing clinical programs and delay our ability to bring products to market;

● seek further third party alliances for existing assets at an earlier stage than would otherwise be desirable or on terms less favourable than might otherwise be available or seek a third party acquirer for the business; or

● relinquish or license on unfavourable terms our rights to technologies or any product candidates we would otherwise seek to develop or commercialize ourselves.

If the Company fails to obtain additional funding, or in the event that the Company significantly reduces its ongoing expenditures and operations, this may result in an inability to retain key individuals required for our ongoing business and may result in a need to delay or halt ongoing clinical programs or change the nature and scope of such clinical programs.

We have never generated any revenue from sales of our SPEAR T-cells and our ability to generate revenue from sales of our SPEAR T-cells and become profitable depends significantly on our success in a number of factors.

We have no SPEAR T-cells approved for commercial sale, have not generated any revenue from sales of our SPEAR T-cells (including the NY-ESO SPEAR T-cell), and do not anticipate generating any revenue from sales of our SPEAR T-cells until sometime after we receive regulatory approval, if at all, for the commercial sale of a SPEAR T-cell. We intend to fund future operations through milestone payments under our collaboration and license agreement with GSK and through additional equity financings or other third party collaborations. Our ability to generate revenue and achieve profitability depends on our success in many factors, including:

● completing preclinical development and advancing our SPEAR T-cells to clinic;

● delivering on the clinical development strategy for our SPEAR T-cells;

● progressing our clinical trials within predicted timeframes and without any substantial delays, for example as may be caused by delays in patient recruitment, regulatory requirements to hold or suspend any clinical trials or delays in obtaining approvals required to conduct clinical trials;

● demonstrating a favorable benefit (efficacy parameters): risk (safety) for our SPEAR T-cells and the NY-ESO SPEAR T-cell that translate into a differentiated product of value for patients;

● obtaining data from clinical trials which are ongoing for SPEAR T-cells other than the NY-ESO SPEAR T-cell;

● obtaining regulatory approvals and marketing authorizations for our SPEAR T-cells and the NY-ESO SPEAR T-cell for which we or our collaborator complete clinical trials;

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● developing sustainable and scalable manufacturing and supply processes for our SPEAR T-cells, including establishing and maintaining commercially viable supply relationships with third parties and establishing our own commercial manufacturing capabilities and infrastructure;

● developing a reliable and commercially viable/cost effective commercial manufacturing process to enable commercial supply of our SPEAR T-cells;

● launching and commercializing SPEAR T-cells for which we obtain regulatory approvals and marketing authorizations, either directly or with a collaborator or distributor;

● obtaining market acceptance, pricing and reimbursement of our SPEAR T-cells as viable treatment options;

● addressing any competing technological and market developments;

● identifying, assessing, acquiring and/or developing new SPEAR T-cells;

● maintaining, protecting, and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and

● attracting, hiring and retaining qualified personnel.

Even if one or more of the SPEAR T-cells is approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved SPEAR T-cell. Our expenses could increase beyond expectations if the FDA or any other regulatory agency requires changes to our manufacturing processes or assays, or for us to perform preclinical programs and clinical or other types of trials in addition to those that we currently anticipate. If we are successful in obtaining regulatory approvals to market one or more SPEAR T-cells, our revenue will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the SPEAR T-cell, the ability to get reimbursement at any price, and whether we own the commercial rights for that territory. If the number of our addressable disease patients is not as significant as we estimate, the indication approved by regulatory authorities is narrower than we expect, or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales or supplies of such SPEAR T-cells, even if approved. If we are not able to generate revenue from the sale of any approved SPEAR T-cells, we may never become profitable.

If we fail to obtain additional financing, we may be unable to complete the development and commercialization of our SPEAR T-cells.

Our operations have required substantial amounts of cash since inception. We expect to continue to spend substantial amounts to continue the development of our SPEAR T-cells, including future clinical trials. If we receive approval for any of our SPEAR T-cells, we will require significant additional amounts in order to launch and commercialize these therapeutic candidates.

As of September 30, 2019, we had $39.4 million of cash and cash equivalents and $63.5 million of marketable securities. We expect to use these funds to advance and accelerate the clinical development of our SPEAR T-cells, to further develop and enhance our manufacturing capabilities and secure a commercially viable manufacturing platform for all of our SPEAR T-cells, to advance additional SPEAR T-cells into preclinical testing and progress such SPEAR T-cells through to clinical trials as quickly as possible and to fund working capital, including for other general corporate purposes. Changing circumstances beyond our control, including changes to the scope and timing of the programs under the GSK collaboration (for example, nomination of further targets by GSK or changes to the third target program) or data seen in any of our clinical trials may cause us to increase our spending significantly faster than we currently anticipate. We will require additional capital for the further development and commercialization of our SPEAR T-cells in accordance with currently planned operations.

We cannot be certain that additional funding will be available on acceptable terms, or at all. We have no committed source of additional capital and if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of our SPEAR T-cells or other research and development initiatives. Our license and supply agreements may also be terminated if we are unable to meet the payment obligations under these agreements. We could be required to seek collaborators for our SPEAR T-cells at an earlier stage than otherwise would be desirable

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or on terms that are less favorable to us than might otherwise be available or relinquish or license on unfavorable terms our rights to our SPEAR T-cells in markets where we otherwise would seek to pursue development or commercialization ourselves. Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our American Depositary Shares, or ADSs, to decline.

Raising additional capital may cause dilution to our existing shareholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms unfavorable to us.

Risks Related to the Development of Our SPEAR T-cells

Our business is highly dependent on our wholly owned SPEAR T-cell candidates including ADP-A2M4, ADP-A2M4CD8, and ADP-A2AFP, which will require significant additional clinical testing before we can seek regulatory approval and begin commercialization of any of our SPEAR T-cells.

There is no guarantee that any SPEAR T-cells will achieve regulatory approval or proceed to the next stage of clinical programs. The process for obtaining marketing approval for any candidate is very long and risky and there will be significant challenges for us to address in order to obtain marketing approval, if at all.

There is no guarantee that the results obtained in current clinical trials for our ADP-A2M4, ADP-A2M4CD8, and ADP-A2AFP SPEAR T-cells will be sufficient for us to plan one or more pivotal clinical trials and obtain regulatory approval or marketing authorization. Negative results in any SPEAR T-cell clinical program may also impact our ability to obtain regulatory approval for other SPEAR T-cells, either at all or within anticipated timeframes because, although the SPEAR T-cell may target a different cancer peptide, the underlying technology platform and other aspects of our clinical programs are the same or substantially similar for all of our SPEAR T-cells. Similarly, negative results in the NY-ESO SPEAR T-cell clinical program, now fully transferred to GSK, may also impact our ability to obtain regulatory approval for other wholly owned SPEAR T-cells. Accordingly, a failure or delay in any one program may affect the ability to obtain regulatory approval to continue or conduct clinical programs for other SPEAR T-cells.

We may not be able to submit INDs, or the foreign equivalent outside of the United States, to commence additional clinical trials for other SPEAR T-cells on the timeframes we expect, and even if we are able to, the FDA or comparable foreign regulatory authorities may not permit us to proceed with planned clinical trials.

Progression of new SPEAR T-cells into clinical trials is inherently risky and dependent on the results obtained in preclinical programs, the results of other clinical programs and results of third-party programs that utilize common components, such as production of the lentiviral vector lot used for production and administration of our SPEAR T-cell. If results are not available when expected or problems are identified during SPEAR T-cell development, we may experience significant delays in development of pipeline products and in existing clinical programs, which may impact our ability to receive regulatory approval. This may also impact our ability to achieve certain financial milestones and the expected timeframes to market any of our SPEAR T-cells. Failure to submit further IND or the foreign equivalent and commence additional clinical programs will significantly limit our opportunity to generate revenue.

There is no guarantee that the FDA, or any other regulatory authority, will approve any IND (or equivalent application) for any of our future SPEAR T-cells, or for new indications for our SPEAR T-cells already in clinical trials, or that amendments to existing protocols will not be required. For example, we recently amended the protocols for all of our pending and on-going ADP-A2M4 and ADP-A2M10 clinical trials in response to reported serious adverse events of prolonged serious pancytopenia in our clinical trials for ADP-A2M4 and ADP-A2M10 in two patients treated with the highest lymphodepletion regimen. Such protocol amendments may delay our clinical trials, may require changes or resubmission of our INDs, or may result or be related to a halt in our planned or contemplated clinical trials.

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We are continuing to expand our clinical trial footprint in Europe. This requires gaining the approval of country specific review bodies for GMO application and Clinical Trial Application (“CTA”). As this is not a harmonized process, the requirements can vary considerably and delays can be incurred at a country level.

In the USA, some institutional review boards, or IRBs, have requested that the Sponsor obtain Investigational Device Exemptions (IDE) from the FDA for the validated clinical trial assay being used to select patients. This has delayed the initiation of some sites and limited the ability to obtain high risk biopsies until an IDE has been granted. We plan to proactively seek IDEs for our SPEAR T-cell assays where appropriate.

Our SPEAR T-cells being developed may have potentially fatal cross-reactivity to other peptides or protein sequences within the human body.

One of our prior SPEAR T-cells, designed to target an HLA-1 restricted MAGE-A3 cancer-specific peptide, recognized another unrelated peptide from a protein called TITIN, expressed within normal cardiac and other muscle tissues in patients. As a result of this cross-reactivity to the TITIN protein in the heart, two patients died during our MAGE-A3 clinical program, the program was put on pause, then formally placed on hold by the FDA, after which we terminated the program. We subsequently developed a preclinical safety testing program that identifies potential cross-reactivity risks but there may be gaps or other problems detected in the testing program at a later date. Even with the use of this testing program, there can be no guarantee that the FDA will permit us to begin clinical trials of any additional SPEAR T-cells other than those for which INDs already exist or that other off-target cross-reactivity will not be identified or present in any patient group. Failure to develop an effective preclinical safety testing program will prevent or delay clinical trials of any SPEAR T-cell. Detection of any cross-reactivity will halt or delay any ongoing clinical trials for any SPEAR T-cell and prevent or delay regulatory approval. Given that the underlying technology platform, manufacturing process and development process is similar for all of our TCR therapies, issues pertaining to cross-reactivity for one SPEAR T-cell may impact our ability or our collaborator’s ability to obtain regulatory approval for other SPEAR T-cells undergoing development and clinical trials, which would significantly harm our business, prospects, financial condition and results of operations.

Cross-reactivity or allo-reactivity (binding to peptides presented on other HLA types) could also occur where the affinity-enhanced engineered TCR contained within any SPEAR T-cell binds to peptides presented by HLAs other than the HLA type for which the relevant TCR was developed. We have developed a preclinical screening process to identify allo-reactivity risk. Where any allo-reactivity risk is identified, patients with the allo-reactive alleles will be excluded from the trial. Any allo-reactivity or other cross-reactivity that impacts patient safety could materially impact our ability to advance our SPEAR T-cells into clinical trials or to proceed to market approval and commercialization. In addition, there is no guarantee that exclusion of patients with the identified allo-reactive allele will successfully eliminate the risk of allo-reactivity, and serious side effects for patients may still exist. Given that the underlying technology platform, manufacturing process and development process are similar for all of our SPEAR T-cells, issues pertaining to allo-reactivity for one SPEAR T-cell may impact our ability or our collaborator’s ability to obtain regulatory approval for other SPEAR T-cells undergoing development and clinical trials, which would significantly harm our business, prospects, financial condition and results of operations.

Our T-cell therapy, which is a type of cell therapy that uses gene therapy technology, represents a novel approach to cancer treatment that could result in heightened regulatory scrutiny, delays in clinical development, or delays in our or our collaborator’s ability to achieve regulatory approval or commercialization of SPEAR T-cells.

Use of any SPEAR T-cells to treat a patient requires the use of gene therapy technology, which involves combining a patient’s T-cells with our lentiviral delivery vector containing the gene for our affinity-enhanced engineered TCR. This is a novel treatment approach that carries inherent development risks. We are therefore constantly evaluating and adapting our SPEAR T-cells following the results obtained during development work and the clinical programs. Further development, characterization and evaluation may be required, depending on the results obtained, in particular where such results suggest any potential safety risk for patients. The need to develop further assays, or to modify in any way the protocols related to our SPEAR T-cells to improve safety or effectiveness, may delay the clinical program, regulatory approval or commercialization, if approved at all, of any SPEAR T-cell. Consequently, this may have a material impact on our ability to receive milestone payments and/or generate revenue from our SPEAR T-cells.

In addition, given the novelty of SPEAR T-cells, the end users and medical personnel require a substantial amount of education and training in their administration of SPEAR T-cells. Regulatory authorities have very limited experience with commercial engineered

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cell therapies and SPEAR T-cells for the treatment of cancer. As a result, regulators may be more risk adverse or require substantial dialogue and education as part of the normal regulatory approval process for each stage of development of any SPEAR T-cell. To date, only a limited number of gene therapy products have been approved in the United States and European Union. Consequently, it is difficult to predict and evaluate what additional regulatory hurdles may apply to the development of our SPEAR T-cells and whether additional investment, time or resources will be required to overcome any such hurdles.

Additionally, because our technology involves the genetic modification of patient cells ex-vivo using a viral vector, we are subject to many of the challenges and risks of gene therapy, including the following challenges:

● Regulatory requirements governing gene and cell therapy products have changed frequently and may continue to change in the future.

● Random gene insertion associated with retrovirus-mediated genetically modified products, known as insertional oncogenesis, could lead to lymphoma, leukemia or other cancers, or other aberrantly functioning cells. Insertional oncogenesis was seen in early gene therapy studies conducted outside of the United States in 2003. In those studies, insertional oncogenesis resulted in patients developing leukemia following treatment with the relevant gene therapy, with one patient dying. As a result of the data from those studies, the FDA temporarily halted gene therapy trials in the United States. The previous trials involved modification of stem cells rather than T-cells and utilized a murine gamma-retroviral vector rather than a lentiviral vector. We cannot guarantee that insertional oncogenesis resulting from administration of our SPEAR T-cells will not occur.

● Although our viral vectors are not able to replicate, there may be a risk with the use of retroviral or lentiviral vectors that they could undergo recombination and lead to new or reactivated pathogenic strains of virus or other infectious diseases.

● There is the potential for delayed adverse events following exposure to gene therapy products due to persistent biological activity of the genetic material or other components of products used to carry the genetic material. In part for this reason, the FDA recommends a 15-year follow-up observation period for all surviving patients who receive treatment using gene therapies in clinical trials. We may need to adopt such an observation period for our therapeutic candidates; however, the FDA does not require that the tracking be complete prior to its review of the Biologics License Application, or BLA.

● Clinical trials using genetically modified cells conducted at institutions that receive funding for recombinant DNA research from the NIH may be subject to review by the NIH Office of Biotechnology Activities’ Recombinant DNA Advisory Committee, or RAC. The RAC review process can delay or impede the initiation of a clinical trial.

If adverse events of the type described above were to occur, further advancement of our clinical trials could be halted or delayed, which would have a material adverse effect on our business and operations. In addition, heightened regulatory scrutiny of gene therapy product candidates may result in delays and increased costs in bringing a product candidate to market, if at all. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate revenue in the future.

In addition, results seen in third party clinical trials using other cell therapy products, for example CAR-T products, or in clinical trials conducted by our collaborators may impact on the further advancement of our clinical trials.

Results seen in third party clinical trials using products that are also used in our combination clinical trials, may impact on the further advancement of our clinical trials or clinical trials of our collaborators. For example, the FDA placed a clinical hold on three combination studies using an anti-PD-1 therapy used to treat multiple myeloma. There is no guarantee that further reviews of safety data with anti-PD-1 therapies will not result in delays or holds to our collaborator’s clinical trials or the requirement to amend the protocol for such clinical trials or would not delay the start of any anti-PD-1 combination clinical trials that we may wish to start.

T-cell therapy is a novel approach to cancer treatment that creates significant increased risk in terms of side-effect profile, ability to satisfy regulatory requirements associated with clinical trials and the long- term viability of administered SPEAR T-cells.

Development of a pharmaceutical or biologic therapy or product has inherent risks based on differences in patient population and responses to therapy and treatment. The mechanism of action and impact on other systems and tissues within the human body following administration of SPEAR T-cells is not completely understood, which means that we cannot predict the long-term effects of treatment with

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SPEAR T-cells (whether by us or a collaborator). In addition, it is not possible for any pre-clinical safety package to completely identify all potential safety risks.

We are aware that certain patients do not respond to our SPEAR T-cells and that other patients may relapse or cease to present the peptide being targeted by such SPEAR T-cells. The percentage of the patient population in which these events may occur is unknown, but the inability of patients to respond and the possibility of relapse may impact our or our collaborator’s ability to conduct clinical trials, to obtain regulatory approvals, if at all, and to successfully commercialize any SPEAR T-cell.

Clinical trials using SPEAR T-cell therapeutics are still in the early stages, and it is difficult to predict the results that will be obtained by us or our collaborator in ongoing clinical trials or the next phase or phases of any clinical program. It is also difficult to predict the way in which SPEAR T-cells will interact with third-party products used in combination clinical trials. For example, data seen in third party combination trials has resulted in certain combination trials being placed on clinical hold by the FDA. Any undesirable side effects seen in combination trials may affect our ability or our collaborator’s ability to continue with and obtain regulatory approval for any combination therapy, but may also impact our or our collaborator’s ability to continue with and obtain regulatory approval for SPEAR T-cell therapies alone.

There is a significant risk at each stage of any clinical program that serious adverse events or low efficacy, as well as less favorable benefit:risk profiles, will prevent any SPEAR T-cells from proceeding further or will result in those programs being suspended or placed on hold (whether voluntarily or as a result of a regulatory authority requirement). For example, there is a risk that the target (or similar) peptide to which any SPEAR T-cell is directed may be present in both patients’ cancer cells and other non-cancer cells and tissues. Should this be the case patients may suffer a range of side effects associated with the SPEAR T-cell binding to both the cancer cells and/or other cells and tissues and such side effects could cause patient death. The extent of these side effects will depend on which cells and tissues are affected as well as the degree to which the target (or similar) peptide is expressed in these cells and tissues. Serious adverse events seen with other immunotherapy products, such as the severe neurotoxicity events observed with CD19-directed CAR-T cell treatments, may also occur at any stage of the clinical program. Further, following infusion of any SPEAR T-cells, there may be a transient inflammatory reaction of the disease to the treatment. Symptoms in any given subject would be dependent on the location and other characteristics of their tumor. For example, subjects with lung tumors may experience dyspnea. Cardiac toxicities may be observed in patients with pre-existing cardiac or pericardial masses. These inflammatory reactions and related symptoms may be mild and self-limited, but can be severe, potentially life-threatening and require medical intervention.

As of April 5, 2019 for ADP-A2AFP and April 15, 2019 for ADP-A2M4 and ADP-A2M10:

● The adverse events considered by investigators to be possibly related to ADP-A2AFP (n=3) include pyrexia, increase in alanine aminotransferase, increase in aspartate aminotransferase, increase in alkaline phosphatase, cognitive disorder, pain in extremity, muscular weakness. Serious adverse events reported with ADP-A2AFP whether considered related to the SPEAR T-cells or not include bile duct obstruction and abdominal pain.

● The adverse events occurring in >10% of subjects treated with ADP-A2M4 (n=23) and considered by investigators to be possibly related to ADP-A2M4 include cytokine release syndrome (CRS), fatigue, pyrexia, decreased appetite, rash, dyspnea, febrile neutropenia, headache, nausea, sinus tachycardia/tachycardia, anemia/red blood cells decreased, chills, diarrhea, hypotension, and tumor pain. Serious adverse events (SAE) reported with ADP-A2M4 in more than one subject whether considered related to the SPEAR T-cells or not, and any related SAE include CRS, pyrexia, atrial fibrillation, thrombocytopenia/platelet count decreased, and rash. There has also been one serious adverse event report of grade 2 encephalopathy considered related to ADP-A2M4 by the investigator which resolved after 2 days of treatment.

● The adverse events occurring in >10% of subjects treated with ADP-A2M10 (n=18) and considered by investigators to be possibly related to ADP-A2M10 include pyrexia, CRS, peripheral edema, chills, febrile neutropenia, leukopenia/white blood cells decreased, lymphopenia/lymphocyte count decreased, thrombocytopenia/platelet count decreased, rash and sinus tachycardia/tachycardia. Serious adverse events (SAE) reported with ADP-A2M10 in more than one subject whether considered related to the SPEAR T-cells or not, and any related SAE include CRS.

Since April 15, 2019, there were two SAE reports of severe prolonged pancytopenia with aplastic anemia (one patient receiving ADP-A2M4 and one patient receiving ADP-A2M10) considered by the investigator to be probably related to the SPEAR T-cells and to the lymphodepleting chemotherapy. Both of these patients died from complications of aplastic anemia. In another patient, there was one report

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of Grade 3 neurotoxicity considered by the investigator to be probably related to the ADP-A2M4 SPEAR T-cells and, in the same patient, a later grade 5 SAE of stroke that was considered by the investigator to be possibly related to the product. These reports were communicated to the FDA and we have responded to queries from the FDA in relation to these reports. All three patients received the highest lymphodepletion regimen (fludarabine (30mg/m²/day) for 4 days and cyclophosphamide (1800 mg/m²/day) for 2 days). The protocols for all of our ADP-A2M4 and ADP-A2M10 trials have now been amended to mitigate the future risk of prolonged pancytopenia and stroke, including a reduction of the lymphodepletion regimen to a previously used regimen (fludarabine (30mg/m²/day) for 4 days and cyclophosphamide (600 mg/m²/day) for 3 days). In addition, patients with a prior history of stroke or central nervous system bleeding (or transient ischemic attack (TIA) or reversible ischemic neurologic deficit (RIND) within the prior 6 months of treatment) are now excluded. These protocol changes have been communicated to and acknowledged by the FDA. If further adverse events of a similar nature occur in patients, there is a risk that we or the FDA may impose a clinical hold until the adverse events are further evaluated or, alternatively, we or the FDA may suspend or require termination of these clinical trials.

Validation of our SPEAR T-cells requires access to human samples but there is no guarantee that such samples can be obtained or, if they can be obtained, that the terms under which they are provided will be favorable to us.

Certain of the steps involved in validating and carrying out safety testing in relation to our SPEAR T-cells require access to samples (e.g., tissues samples or cell samples) from third parties. Such samples may be obtained from universities or research institutions and will often be provided, subject to satisfaction of certain terms and conditions. There can be no guarantee that we will be able to obtain samples in sufficient quantities to enable development of and use of the full preclinical safety testing program for all SPEAR T-cells undergoing development. In addition, the terms under which such samples are available may not be acceptable to us or may restrict our use of any generated results or require us to make payments to the third parties.

SPEAR T-cells and their application are not fully scientifically understood and are still undergoing validation and investigation.

SPEAR T-cells (including the NY-ESO SPEAR T-cell) and their potential associated risks are still under investigation. There is no guarantee that our SPEAR T-cells will work in the way that we currently anticipate or that affinity modification of T-cell receptors will produce the anticipated enhancements in activity. For example, there is a potential risk that, given that the TCR chains are produced separately and then assembled within patient T-cells into full TCRs, the TCR chains from both transduced and naturally occurring T-cells could be assembled into an unintended end TCR due to mis-pairing of TCR chains, which could create unknown recognition and cross-reactivity problems within patients. Although this phenomenon has not been reported in humans, it remains a theoretical risk for our SPEAR T-cells and is still being studied and investigated. This could delay regulatory approval, if any, for the relevant SPEAR T-cells. To the extent that any mis-pairing of TCR chains is identified, either in our or our competitors’ clinical trials, additional investment may be required in order to modify relevant SPEAR T-cells and to further assess and validate the risk of such mis-pairing to patients. There is also no guarantee that following modification of the relevant SPEAR T-cell, such modified SPEAR T-cell will remain suitable for patient treatment, that it will eliminate the risk of mis-pairing of TCR chains or that regulatory approval will be obtained at all or on a timely basis in relation to such modified SPEAR T-cells. The occurrence of such events would significantly harm our business, prospects, financial condition and results of operations.

We may not be able to identify and validate additional target peptides or isolate and develop affinity-enhanced TCRs that are suitable for validation and further development.

The success of our SPEAR T-cells depends on both the identification of target peptides presented on cancer cells, which can be bound by TCRs, and isolation and affinity enhancement of TCRs, which can be used to treat patients if regulatory approval is obtained. There is an inherent risk that the number of target peptides that can be identified and/or our ability to develop and isolate suitable TCRs for affinity enhancement could be significantly lower than projected or that no additional SPEAR T-cells suitable for further development can be identified. Any failure to identify and validate further target peptides will reduce the number of potential SPEAR T-cells that we can successfully develop, which in turn will reduce the commercial opportunities available to us and increase our reliance on our existing SPEAR T-cells.

In addition, there is no guarantee that our attempts to develop further SPEAR T-cells will result in candidates for which the safety and efficacy profiles enable progression to and through preclinical testing. Failure to identify further candidates for progression into preclinical testing and clinical programs will significantly impact our commercial returns, increase our reliance on the success of our existing SPEAR T-cell programs and may significantly harm our business, prospects, financial condition and results of operations. If resources become limited or if we fail to identify suitable target peptides, TCRs or affinity-enhanced TCRs, our ability to submit INDs for

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further SPEAR T-cells may be delayed or never realized, which would have a materially adverse effect on our business. We have multiple research projects ongoing both internally and with third parties, for example Universal Cells, Inc., Noile-Immune Biotech, Inc, Alpine Immune Sciences Inc and Bellicum, Inc. The outcomes of these research projects are uncertain and such research projects may or may not generate next generation SPEAR T-cells with profiles suitable for further development or progression into clinical trials.

We may encounter substantial delays in our clinical trials or may not be able to conduct our trials on the timelines we expect.

Conduct of clinical trials is dependent on finding clinical sites prepared to carry out the relevant clinical trials, screening of patients by the clinical sites, recruitment of patients both in terms of number and type of patients and general performance of the relevant clinical site. It is difficult to predict how quickly we or our collaborators will be able to recruit suitable patients, find suitable sites, begin clinical programs and administer our SPEAR T-cells. The patient population in which any required peptide antigen is presented may be lower than expected which will increase the timescales required to find and recruit patients into the applicable clinical trial. Screening of a large number of patients is required to identify HLA and tumor antigen positive patients for most of our clinical trials. Any delay in identification of suitable patients will result in the Company incurring additional costs associated with the need to find and initiate additional clinical trial sites. It is also difficult to predict whether changes may be required to any clinical trial design as our clinical trials progress.

Our and our collaborator’s clinical trials will compete with other clinical trials that are in the same therapeutic areas as our SPEAR T-cells, which will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. In addition, GSK is also opening T-cell therapy clinical trials in synovial sarcoma and MRCLS in the U.S. and European Union which could impact the number of sites available to us to run our trials and the number and types of patients in these indications available to us. Because the number of qualified clinical investigators is limited, we will conduct some of our clinical trials at the same clinical trial sites where competing trials are ongoing, which will reduce the number of patients who are available for our clinical trials at such clinical trial sites. Moreover, because our SPEAR T-cells represent a departure from more commonly used methods for cancer treatment, potential patients and their physicians may opt to use conventional therapies, such as chemotherapy and hematopoietic cell transplantation, rather than enrollment in any of our current or future clinical trials. This may also mean we cannot recruit patients at a suitable time in their disease progression. In addition, in relation to any indication, the standard of care for patients in that indication may change or further develop meaning that clinical sites are no longer prepared to continue with any clinical trial or require amendments to agreed protocols for clinical trials. For example, the standard of care in melanoma changed during the course of our clinical trials in melanoma with the NY-ESO SPEAR T-cell and as a result the clinical trial was halted due to anticipated unavailability of patients. Such circumstances can lead to the suspension of the relevant clinical trial at a site, inability to recruit further patients at that clinical site or a requirement to amend the protocol, all of which will delay or potentially halt progression of a SPEAR T-cell through clinical trials.

Even if we are able to enroll a sufficient number of patients in our clinical trials, delays in patient enrollment may result, and have resulted in, increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect our and our collaborator’s ability to advance the development of our SPEAR T-cells.

Comparability studies related to the manufacturing of any SPEAR T-cells may be required ahead of any pivotal trial start date or ahead of use in the European Union or alternatively in connection with any changes made to our manufacturing process. The requirement to carry out such comparability studies may delay the uptake of any changed process, start of any pivotal trial or use of the relevant SPEAR T-cells in Europe. If the results from the comparability studies are not acceptable, this may further delay the start of such trials or changed process and require re-evaluation of the process used to manufacture of such SPEAR T-cells.

We may not be able to develop or obtain approval for the analytical assays and companion diagnostics required for commercialization of our SPEAR T-cells.

Administration of our SPEAR T-cells requires the use of an immuno-chemistry or other screening assay in which patients are screened for the presence of the cancer peptide targeted by our SPEAR T-cells. This assay requires the identification of suitable antibodies which can be used to identify the presence of the relevant target cancer peptide.

If safe and effective use of a biologic product depends on an in vitro diagnostic, such as a test to detect patients with HLA type A2, then the FDA generally requires approval or clearance of the diagnostic, known as a companion diagnostic, concurrently with approval of the therapeutic product. To date, the FDA has generally required in vitro companion diagnostics that are intended for use in

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selection of patients who will respond to cancer treatment to obtain a pre-market approval, or PMA, which can take up to several years, for that diagnostic approval or clearance to occur simultaneously with approval of the biologic product.

We expect that, for all SPEAR T-cells, the FDA and similar regulatory authorities outside of the United States will require the development and regulatory approval of a companion diagnostic assay as a condition to approval. We also expect that the FDA may require PMA supplemental approvals for use of that same companion diagnostic as a condition of approval of additional SPEAR T-cells. We do not have experience or capabilities in developing or commercializing these companion diagnostics and plan to rely in large part on third parties to perform these functions.

If we or our collaborators, or any third parties that we engage to assist us, are unable to successfully develop companion diagnostic assays for use with any SPEAR T-cells, or are unable to obtain regulatory approval or experience delays in either development or obtaining regulatory approval, we may be unable to identify patients with the specific profile targeted by the relevant SPEAR T-cells for enrollment in our clinical trials. Accordingly, further investment may be required to further develop or obtain the required regulatory approval for the relevant companion diagnostic assay, which would delay or substantially impact our ability or our collaborators’ ability to conduct further clinical trials or obtain regulatory approval.

Manufacturing and administering SPEAR T-cells is complex and we and our collaborators may encounter difficulties in production, particularly with respect to process development or scaling up of manufacturing capabilities. If we or our collaborators encounter such difficulties, our or our collaborators’ ability to provide supply of our SPEAR T-cells for clinical trials or for commercial purposes could be delayed or stopped.

The process of manufacturing and administering SPEAR T-cells is complex and highly regulated. The manufacture of SPEAR T-cells involves complex processes, including manufacture of a lentiviral delivery vector containing the gene for our affinity-enhanced engineered TCR. Administration of SPEAR T-cells includes harvesting white blood cells from the patient, isolating certain T-cells from the white blood cells, combining patient T-cells with our lentiviral delivery vector through a process known as transduction, expanding the transduced T-cells to obtain the desired dose, and ultimately infusing the modified T-cells back into the patient. As a result of the complexities, our manufacturing and supply costs are likely to be higher than those at more traditional manufacturing processes and the manufacturing process is less reliable and more difficult to reproduce.

Delays or failures in the manufacture of SPEAR T-cells (whether by us, any collaborator or our third party contract manufacturer) can result in a patient being unable to receive their SPEAR T-cells or a requirement to re-manufacture SPEAR T-cells which itself then causes delays in manufacture for other patients. Any delay or failure or inability to manufacture on a timely basis can adversely affect a patient’s outcomes and delay the timelines for our clinical trials. Such delays or failure or inability to manufacture can result from:

● A failure in the manufacturing process itself for example by an error in manufacturing process (whether by us or our third party contract manufacturing organization), equipment or reagent failure (including failure in the bags the Company uses to freeze), differences in patient material, failure in any step of the manufacturing process, failure to maintain a GMP environment, failure in quality systems applicable to manufacture, sterility failures, contamination during process;

● A lack of reliability or reproducibility in the manufacturing process itself leading to variability in end manufacture of SPEAR T-cells. Should the process be unreliable, the relevant regulatory agency (for example the FDA in the United States) may place a hold on a clinical trial or request further information on the process which could in turn result in delays to the clinical trials;

● Variations in patient starting material resulting in less product than expected or product which is not viable or cannot be manufactured;

● Product loss or failure due to logistical issues including issues associated with the differences between patients’ white blood cells or characteristics, interruptions to process, contamination, failure to supply patient apheresis material within required timescales (for example as a result of an import or export hold-up) or supplier error;

● Inability to obtain manufacturing slots from third party contract manufacturers or to have enough manufacturing slots (including those at our Navy Yard facility) to manufacture SPEAR T-cells for patients as and when those patients require manufacture;

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● Inability to procure starting materials or to manufacture starting materials (including at our UK vector facility), for example vector required for SPEAR T-cell manufacture;

● Inability to procure manufacturing slots from third party manufacturers (whether for SPEAR T-cell manufacture or for starting materials manufacture, including vector) at all or on a timely basis. Even where manufacturing slots are agreed in advance with third party manufacturers we cannot guarantee they will not be delayed or cancelled or that any manufacturing process will be successful;

● Loss of or close-down of any manufacturing facility used in the manufacture of SPEAR T-cells. For example, we will be manufacturing SPEAR T-cells at our Navy Yard manufacturing facility. Should there be a contamination event at the facility resulting in the close-down of that facility it may not be possible to find alternative manufacturing capability for these SPEAR T-cells within the timescales required for ongoing clinical trials;

● Loss or contamination of patient starting material, requiring the starting material to be obtained again from the patient or the manufacturing process to be re-started; and

● A requirement to modify or make changes to any manufacturing process. Such changes may additionally require comparability testing which then may reduce the amount of manufacturing slots available for manufacture of patient SPEAR T-cells. Delays in our ability to make the required modifications or perform any required comparability testing within currently anticipated timeframes or that such modifications or comparability testing, when made, will obtain regulatory approval or that the new processes or modified processes will successfully be transferred to the third party contract suppliers within currently anticipated timeframes can also impact timelines for manufacture.

The requirements for manufacture and supply of SPEAR T-cells for clinical trials in Europe have additional complexities and the manufacture and supply of SPEAR T-cells is raising issues which have not previously been regulated or observed by the relevant regulatory authorities. For example, supply of SPEAR T-cells for European clinical trials will either require manufacture of SPEAR T-cells in the United States or use of a new CMO in Europe. Where manufacture continues in the United States, there is a need to transfer patient product from clinical sites in Europe to the manufacturer in the United States, for the patient product to be converted into our end SPEAR T-cell product, for that product to be released for use in Europe and then for that SPEAR T-cell product to be transported back to the site in Europe for administration to the patient. The supply and manufacturing chain required to achieve this is very complex and could be subject to failures at any point in the supply and manufacturing chain. Any inability to set up acceptable manufacturing and supply chains to enable treatment of patients in Europe could result in a delay to those trials starting in Europe or could result in a delay in patient treatment, requirement to re-apherese a patient or a requirement to re-manufacture patient material.

As our SPEAR T-cells progress through preclinical programs and clinical trials towards approval and commercialization, it is expected that various aspects of the manufacturing and administration process will be altered in an effort to optimize processes and results. We have already identified some improvements to our manufacturing and administration processes, but these changes may not achieve the intended objectives, may not be transferable to third parties or able to be used at larger scales and could cause our SPEAR T-cells to perform differently or affect the results of planned clinical trials or other future clinical trials. In addition, such changes may require amendments to be made to regulatory applications or comparability tests to be conducted which may further delay the timeframes under which modified manufacturing processes can be used for any SPEAR T-cell. If SPEAR T-cells manufactured under the new process has a worse safety or efficacy profile than the prior investigational product or the process is less reproducible than the previous process, we may need to re-evaluate the use of that manufacturing process, which could significantly delay or even result in the halting of our clinical trials.

Developing a commercially viable process is a difficult and uncertain task, and there are risks associated with scaling to the level required for advanced clinical trials or commercialization, including, among others, increased costs, potential problems with process scale-out, process reproducibility, stability issues, lot consistency, loss of product, and timely availability of reagents or raw materials or contract manufacturing services or facilities. A failure to develop such a commercially viable process within anticipated timescales may prevent or delay progression of our T-cell therapies into pivotal clinical trials and ultimately commercialization. In addition, we may ultimately be unable to reduce the expenses associated with our SPEAR T-cells to levels that will allow us to achieve a profitable return on investment. We have entered into an alliance with Universal Cells, Inc. that, if successful, will enable us to treat patient populations with an off-the-shelf product. However, there is no guarantee that the research program with Universal Cells, Inc. will be successful, will be carried out within the timescales currently anticipated, or even if successful will result in a SPEAR T-cell that can be used to treat patients or that such SPEAR T-cell will allow us to achieve a profitable return on investment.

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We have insurance to cover certain business interruption events which is capped at £10 million in the United Kingdom and $5 million in the United States. However, because our level of insurance is capped, it may be insufficient to fully compensate us if any of these events were to occur in the future.

Our manufacturing process needs to comply with FDA regulations and foreign regulations relating to the quality and reliability of such processes. Any failure to comply with relevant regulations could result in delays in or termination of our clinical programs and suspension or withdrawal of any regulatory approvals.

In order to commercially produce our products, we will need to comply with the FDA’s cGMP requirements at both our Navy Yard facility, vector facility and at our third party contract manufacturing facilities. We may encounter difficulties in achieving quality control and quality assurance and may experience shortages in qualified personnel. We and our third party contract manufacturers are subject to inspections by the FDA and comparable agencies in other jurisdictions to confirm compliance with applicable regulatory requirements once the process has been approved. Any failure to follow cGMP or other regulatory requirements, reliably manufacture product or delay, interruption or other issues that arise in the manufacture, fill- finish, packaging, or storage of our SPEAR T-cells as a result of a failure of our facilities or the facilities or operations of third parties to comply with regulatory requirements or pass any regulatory authority inspection could significantly impair our ability to develop and commercialize our SPEAR T-cells, including leading to significant delays in the availability of our SPEAR T-cells for our clinical trials or the termination of or suspension of a clinical trial, or the delay or prevention of a filing or approval of marketing authorization applications for our SPEAR T-cells. Significant non-compliance could also result in the imposition of sanctions, including warning letters, fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approvals for our SPEAR T-cells, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions, any of which could damage our reputation and our business.

We now manufacture SPEAR T-cells at our own US manufacturing facility and plan to manufacture vector at a UK vector facility. There is no guarantee that regulatory authorities will not raise non-compliance issues or that regulatory authorities may require us to make changes to the way in which either facility is operated. This may result in a delay in our ability to manufacture SPEAR T-cells at our own facility or in our ability to supply vector material for use in the SPEAR T-cell manufacturing process. In addition, there is no guarantee that any SPEAR T-cells or vector produced in any of our facilities will be able to meet regulatory requirements or that we will be able to recruit and maintain sufficient staff to enable manufacture of products within required timescales. Any failure to meet regulatory requirements or produce SPEAR T-cells and vector according to regulatory requirements could result in delays to our clinical programs, potential side effects and even fatalities to patients and may result in withdrawal of regulatory approval for our manufacturing facility.

The outcome of clinical trials is uncertain and clinical trials may fail to demonstrate adequately the safety and efficacy of any SPEAR T-cells which would prevent or delay regulatory approval and commercialization.

There is a risk in any clinical trial (whether sponsored by us, a collaborator or investigator-initiated) that side effects from SPEAR T-cells will require a hold on, or termination of, clinical programs or further adjustments to clinical programs in order to progress any SPEAR T-cell. The SPEAR T-cells are novel and unproven and regulators will therefore require evidence that the SPEAR T-cells are safe before permitting clinical trials to commence and evidence that the SPEAR T-cells are safe and effective before granting any regulatory approval. In particular, because our SPEAR T-cells are subject to regulation as biological products, we will need to demonstrate that they are safe, pure and potent for use in each target indication. The SPEAR T-cell must demonstrate an acceptable benefit:risk profile in its intended patient population and for its intended use. The benefit:risk profile required for product licensure will vary depending on these factors and may include not only the ability to show tumor shrinkage, but also adequate duration of response, a delay in the progression of the disease and/or an improvement in survival. For example, response rates from the use of the SPEAR T-cells may not be sufficient to obtain regulatory approval unless we or our collaborators can also show an adequate duration of response.

The regulatory authorities (including the FDA) may issue a hold on our or our collaborators’ clinical trials as a result of safety information and data obtained in third party clinical trials or in relation to third party products. Any such hold will require addressing by us and our collaborators and will inevitably delay progression of the clinical trials concerned, if such clinical trials progress at all.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. Success in preclinical programs and early clinical trials does not ensure that later clinical trials will be successful. Moreover, the results of preclinical programs and early clinical trials of SPEAR T-cells may not be predictive of the results of later-stage clinical trials. To date, we have only obtained interim results from Phase 1/2 clinical trials that are uncontrolled, involve small sample sizes and are of shorter duration than might be required for regulatory approval. There may be other reasons why our

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early clinical trials are not predictive of later clinical trials. In addition, the results of trials in one set of patients or line of treatment may not be predictive of those obtained in another and protocols may need to be revised based on unexpected early results. For example, in the ADP-A2M4 pilot clinical trial, RECIST responses were observed in patients with synovial sarcoma but not in patients with certain other indications.

We expect there may be greater variability in results for SPEAR T-cells which are administered on a patient-by-patient basis than for “off-the-shelf” products, like many other biologics. There is typically an extremely high rate of attrition from the failure of any products proceeding through clinical trials. SPEAR T-cells in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical programs and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unacceptable safety issues, notwithstanding promising results in earlier trials. Most biologic candidates that begin clinical trials are never approved by regulatory authorities for commercialization. We cannot therefore guarantee that we will be successful in demonstrating the required efficacy and safety profile from the performance of any of our clinical programs.

Certain of our clinical trials include dose escalation studies in which the dose of SPEAR T-cells administered to patients is varied or initial studies in which the pre-treatment regimen may be varied, for example a regimen with and without fludarabine. The outcome of such dose escalation or initial studies will inform the clinical study going forward. However, the need to carry out dose escalation or other initial studies may result in delays in data from such clinical programs while the most suitable dose or regimen is assessed. For example, the trial design for our SPEAR T-cell trials includes dose escalation and therefore efficacy data may not be obtained from initial patients treated in such studies.

In addition, even if such trials are successfully completed, we cannot guarantee that the FDA or foreign regulatory authorities will interpret the results as we or our collaborators do. Accordingly, more trials may be required before we can submit any SPEAR T-cell for regulatory approval. To the extent that the results of the trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing authorization application, we may be required to expend significant resources, which may not be available to us, to conduct additional trials in support of potential approval of our SPEAR T-cells. We cannot predict whether any SPEAR T-cells will satisfy regulatory requirements at all or for indications in which such SPEAR T-cells are currently being evaluated as part of any clinical programs.

We have limited experience conducting clinical trials which may cause a delay in any clinical program and in the obtaining of regulatory approvals.

Although we have recruited a team that has significant experience with clinical trials, as a company we have limited experience in conducting clinical trials and no experience in conducting clinical trials through to regulatory approval. In part because of this lack of experience, we cannot be certain that planned clinical trials will begin or be completed on time, if at all. Large-scale trials would require significant additional financial and management resources, and reliance on third-party clinical investigators, contract research organizations, or CROs, or consultants. Relying on third-party clinical investigators, consultants or CROs may force us to encounter delays that are outside of our control.

SPEAR T-cells may have undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or otherwise result in significant negative consequences.

Where any SPEAR T-cell has undesirable side effects, regulatory approval for such therapeutic may be delayed or suspended, or alternatively may be restricted to particular disease indications or states that are more limited than desirable. This could result in the failure of any products reaching the market or a reduction in the patient population for which any SPEAR T-cell can be used.

As of April 5, 2019 for ADP-A2AFP and April 15, 2019 for ADP-A2M4 and ADP-A2M10:

● The adverse events considered by investigators to be possibly related to ADP-A2AFP (n=3) include pyrexia, increase in alanine aminotransferase, increase in aspartate aminotransferase, increase in alkaline phosphatase, cognitive disorder, pain in extremity, muscular weakness. Serious adverse events reported with ADP-A2AFP whether considered related to the SPEAR T-cells or not include bile duct obstruction and abdominal pain.

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● The adverse events occurring in >10% of subjects treated with ADP-A2M4 (n=23) and considered by investigators to be possibly related to ADP-A2M4 include cytokine release syndrome (CRS), fatigue, pyrexia, decreased appetite, rash, dyspnea, febrile neutropenia, headache, nausea, sinus tachycardia/tachycardia, anemia/red blood cells decreased, chills, diarrhea, hypotension, and tumor pain. Serious adverse events (SAE) reported with ADP-A2M4 in more than one subject whether considered related to the SPEAR T-cells or not, and any related SAE include CRS, pyrexia, atrial fibrillation, thrombocytopenia/platelet count decreased, and rash. There has also been one SAE report of grade 2 encephalopathy considered related to ADP-A2M4 by the investigator which resolved after 2 days of treatment.

● The adverse events occurring in >10% of subjects treated with ADP-A2M10 (n=18) and considered by investigators to be possibly related to ADP-A2M10 include pyrexia, CRS, peripheral edema, chills, febrile neutropenia, leukopenia/white blood cells decreased, lymphopenia/lymphocyte count decreased, thrombocytopenia/platelet count decreased, rash and sinus tachycardia/tachycardia. Serious adverse events (SAE) reported with ADP-A2M10 in more than one subject whether considered related to the SPEAR T-cells or not, and any related SAE include CRS.

Since April 15, 2019, there were two SAE reports of severe prolonged pancytopenia with aplastic anemia (one patient receiving ADP-A2M4 and one patient receiving ADP-A2M10) considered by the investigator to be probably related to the SPEAR T-cells and to the lymphodepleting chemotherapy. Both of these patients died from complications of aplastic anemia. In another patient, there was one report of Grade 3 neurotoxicity considered by the investigator to be probably related to the ADP-A2M4 SPEAR T-cells and, in the same patient, a later grade 5 SAE of stroke that was considered by the investigator to be possibly related to the product. These reports were communicated to the FDA and we have responded to queries from the FDA in relation to these reports. All three patients received the highest lymphodepletion regimen (fludarabine (30mg/m²/day) for 4 days and cyclophosphamide (1800 mg/m2/day) for 2 days). The protocols for all of our ADP-A2M4 and ADP-A2M10 trials have now been amended to mitigate the future risk of prolonged pancytopenia and stroke, including a reduction of the lymphodepletion regimen to a previously used regimen (fludarabine (30mg/m²/day) for 4 days and cyclophosphamide (600 mg/m²/day) for 3 days). In addition, patients with a prior history of stroke or central nervous system bleeding (or transient ischemic attack (TIA) or reversible ischemic neurologic deficit (RIND) within the prior 6 months of treatment) are now excluded. These protocol changes have been communicated to and acknowledged by the FDA. If further adverse events of a similar nature occur in patients, there is a risk that we or the FDA may impose a clinical hold until the adverse events are further evaluated or, alternatively, we or the FDA may suspend or require termination of these clinical trials.

CRS has been reported in subjects in our SPEAR T-cell trials. A subset of these reported CRS events has been Grade 3 or 4 in severity. Subjects with more severe CRS symptoms have generally responded to treatment with the anti-IL6 or anti-IL6 receptor therapy. All of our protocols now allow for use of this therapy for the treatment of cytokine release syndrome. The anti-IL6 receptor antibody (tocilizumab) has been shown to control cytokine release syndrome without abrogating the anti-tumor response.

Any unacceptable toxicities arising in ongoing clinical programs could result in suspension or termination of those clinical programs. The more SAEs that are reported the greater the risk of suspension of termination of clinical programs, even where the SAEs are unrelated to each other or to our SPEAR T-cells. Any suspension or termination may affect other SPEAR T-cells and thereby impact our ability to recognize any product revenues. Any side effects may also result in the need to perform additional trials, which will delay regulatory approval for such SPEAR T-cell, if at all, and require additional resources and financial investment to bring the relevant SPEAR T-cell to market.

In addition, the impact of SPEAR T-cells may vary from patient to patient and this may affect the number of patients who can be successfully treated with our SPEAR T-cells. Depending on the nature of the indication, certain patients may need to be excluded from treatment, which could also impact our ability to delivery therapies to some patients.

Use of SPEAR T-cells in combination with other third party products or therapies may increase or exacerbate side effects that have been seen with our SPEAR T-cells alone or may result in new side effects that have not previously been identified with our SPEAR T-cells alone. Any undesirable side effects seen in combination trials may affect our ability to continue with and obtain regulatory approval for the combination therapy, but may also impact our ability to continue with and obtain regulatory approval for SPEAR T-cell therapies alone.

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Clinical trials are expensive, time-consuming and difficult to implement.

Clinical trials, depending on the stage, can be costly as well as difficult to implement and define, particularly with technologies that are not tried and tested, such as our SPEAR T-cells. These factors can lead to a longer clinical development timeline and regulatory approval process, including a requirement to conduct further or more complex clinical trials in order to obtain regulatory approval. Regulatory authorities may disagree with the design of any clinical program, and designing an acceptable program could lead to increased timeframes for obtaining of approvals, if any. In addition, progression of clinical trials depends on the ability to recruit suitable patients to those trials and delay in recruiting will impact the timeframes of such clinical trials and as a result the timeframes for obtaining regulatory approval, if any, for the relevant SPEAR T-cells.

In particular, eligible patients must be screened for the target peptide and HLA type, which may reduce the number of patients who can be recruited for any clinical program. For example, low target peptide expression levels in the NY-ESO SPEAR T-cell and ADP-A2M10 programs affected speed of patient recruitment. The ability to administer SPEAR T-cells to patients in accordance with set protocols for the clinical trials and the results obtained depends on patient participation for the duration of the clinical trial, which many of these patients are unable to do because of their late-stage cancer and limited life expectancy.

Although the initial results in our clinical trials to date may suggest a promising tolerability profile, these results may not be indicative of results obtained in later and larger clinical trials. Long-term follow-up of patients from earlier trials may also result in detection of additional side effects or identification of other safety issues. There is no guarantee of success in any clinical trial and there is a very high attrition rate for pharmaceutical or biological compounds entering clinical trials. Any side effects or negative safety issues identified at any stage of clinical development will require additional investigation and assessment which can result in additional costs and resource requirements that could delay or potentially terminate our clinical trials.

We may face difficulty in enrolling patients in our clinical trials.

We or our collaborators may find it difficult to enroll patients in our clinical trials. Identifying and qualifying patients, including testing of patients for appropriate target peptides and HLA type, to participate in clinical trials of our SPEAR T-cells are critical to our success. The patient population in which any required peptide antigen is presented may be lower than expected which will increase the timescales required to find and recruit patients into the applicable clinical trial. The timing of clinical trials depends on the speed at which we or our collaborators can recruit patients to participate in testing of the SPEAR T-cells. If patients are unwilling to participate in trials because of negative publicity from adverse events or for other reasons, including competitive clinical trials for similar patient populations, negative results seen in competitive third party clinical trials utilizing similar cell therapy products, the timeline for recruiting patients, conducting trials and obtaining regulatory approval of potential products may be delayed or prevented. These delays could result in increased costs, delays in advancing product development, delays in testing the effectiveness of our technology or termination of the clinical trials altogether. We or our collaborators may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired characteristics to achieve sufficient diversity in a given trial in order to complete our clinical trials in a timely manner. Successful execution of patient treatment and assessment of outcomes is affected by several factors including:

● eligibility criteria for the trial in question, in particular, presenting the correct HLA type and expression levels of the target antigen;

● ability to detect required expression levels of target antigens in any patient population;

● ability to detect required target antigens in any patient population and to set detection levels at an appropriate level to facilitate patient recruitment;

● severity of the disease under investigation and the type of patient being recruited into the clinical trial;

● design of the trial protocol;

● size of the patient population;

● perceived risks and benefits of the SPEAR T-cell under trial;

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● novelty of the SPEAR T-cell and acceptance by oncologists;

● proximity and availability of clinical trial sites for prospective patients;

● availability of competing therapies and clinical trials and ability to obtain patient insurance coverage;

● efforts to facilitate timely enrollment in clinical trials and to provide manufactured product on a timely basis;

● patient referral practices of physicians;

● changes in the underlying standard of care applicable or treatments available for the relevant indication for which a patient is being treated; and

● ability to monitor patients adequately during and after treatment, for example where patients decide not to attend follow-up appointments.

If we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business.

Our SPEAR T-cells for which we intend to seek approval as biologic products may face competition sooner than anticipated.

The enactment of the Biologics Price Competition and Innovation Act of 2009, or BPCIA, created an abbreviated pathway for the approval of biosimilar and interchangeable biological products. The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an existing reference product. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original branded product or “reference” is approved under a BLA. On March 6, 2015, the FDA approved the first biosimilar product under the BPCIA. However, the law is complex and is still being interpreted and implemented by the FDA and as a result, its ultimate impact, implementation and meaning are subject to uncertainty. While it is uncertain when such processes intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for our biological products.

There is a risk that the FDA will not consider our SPEAR T-cells to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Additionally, this period of regulatory exclusivity does not apply to companies pursuing regulatory approval via their own traditional BLA, rather than via the abbreviated pathway. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

Foreign countries also have abbreviated regulatory pathways for biosimilars and hence even where the FDA does not approve a biosimilar biologic, a biosimilar could be approved using an abbreviated regulatory pathway in other markets where our SPEAR T-cells are approved and marketed.

Risks Related to Government Regulation

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 SPEAR T-cells.

We have not previously submitted a BLA to the FDA, or similar approval submissions to comparable foreign authorities. A BLA must include extensive preclinical and clinical data and supporting information to establish the SPEAR T-cell’s safety and effectiveness for each desired indication. The BLA must also include significant information regarding the chemistry, manufacturing and controls for the product. We expect the novel nature of our SPEAR T-cells to create additional challenges in obtaining regulatory approval, if at all. For example, the FDA has limited experience with commercial development of T-cell therapies for cancer. Accordingly, the regulatory approval pathway for our SPEAR T-cells may be uncertain, complex, expensive and lengthy, and approval may not be obtained. For

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example, in relation to the NY-ESO SPEAR T-cell in synovial sarcoma, the FDA requested certain additional information be made available as part of our application to conduct a pivotal study in synovial sarcoma, including a requirement to assess comparability between the manufacturing process used for the initial synovial sarcoma trials and the commercial-ready manufacturing process intended to be used in pivotal trials. The FDA also recommended that we file a SPA in relation to the design of the pivotal study. Such requirements and requests for additional information can delay the start of any pivotal or other trial or result in clinical holds being imposed on ongoing trials and there is no guarantee that the FDA will not continue to require further or additional information ahead of approving any trial whether from our collaborators for the NY-ESO SPEAR T-cells or from us for other SPEAR T-cells.

We or our collaborators could also encounter delays if physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our SPEAR T-cells in lieu of prescribing existing treatments that have established safety and efficacy profiles. Further, a clinical trial may be suspended or terminated by us or a collaborator, IRBs for the institutions in which such trials are being conducted, the Data Monitoring Committee for such trial, or by the FDA or other regulatory authorities due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a SPEAR T-cell, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. If we or our collaborators experience termination of, or delays in the completion of, any clinical trial of our SPEAR T-cells, the commercial prospects for our SPEAR T-cells will be harmed, and our ability to generate product revenue will be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow our product development and approval process and jeopardize our ability to commence product sales and generate revenue.

Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may ultimately lead to the denial of regulatory approval of our SPEAR T-cells.

The FDA regulatory process can be difficult to predict, in particular whether for example accelerated approval processes are available or further unanticipated clinical trials are required will depend on the data obtained in our ongoing clinical trials.

The regulatory approval process and the amount of time it takes us to obtain regulatory approvals for our SPEAR T-cells will depend on the data that are obtained in our ongoing clinical trials and in one or more future registration or pivotal clinical trials. We may attempt to seek approval on a per indication basis for our SPEAR T-cells on the basis of a single pivotal trial or on the basis of data from a Phase 2 trial. While the FDA requires in most cases two adequate and well-controlled pivotal clinical trials to demonstrate the efficacy of a product candidate, a single trial with other confirmatory evidence may be sufficient in rare instances where the trial is a large multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible. Depending on the data we obtain, the FDA or other regulatory authorities may require additional clinical trials to be carried out or further patients to be treated prior to the granting of any regulatory approval for marketing of our SPEAR T-cells. It is difficult for us to predict with such a novel technology exactly what will be required by the regulatory authorities in order to take our SPEAR T-cells to market or the timeframes under which the relevant regulatory approvals can be obtained.

We obtained breakthrough therapy status for the NY-ESO SPEAR T-cell for the treatment of certain patients with inoperable or metastatic synovial sarcoma who have received prior chemotherapy. Following exercise of the option over the NY-ESO SPEAR T-cell program by GSK, it is not known whether such breakthrough therapy status will continue or whether GSK will apply for and obtain any accelerated approval for the NY-ESO SPEAR T-cell. In addition, depending on the data that is obtained by us in our current and future clinical trials for our wholly owned SPEAR T-cells, we may seek breakthrough therapy or fast track designation or accelerated approval from the FDA for our SPEAR T-cells and equivalent accelerated approval procedures in other countries. However, given the novel nature of our SPEAR T-cells, it is difficult for us to predict or guarantee whether the FDA or other regulatory authorities will approve such requests or what further clinical or other data may be required to support an application for such accelerated approval procedures.

The process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the SPEAR T-cells involved. For example, clinical trials may be required in paediatric populations before any marketing approval can be obtained, which can be time consuming and costly. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. The FDA and foreign regulatory authorities also have substantial discretion in the drug and biologics approval process. The number and types of preclinical programs and clinical trials that will

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be required for regulatory approval varies depending on the SPEAR T-cell, the disease or condition that the SPEAR T-cell is designed to address, and the regulations applicable to any particular SPEAR T-cell. Approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a SPEAR T-cell’s clinical development and may vary among jurisdictions, and there may be varying interpretations of data obtained from preclinical programs or clinical trials, either of which may cause delays or limitations in the approval or the decision not to approve an application. In addition, approval of our SPEAR T-cells could be delayed or refused for many reasons, including the following:

● the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our or our collaborators’ clinical trials;

● we or our collaborators may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that our SPEAR T-cells have a beneficial risk: benefit profile for any of their proposed indications;

● the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;

● the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical programs or clinical trials;

● the data collected from clinical trials of SPEAR T-cells may not be sufficient to the satisfaction of the FDA or comparable foreign regulatory authorities to support the submission of a BLA or other comparable submission in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere;

● our manufacturing processes or facilities or those of the third-party manufacturers we use may not be adequate to support approval of our SPEAR T-cells; and

● the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

It is possible that no SPEAR T-cells will ever obtain the appropriate regulatory approvals necessary to commercialize the TCR therapeutics. Any delay in obtaining, or failure to obtain, required approvals would materially adversely affect our ability to generate revenue from the particular SPEAR T-cell, which would result in significant harm to our business.

Obtaining and maintaining regulatory approval of our SPEAR T-cells in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our SPEAR T-cells in other jurisdictions.

Obtaining and maintaining regulatory approval of our SPEAR T-cells in one jurisdiction does not guarantee that we or our collaborators will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if the FDA grants marketing approval of a SPEAR T-cell, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the SPEAR T-cell in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical programs or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a SPEAR T-cell must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we or our collaborators intend to charge for SPEAR T-cells is also subject to approval.

We or our collaborators may also submit marketing authorization applications in other countries. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of SPEAR T-cells with which we must comply prior to marketing in those jurisdictions. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our SPEAR T-cells in certain countries. If we fail to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our SPEAR T-cells will be harmed.

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We may seek breakthrough therapy or fast track designations and may pursue accelerated approval for some or all of our current SPEAR T-cells, but we may be unable to obtain such designations or, where obtained we may be unable to maintain breakthrough therapy designation or, obtain or maintain the benefits associated with such designations.

We obtained breakthrough therapy status in the United States and PRIME status in Europe for the NY-ESO SPEAR T-cell for the treatment of certain patients with inoperable or metastatic synovial sarcoma who have received prior chemotherapy. We may seek breakthrough therapy or fast track designations for our other SPEAR T-cells in the United States or equivalent regulations elsewhere in the world.

In 2012, the FDA established a breakthrough therapy designation which is intended to expedite the development and review of products that treat serious or life-threatening diseases when “preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.” The designation of a SPEAR T-cell as a breakthrough therapy provides potential benefits that include more frequent meetings with the FDA to discuss the development plan for the SPEAR T-cell and ensure collection of appropriate data needed to support approval; more frequent written correspondence from the FDA about things such as the design of the proposed clinical trials and use of biomarkers; intensive guidance on an efficient drug development program, beginning as early as Phase 1; organizational commitment involving senior managers; and eligibility for rolling review and priority review.

Breakthrough therapy designation does not change the standards for product approval. There can be no assurance that we will receive breakthrough therapy designation for any SPEAR T-cell or any particular indication. Additionally, other treatments from competing companies may obtain the designations and impact our ability to develop and commercialize our SPEAR T-cells, which may adversely impact our business, financial condition or results of operation.

We may also seek fast track designation. If a drug or biologic candidate is intended for the treatment of a serious or life-threatening condition or disease and the drug demonstrates the potential to address unmet medical needs for the condition, the sponsor may apply for fast track designation. Under the fast track program, the sponsor of a new drug or biologic candidate may request that the FDA designate the candidate for a specific indication as a fast track drug or biologic concurrent with, or after, the submission of the IND for the candidate. The FDA must determine if the drug or biologic candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request. Even if we do apply for and receive fast track designation, we may not experience a faster development, review or approval process compared to conventional FDA procedures. The FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development program.

We may also seek accelerated approval under the FDA’s fast track and accelerated approval programs, the FDA may approve a drug or biologic for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. For drugs granted accelerated approval, post-marketing confirmatory trials have been required to describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit. These confirmatory trials must be completed with due diligence. Moreover, the FDA may withdraw approval of our SPEAR T-cell or indication approved under the accelerated approval pathway if, for example:

● the trial or trials required to verify the predicted clinical benefit of our SPEAR T-cell fail to verify such benefit or do not demonstrate sufficient clinical benefit to justify the risks associated with the drug;

● other evidence demonstrates that our SPEAR T-cell is not shown to be safe or effective under the conditions of use;

● we fail to conduct any required post approval trial of our SPEAR T-cell with due diligence; or

● we disseminate false or misleading promotional materials relating to the relevant SPEAR T-cell.

In Europe, the EMA has implemented the so-called "PRIME" (PRIority MEdicines) status in order support the development and accelerate the approval of complex innovative medicinal products addressing an unmet medical need. The PRIME status enables early dialogue with the relevant EMA scientific committees and, possibly, some payers; and thus reinforces the EMA's scientific and regulatory support. It also opens accelerated assessment of the marketing authorization application (150 days instead of 210 days). The PRIME status,

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which is decided by the EMA, is reserved to medicines that may benefit from accelerated assessment, i.e. medicines of major interest from a public health perspective, in particular from a therapeutic innovation perspective.

In 2016, the EMA granted PRIME status to NY-ESO SPEAR T-Cell for the treatment of certain patients with metastatic synovial sarcoma who have received prior chemotherapy.

Even if we receive regulatory approval of our SPEAR T-cells, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense as well as significant penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our SPEAR T-cells.

Any regulatory approvals that we receive for our SPEAR T-cells will require surveillance to monitor the safety and efficacy of the SPEAR T-cell. The FDA may also require a risk evaluation and mitigation strategy in order to approve our SPEAR T-cells, which could entail requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority approves our SPEAR T-cells, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our SPEAR T-cells will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration and listing, as well as continued compliance with cGMPs and cGCPs for any clinical trials that we conduct post-approval. We and our contract manufacturers will be subject to periodic unannounced inspections by the FDA to monitor and ensure compliance with cGMPs. We must also comply with requirements concerning advertising and promotion for any SPEAR T-cells for which we obtain marketing approval. Promotional communications with respect to prescription drugs, including biologics, are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved labeling. Thus, we will not be able to promote any SPEAR T-cells we develop for indications or uses for which they are not approved. Later discovery of previously unknown problems with our SPEAR T-cells, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

● restrictions on our ability to conduct clinical trials, including full or partial clinical holds on ongoing or planned trials;

● restrictions on such products’ manufacturing processes;

● restrictions on the marketing of a product;

● restrictions on product distribution;

● requirements to conduct post-marketing clinical trials;

● untitled or warning letters;

● withdrawal of the products from the market;

● refusal to approve pending applications or supplements to approved applications that we submit;

● recall of products;

● fines, restitution or disgorgement of profits or revenue;

● suspension or withdrawal of regulatory approvals;

● refusal to permit the import or export of our products;

● product seizure;

● injunctions;

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● imposition of civil penalties; or

● criminal prosecution.

The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our SPEAR T-cells. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability.

In addition, if following any pivotal clinical trial we were able to obtain accelerated approval of any of our SPEAR T-cell, the FDA will require us to conduct a confirmatory trial or trials to verify the predicted clinical benefit and additional safety studies. The results from the confirmatory trial or trials may not support the clinical benefit, which would result in the approval being withdrawn.

We may seek a conditional marketing authorization in Europe for some or all of our current SPEAR T-cells, but we may not be able to obtain or maintain such authorization.

As part of its marketing authorization process, the EMA may grant marketing authorizations for certain categories of medicinal products on the basis of less complete data than is normally required, when doing so may meet unmet medical needs of patients and serve the interest of public health. In such cases, it is possible for the Committee for Medicinal Products for Human Use, or CHMP, to recommend the granting of a marketing authorization, subject to certain specific obligations to be reviewed annually, which is referred to as a conditional marketing authorization. This may apply to medicinal products for human use that fall under the centralized procedure (EMA's scientific assessment and European Commission's approval), including those that aim at the treatment, the prevention, or the medical diagnosis of seriously debilitating diseases or life-threatening diseases and those designated as orphan medicinal products.

A conditional marketing authorization may be granted when the CHMP finds that, although comprehensive clinical data referring to the safety and efficacy of the medicinal product have not been supplied, all the following requirements are met:

● the risk: benefit balance of the medicinal product is positive;

● it is likely that the applicant will be in a position to provide the comprehensive clinical data;

● unmet medical needs will be fulfilled; and

● the benefit to public health of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data is still required.

The granting of a conditional marketing authorization is restricted to situations in which only the clinical part of the application is not yet fully complete. Incomplete preclinical or quality data may only be accepted if duly justified and only in the case of a product intended to be used in emergency situations in response to public-health threats. Conditional marketing authorizations are valid for one year, on a renewable basis. The holder will be required to complete ongoing trials or to conduct new trials with a view to confirming that the benefit-risk balance is positive. In addition, specific obligations may be imposed in relation to the collection of pharmacovigilance data.

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Granting a conditional marketing authorization allows medicines to reach patients with unmet medical needs earlier than might otherwise be the case and will ensure that additional data on a product are generated, submitted, assessed and acted upon. Although we may seek a conditional marketing authorization for one or more of our SPEAR T-cells, the CHMP may ultimately not agree that the requirements for such conditional marketing authorization have been satisfied. This would delay the commercialization of our SPEAR T-cells as we would have to wait for a complete data package before submitting the marketing authorization application.

We or our collaborators may not be able to obtain or maintain orphan drug exclusivity for our SPEAR T-cells.

Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs or biologics for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug or biologic intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States or, if they affect more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a drug product available in the United States for these types of diseases or conditions will be recovered from sales of the product. If the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by that agency. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process, but it can lead to financial incentives, such as opportunities for grant funding toward clinical trial costs, tax advantages in-lieu of R&D tax credits and user-fee waivers. If a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug marketing exclusivity for a period of seven years. Orphan drug marketing exclusivity generally prevents the FDA from approving another application, including a full BLA, to market the same drug for the same indication for seven years, except in limited circumstances, including if the FDA concludes that the later drug is clinically superior to the approved drug.

The European criteria for orphan designation are different from the U.S. criteria. On the one hand, the prevalence criterion is five in 10,000 individuals in the European Economic Area (EU plus Iceland, Liechtenstein and Norway). On another hand, no therapy is available for the rare condition or, if such a therapy exists, the future orphan product must bring a significant benefit over that therapy. The significant benefit may be any benefit to patients, including improved safety, improved efficacy, better quality of life or better patient compliance to treatment, provided that it is significant. It must be demonstrated by means of a comparison with the other available therapies, including the medicinal products already approved for the same rare condition. The Committee for Orphan Medicinal Products, or COMP, examines if the orphan criteria are met, and the orphan status is granted by a decision of the European Commission. The meeting of the criteria for orphan designation is examined again by the COMP at the time of approval of the medicinal product. If the criteria for orphan designation are no longer met at that time, the European Commission withdraws the orphan status.

Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the EMA or the FDA from approving another marketing authorization application for the same drug for that time period. The applicable period is seven years in the United States and 10 years in Europe. The European exclusivity period can be reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition. In Europe, the orphan exclusivity may be lost vis-à-vis another drug in cases the manufacturer is unable to assure sufficient quantity of the drug to meet patient needs or if that other product is proved to be clinically superior to the approved orphan product. A drug is clinically superior if it is safer, more effective or makes a major contribution to patient care.

There can be no assurance that any SPEAR T-cell will be eligible for orphan drug designation in the United States or in other jurisdictions or that it will obtain orphan drug marketing exclusivity upon approval or that we or GSK will not lose orphan drug designation for ADP-A2M4 or the NY-ESO SPEAR T-cell. Inability to obtain orphan drug designation for a specific SPEAR T-cell or loss of such designation for ADP-A2M4 or the NY-ESO SPEAR T-cell in the future would prevent any ability to take advantage of the financial benefits associated with orphan drug designation and would preclude us from obtaining marketing exclusivity upon approval, if any. Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition. The extent of market exclusivity which is obtained may also be affected if the indication for any relevant registration or pivotal trial is narrower than the orphan designation granted. Even after an orphan drug is approved, the FDA can subsequently approve another drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.

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Any failure by us to comply with existing regulations could harm our reputation and operating results.

The production of SPEAR T-cells is highly regulated and subject to constant inspection. The regulatory environment may also change from time to time. Any failure to comply with regulatory requirements, whether in the United States or in other countries in which our SPEAR T-cells are supplied, may result in investigation by regulatory authorities, suspension of regulatory authorizations and, as a result, suspension of clinical programs or ability to supply any of our SPEAR T-cells and potentially significant fines or other penalties being imposed in relation to any breach. Any failure may also harm our reputation and impact our ability going forward to obtain regulatory approvals for other SPEAR T-cells or require us to undertake additional organizational changes to minimize the risk of further breach. A failure to comply may apply to any part of our business, for example to the processes used for manufacture of our SPEAR T-cells (including the reliability of the process) or to the processes used for treatment of patients (including tracking of patient product and supply of patient specific product).

Because administration of SPEAR T-cells is patient-specific, the process requires careful handling of patient-specific products and fail-safe tracking, namely the need to ensure that the tracking process is without error and that patient samples are tracked from patient removal, through manufacturing and re-administration to the same patient. While such mechanisms are in place, should the tracking process fail, whether at our own facility, a third party facility or at any point in the manufacturing and supply process, a patient could receive another patient’s T-cells resulting in significant toxicity and potentially patient fatality. We will need to invest in enhanced systems, such as bar coding, to further ensure fail safe tracking. There is always a risk of a failure in any such system. Inability to develop or adopt an acceptable fail-safe tracking methodology and handling regime may delay or prevent us from receiving regulatory approval and/or result in significant toxicity and potentially patient fatality if a patient receives another patient’s T-cells. This risk may be increased where SPEAR T-cells are used in clinical programs that we do not control or sponsor and, should an error be made in the administration of our SPEAR T-cells in such clinical programs, this could affect the steps required in our own clinical programs and manufacturing process requiring the addition of further tracking mechanisms to ensure fail-safe tracking. The tracking systems required to further ensure safe patient administration may also require increased administration to satisfy other regulatory requirements, for example data protection requirements in Europe. The need to ensure tracking systems are adequate and to comply with these additional regulatory requirements may result in delay to the start of trials or the need to obtain additional regulatory licenses or consents prior to starting such trials.

Our research and development activities utilize hazardous, radioactive and biological materials. Should such materials cause injury or be used other than in accordance with applicable laws and regulations, we may be liable for damages.

We use hazardous and biological reagents and materials in our research and development at our U.K. site. We also use radioactive reagents and materials in our research and development in the United Kingdom. We have obtained the appropriate certification or ensured that such certification has been obtained as required for the use of these reagents but our use is subject to compliance with applicable laws and there is a risk that should any third party or employee suffer injury or damage from radioactive, hazardous or biological reagents that we may incur liability or obligations to compensate such third parties or employees. We have employer’s liability insurance capped at £10.0 million per occurrence and public liability insurance capped at £3.0 million per occurrence; however, these amounts may be insufficient to compensate us if these events actually occur in the future.

We are subject to the U.K. Bribery Act, the U.S. Foreign Corrupt Practices Act and other anti-corruption laws, as well as export control laws, customs laws, sanctions laws and other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, results of operations and financial condition.

Our operations are subject to anti-corruption laws, including the U.K. Bribery Act 2010, or Bribery Act, the U.S. Foreign Corrupt Practices Act, or FCPA, and other anti-corruption laws that apply in countries where we do business. The Bribery Act, the FCPA and these other laws generally prohibit us and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage. Under the Bribery Act, we may also be liable for failing to prevent a person associated with us from committing a bribery offense. We and our commercial partners may operate in a number of jurisdictions that pose a high risk of potential Bribery Act or FCPA violations, and we participate in collaborations and relationships with third parties whose actions, if non-compliant, could potentially subject us to liability under the Bribery Act, FCPA or local anti-corruption laws. In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted.

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We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of the United Kingdom and the United States, and authorities in the European Union, including applicable export control regulations, economic sanctions on countries and persons, anti-money laundering laws, customs requirements and currency exchange regulations, collectively referred to as the Trade Control laws.

However, there is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the Bribery Act, the FCPA or other legal requirements, including Trade Control laws. If we are not in compliance with the Bribery Act, the FCPA and other anti-corruption laws or Trade Control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity. Likewise, any investigation of any potential violations of the Bribery Act, the FCPA, other anti-corruption laws or Trade Control laws by United Kingdom, United States or other authorities could also have an adverse impact on our reputation, our business, results of operations and financial condition.

If we are found in violation of federal or state “fraud and abuse” or other health care laws, we may be required to pay a penalty and/or be suspended from participation in federal or state health care programs, which may adversely affect our business, financial condition and results of operations.

If we obtain marketing approval for our products in the United States, if at all, we will be subject to various federal and state health care “fraud and abuse” and other health care laws. Healthcare providers, physicians and third-party payors play a primary role in the recommendation and use of pharmaceutical products that are granted marketing approval. Accordingly, arrangements with third-party payors, existing or potential customers and referral sources are subject to broadly applicable fraud and abuse and other healthcare laws and regulations, and these laws and regulations may constrain the business or financial arrangements and relationships through which manufacturers market, sell and distribute the products for which they obtain marketing approval.

Such restrictions under applicable federal and state healthcare laws and regulations include the following:

● the Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or kind, in exchange for, or to induce, either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers, on the one hand, and prescribers, purchasers and formulary managers on the other. Cases have been brought under false claims laws alleging that off-label promotion of pharmaceutical products or the provision of kickbacks has resulted in the submission of false claims to governmental health care programs. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively, the Healthcare Reform Act, amended the intent requirement of the Anti-Kickback Statute. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. Under federal government regulations, some arrangements, known as safe harbors, are deemed not to violate the Anti-Kickback Statute and analogous state law requirements;

● the False Claims Act, or FCA, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent. Violations under the Anti-Kickback Statute and certain marketing practices, including off-label promotion, also may implicate the FCA. In addition, private individuals have the ability to bring actions on behalf of the government under the FCA and under the false claims laws of several states;

● federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

● the Physician Payment Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members. The CMS publishes the reported data in a searchable form on an annual basis;

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● The Health Insurance Portability and Accountability Act of 1996 (HIPAA) imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; and

● state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to: items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance issued by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. California and a few other states have passed laws that require pharmaceutical companies to comply with the April 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers of America Code on Interactions with Healthcare Professionals. In addition, several states impose other marketing restrictions or require pharmaceutical companies to make marketing or price disclosures to the state. There are ambiguities as to what is required to comply with these state requirements and if we fail to comply with an applicable state law requirement we could be subject to penalties.

Neither the government nor the courts have provided definitive guidance on the application of fraud and abuse laws to our business. Law enforcement authorities are increasingly focused on enforcing these laws. Although we seek to structure our business arrangements in compliance with all applicable requirements, these laws are broadly written, and it is often difficult to determine precisely how the law will be applied in specific circumstances. Accordingly, it is possible that, once we begin marketing our product(s) some of our practices may be challenged under these laws. While we intend to structure our business arrangements to comply with these laws, it is possible that the government could allege violations of, or convict us of violating, these laws. Violation of any of the laws described above or any other governmental laws and regulations may result in penalties, including civil and criminal penalties, damages, fines, the curtailment or restructuring of operations, the exclusion from participation in federal and state healthcare programs and imprisonment. Furthermore, efforts to ensure that business activities and business arrangements comply with applicable healthcare laws and regulations can be costly for manufacturers of branded prescription products. Additionally, if we are found in violation of one or more of these laws our business, results of operations and financial condition may be adversely affected.

Our current cash projections include reliance on the ability to obtain certain tax credits and the operation of certain tax regimes within the United Kingdom. Should these cease to be available, this could impact our ongoing requirement for investment and the timeframes within which additional investment is required.

As a company that carries out extensive research and development activities, we benefit from the U.K. research and development tax credit regime for small and medium sized companies, whereby our principal research subsidiary company, Adaptimmune Limited, is able to surrender the trading losses that arise from its research and development activities for a payable tax credit of up to approximately 33.4% of eligible research and development expenditures. Qualifying expenditures largely comprise employment costs for research staff, consumables and certain internal overhead costs incurred as part of research projects. Subcontracted research expenditures are eligible for a cash rebate of up to approximately 21.7%. The majority of our pipeline research, clinical trials management and manufacturing development activities, all of which are being carried out by Adaptimmune Limited, are eligible for inclusion within these tax credit cash rebate claims.

We may not be able to continue to claim research and development tax credits (R&D tax credits) in the future as we increase our personnel and expand our business because we may no longer qualify as an SME (small or medium-sized enterprise). In order to qualify as an SME for R&D tax credits, we must continue to be a company with fewer than 500 employees and also have either an annual turnover not exceeding €100 million or a balance sheet not exceeding €86 million.

We may also benefit in the future from the United Kingdom’s “patent box” regime, which would allow certain profits attributable to revenues from patented products to be taxed at a rate of 10%. As we have many different patents covering our products, future upfront

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fees, milestone fees, product revenues, and royalties could be taxed at this favorably low tax rate. When taken in combination with the enhanced relief available on our research and development expenditures, we expect a long-term lower rate of corporation tax to apply to us. If, however, there are unexpected adverse changes to the United Kingdom research and development tax credit regime or the “patent box” regime, or we are unable to qualify for such advantageous tax legislation, our business, results of operations and financial condition may be adversely affected.

Risks Related to the Commercialization of Our SPEAR T-cells

The market opportunities for SPEAR T-cells may be limited to those patients who have failed prior treatments.

Initial approval of new cancer therapies may be limited to what is referred to as third-line use. Third-line treatment is the third type of treatment following initial, or first-line, treatment and second-line treatment, which is given when first-line treatment does not work or ceases working. However, cancer therapies may be used from the point at which cancer is detected in its early stages (first line) onward. Whenever the first-line therapy fails or the process is unsuccessful, second-line therapy may be administered, such as additional rounds of chemotherapy, radiation and antibody drugs or a combination of these treatments. If second-line therapies fail, patients are generally given the opportunity to receive third-line therapies, which tend to be more novel therapies. Our and our collaborators current clinical trials generally require that patients have received chemotherapy prior to enrollment. Depending upon the outcome of current trials, we or our collaborators may conduct future clinical trials using SPEAR T-cells for first-line therapy, but there can be no guarantee that clinical trials will be approved or that if approved such trials will lead to regulatory approval. If SPEAR T-cells only receive third-line or second-line approval, the patient population to which we or our collaborators can supply our SPEAR T-cells will be significantly reduced, which may limit commercial opportunities.

In addition, our patient population may be derived from those who have previously failed checkpoint therapy, which may result in tumor resistance mechanisms which also impart resistance to SPEAR T-cell therapies.

Our estimates of the patient population that may be treated by SPEAR T-cells is based on published information. This information may not be accurate in relation to SPEAR T-cells and our estimates of potential patient populations could therefore be much higher than those that are actually available or possible for commercialization.

In addition, these estimates are based on assumptions about the number of eligible patients which have the peptide and HLA type targeted by the SPEAR T-cells. Different patient populations will present different peptides according to their specific HLA type. HLA types vary across the patient population and, due to this variability, any therapy will initially only be suitable for treatment of patients expressing the particular HLA type presenting the relevant peptide. Current SPEAR T-cells have been developed for patients who are HLA A2 which will reduce the size of the patient population that can be treated unless we develop and we or our collaborators receive regulatory approval for SPEAR T-cells approved for additional HLA peptides.

We currently have no marketing and sales organization and have no experience in marketing products. If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell our SPEAR T-cells, we may not be able to generate product revenue.

As an organization, we have never marketed or supplied commercial pharmaceutical or biologic products or therapies. We do not currently have a sales force and will need to grow and develop the sales function and associated support network if we are to supply SPEAR T-cells on a commercial basis. As our SPEAR T-cells proceed through clinical programs, we intend to develop an in-house marketing organization and sales force, which will require significant capital expenditures, management resources, and time. We will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train, and retain marketing and sales personnel. This process may result in additional delays in bringing our TCR product candidate to market or in certain cases require us to enter into alliances with third parties in order to do so. However, there can be no assurance that we will be able to establish or maintain such collaborative arrangements, or even if we are able to do so, that they will result in effective sales forces. Any revenue we receive will depend upon the efforts of such third parties, which may not be successful. We may have little or no control over the marketing and sales efforts of such third parties, and our revenue from SPEAR T-cell sales may be lower than if we had commercialized our SPEAR T-cells ourselves. We also face significant competition in our search for third parties to assist us with the sales and marketing efforts of our SPEAR T-cells. Such competition may also result in delay or inability to supply SPEAR T-cells to particular countries or territories in the world which in turn will restrict the revenue that can be obtained from any SPEAR T-cell. Any inability on our part to develop in-house sales and commercial distribution capabilities or to establish and maintain relationships with third-party collaborators that can successfully

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commercialize any SPEAR T-cell in the United States or elsewhere will have a materially adverse effect on our business and results of operations.

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our SPEAR T-cells.

We face an inherent risk of product liability as a result of the clinical testing of our SPEAR T-cells and our ongoing manufacture of SPEAR T-cells and will face an even greater risk upon any commercialization. For example, we may be sued if any of our SPEAR T-cells causes or is perceived to cause injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our SPEAR T-cell. Even a successful defense would require significant financial and management resources and, regardless of the merits or eventual outcome, liability claims may result in:

● decreased demand for our SPEAR T-cells;

● injury to our reputation;

● withdrawal of clinical trial participants;

● initiation of investigations by regulators;

● costs to defend the related litigation;

● a diversion of management’s time and our resources;

● substantial monetary awards to trial participants or patients;

● product recalls, withdrawals or labeling, marketing or promotional restrictions;

● loss of revenue;

● exhaustion of any available insurance and our capital resources;

● the inability to commercialize SPEAR T-cells; and

● a decline in our share price.

Our inability to obtain sufficient product liability insurance at an acceptable price to protect against potential product liability claims could also prevent or inhibit the commercialization of our SPEAR T-cells. We currently hold £15.0 million in clinical trial insurance coverage in the aggregate per year, with a per trial limit of £5.0 million. We also hold products and services liability insurance capped at £3.0 million in the aggregate and public liability insurance capped at £3.0 million per occurrence. These levels may not be adequate to cover all liabilities that we may incur. We may also need to increase our insurance coverage as we expand the scope of our clinical trials and commercialize any of our product SPEAR T-cells. In addition, insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

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Even if we or our collaborators obtain regulatory approval of our SPEAR T-cells, they may not gain market acceptance among physicians, patients, hospitals, cancer treatment centers and others in the medical community.

The use of engineered T-cells as a potential cancer treatment is a recent development and may not become broadly accepted by physicians, patients, hospitals, cancer treatment centers and others in the medical community. Additional factors will influence whether SPEAR T-cells are accepted in the market, including:

● the clinical indications for which SPEAR T-cells are approved;

● physicians, hospitals, cancer treatment centers and patients considering the SPEAR T-cells as a safe and effective treatment;

● the potential and perceived advantages of SPEAR T-cells over alternative treatments;

● the prevalence and severity of any side effects;

● product labeling or prescribing information requirements of the FDA or other regulatory authorities;

● limitations or warnings contained in the labeling approved by the FDA;

● the timing of market introduction of SPEAR T-cells as well as competitive products;

● the cost of treatment in relation to alternative treatments;

● the availability of coverage, adequate reimbursement and pricing by third-party payors and government authorities;

● the willingness of patients to pay for SPEAR T-cells on an out-of-pocket basis in the absence of coverage by third-party payors and government authorities;

● relative convenience and ease of administration as compared to alternative treatments and competitive therapies; and

● the effectiveness of our sales and marketing efforts.

In addition, although we are not utilizing embryonic stem cells or replication competent vectors in our manufacturing process, adverse publicity due to the ethical and social controversies surrounding the therapeutic use of such technologies, and reported side effects from any clinical trials using these technologies or the failure of such trials to demonstrate that these therapies are safe and effective may limit market acceptance of SPEAR T-cells. If SPEAR T-cells are approved but fail to achieve market acceptance among physicians, patients, hospitals, cancer treatment centers or others in the medical community, we or our collaborators will not be able to generate significant revenue.

Even if SPEAR T-cells achieve market acceptance, we or our collaborators may not be able to maintain that market acceptance over time if new products or technologies are introduced that are more favorably received than the SPEAR T-cells, are more cost effective or render the SPEAR T-cells obsolete.

Coverage and reimbursement may be limited or unavailable in certain market segments for SPEAR T-cells, which could make it difficult for us or our collaborators to sell SPEAR T-cells profitably.

Successful sales of SPEAR T-cells, if approved, depend on the availability of coverage and adequate reimbursement from third-party payors. In addition, because SPEAR T-cells represent new approaches to the treatment of cancer, we cannot accurately estimate the potential revenue from SPEAR T-cells.

Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Obtaining coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance.

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Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drugs and treatments they will cover and the amount of reimbursement. Reimbursement by a third-party payor may depend upon a number of factors, including, but not limited to, the third-party payor’s determination that use of a product is:

● a covered benefit under its health plan;

● safe, effective and medically necessary;

● appropriate for the specific patient;

● cost-effective; and

● neither experimental nor investigational.

Obtaining coverage and reimbursement approval of a SPEAR T-cell from a government or other third-party payor is a time-consuming and costly process which could require us to provide to the payor supporting scientific, clinical and cost-effectiveness data for the use of our products. Even if we obtain coverage for a given SPEAR T-cell, the resulting reimbursement payment rates might not be adequate for us to achieve or sustain profitability or may require co-payments that patients find unacceptably high. Patients are unlikely to use SPEAR T-cells unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of the SPEAR T-cells.

In the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our SPEAR T-cells to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.

We intend to seek approval to market our SPEAR T-cells in both the United States and in selected jurisdictions. If we obtain approval in one or more foreign jurisdictions for our SPEAR T-cells, we will be subject to rules and regulations in those jurisdictions.

In some foreign countries, particularly those in the European Union, the pricing of biologics is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after obtaining marketing approval of a SPEAR T-cell. In addition, market acceptance and sales of SPEAR T-cells will depend significantly on the availability of coverage and adequate reimbursement from third-party payors for the SPEAR T-cells and may be affected by existing and future health care reform measures.

Third-party payors, whether domestic or foreign, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our products profitably. In particular, the recently enacted U.S. Healthcare Reform Act and its implementing regulations, among other things, revised the methodology by which rebates owed by manufacturers to the state and federal government for covered outpatient drugs and certain biologics, including our SPEAR T-cells, under the Medicaid Drug Rebate Program are calculated, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjected manufacturers to new annual fees and taxes for certain branded prescription drugs, and provided incentives to programs that increase the federal government’s comparative effectiveness research.

Other legislative changes have been proposed and adopted in the United States since the Healthcare Reform Act was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.

This includes aggregate reductions of Medicare payments to providers up to two percent per fiscal year, which went into effect on April 1, 2013 and will remain in effect until 2024, unless additional congressional action is taken. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, or the ATRA, which, among other things, reduced Medicare payments to

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several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. We cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect:

● the demand for SPEAR T-cells, if we or our collaborators obtain regulatory approval;

● our or our collaborators’ ability to set a price that is fair for our SPEAR T-cells;

● our or our collaborators’ ability to generate revenue and achieve or maintain profitability;

● the level of taxes that we are required to pay; and

● the availability of capital.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect our future profitability.

Risks Related to Our Reliance Upon Third Parties

We rely on GSK in relation to the performance of programs under the GSK Collaboration and License Agreement and associated payments.

Commercialization of the NY-ESO SPEAR T-cell therapy and payments made by GSK in relation to the NY-ESO SPEAR T-cell therapy depend on GSK’s progression of the NY-ESO program through development. GSK has nominated a third target program under the GSK Collaboration and License Agreement that will evaluate and develop new SPEAR T-cells. GSK is currently entitled to nominate a fourth target program and, upon satisfying other conditions, may have the right to nominate a fifth program under the GSK Collaboration and License Agreement, in each case excluding our ongoing wholly-owned development programs. We have no control over whether GSK will elect to progress additional targets under the collaboration arrangements and therefore trigger additional payments from GSK under the GSK Collaboration and License Agreement. In addition, GSK has a right to terminate the GSK Collaboration and License Agreement or any specific license under the GSK Collaboration and License Agreement for any reason on provision of sixty days’ notice. Termination will impact our ability to receive further payments under the GSK Collaboration and License Agreement.

The current development plans or any future development plan agreed upon between GSK and us, including those relating to the third target program, may be unsuccessful or fail to result in candidate therapies that are feasible for further development or commercialization. For example, the second target program was terminated by GSK and us due to low presentation of peptide in certain indications. In addition, milestone payments may not be paid or may be varied where any development plan is amended or where any development plan is terminated prior to completion for lack of feasibility or lack of identification of any suitable candidates that meet the required criteria for progression to the next stage of development.

There is no guarantee that any payments due on commercialization of products under the GSK Collaboration and License Agreement will be due or payable by GSK at any time or on the timeframes currently expected. In particular, GSK has now exercised its option to the NY-ESO SPEAR T-cell program and commercialization of the NY-ESO SPEAR T-cell is now the responsibility of GSK. The timing for commercialization of the NY-ESO SPEAR T-cell and the route to commercialization will be determined by GSK and we cannot guarantee that GSK will commercialize the NY-ESO SPEAR T-cell within expected timelines or at all. Any substantial delay in the progression of the NY-ESO SPEAR T-cell into pivotal or other clinical trials by GSK will impact the timing of payments received by us in relation to the NY-ESO SPEAR T-cell program.

In addition, the development plans agreed upon with GSK and any future development plans will be subject to change as a result of risks inherent with the development of any pharmaceutical, biological or gene therapy product. Changes may be agreed to expand or

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change the scope of the collaboration or the responsibilities of the parties under the collaboration. Changes to the development plans or collaboration agreement may impact the timing and extent of milestone payments made by GSK to us, the nature of the relationship with GSK or the scope of the collaboration with GSK.

GSK has the ability to influence or control certain decisions relating to the development of therapies covered by the GSK Collaboration and License Agreement. This ability could result in delays to the clinical programs covered by the collaboration or changes to the scope of those clinical programs, including the disease indications relevant to such clinical programs. Under the GSK Collaboration and License Agreement, we are also prohibited from independently developing or commercializing therapies directed at the targets subject to outstanding options granted to GSK. In addition, GSK may have competing internal or commercial interests including its independent collaboration with Immunocore any of which could impact our collaboration or the ability of GSK to take any clinical programs forward to the next stage following the exercise of their option. Given GSK has taken over the responsibility for the NY-ESO SPEAR T-cell program, decisions taken by GSK (with limited or no input from us) may impact on the development of our SPEAR T-cells outside of the collaboration program or may impact on the regulatory requirements applicable to such SPEAR T-cells.

GSK and Novartis have publicly announced that Novartis has opt-in rights over GSK’s current and future oncology research and development pipeline. As part of that announced transaction, GSK has sold the rights to GSK’s marketed oncology portfolio, related R&D activities and the AKT Inhibitors currently in development. GSK has also agreed to grant Novartis preferred partner rights for co-development and commercialization of GSK’s current and future oncology pipeline products for a period of 12.5 years from completion of the applicable transactions between GSK and Novartis. The agreement grants Novartis a right of first negotiation over the co-development or commercialization of any GSK “Relevant Development Product” in a major market. A “Relevant Development Product” as defined in the public announcement is a product in development for the treatment, palliation, diagnosis or prevention of all cancers, including immunology, epigenetics and treatment of solid or hematologic tumors (excluding in all cases, vaccines). The right of first negotiation also lasts for 12.5 years from completion of the applicable transactions between GSK and Novartis and according to the public announcement applies where GSK decides to seek a third party partner for co-development or commercialization of, or to whom to divest rights to, a Relevant Development Product in a global or major market or where GSK proposes to seek a marketing authorization for a Relevant Development Product in a major market.

The existence of these opt-in rights could impact GSK’s decision whether to exercise any future option under our collaboration or the ability of GSK to take any clinical programs forward to the next stage, following the exercise of its option.

The relationship with GSK could also result in disputes arising between us and GSK which could result in costly arbitration or litigation and could impact the ongoing clinical programs or progress of such clinical programs. All intellectual property rights arising from the performance of the collaboration and license agreement will be jointly owned apart from intellectual property rights that we solely create. Both GSK and we have freedom to use jointly owned intellectual property rights.

We rely heavily on ThermoFisher and the technology that we license from them.

The ability to use the ThermoFisher Dynabeads® CD3/CD28 technology to isolate, activate and expand T-cells is important to our ongoing ability to offer SPEAR T-cells. In December 2012, we entered into a series of license and sub-license agreements with Life Technologies Corporation (now part of ThermoFisher). These agreements provide us with a field-based exclusive license under certain intellectual property rights owned or controlled by ThermoFisher in relation to the methods of use of the ThermoFisher Dynabeads® CD3/CD28 technology to isolate, activate and expand T-cells and enable transfection of the T-cells with any TCR genes to manufacture our TCR products and use and sell those TCR products to treat cancer, infectious disease and/or autoimmune disease. We also have a field-based exclusive sub-license under certain other patents which cover the method of use of the Dynabeads® CD3/CD28 and are controlled by ThermoFisher under a head-license from the University of Michigan, the United States Navy and the Dana-Farber Cancer Institute.

In June 2016, we entered into a supply agreement with ThermoFisher for the supply of the Dynabeads® CD3/CD28 technology. The supply agreement runs until December 31, 2025. Under the supply agreement we are required to purchase our requirements for CD3/CD28 magnetic bead product exclusively from ThermoFisher for a period of five years and there are also minimum purchasing obligations. Despite having negotiated this supply agreement there is no certainty that ThermoFisher will be able to continue to supply the Dynabeads® CD3/CD28 technology at the times or at the levels we require or that facilities used by ThermoFisher for the manufacture and supply of the Dynabeads® CD3/CD28 technology will continue to be available to us which could impact the timing of supply of SPEAR T-cells or ability to manufacture SPEAR T-cells.

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ThermoFisher has the right to terminate the above described agreements for material breach or insolvency. On termination of the license agreements, the supply agreement will also automatically terminate. If ThermoFisher terminates the exclusive license, sub-license and supply agreements or otherwise refuses or is unable to supply the Dynabeads® product, we will have to seek an alternative source of the beads or develop an alternative process methodology to enable supply of our SPEAR T-cells.

If the supply agreements with ThermoFisher is terminated or ThermoFisher is unable to supply the Dynabeads® CD3/CD28 technology for any reason, an alternative source may be difficult to find or more expensive, which may delay timeframes either for clinical programs or ultimately commercial supply of our SPEAR T-cells. A requirement to identify an alternative source may also require a change in our regulatory application or additional regulatory testing to ensure that any alternative source is comparable and does not present any additional risk which could also result in our program experiencing delays and increased costs.

The sub-license agreement, in addition to having the same relevant exclusivity scope and field-based restrictions and many of the terms being equivalent to those set out in the main license agreement with ThermoFisher, also includes additional requirements that any manufacture of engineered TCR products for sale in the United States must occur in the United States and reserves rights for the United States government to use the technology in accordance with 35 U.S.C. § 200 et seq. and for the University of Michigan and Dana-Farber Cancer Institute to use the technology for non-commercial research purposes.

We rely on third parties to manufacture and supply our SPEAR T-cells and to develop next generation SPEAR T-cells, and we may have to rely on third parties to produce and process our SPEAR T-cells, if approved.

We currently rely partly on outside contract manufacturing organizations (“CMOs”) and other third parties to provide services related to the manufacture, supply, and processing of our SPEAR T-cells. If one or more of these third parties become unable or unwilling to continue to manufacture our engineered SPEAR T-cells (including any raw or intermediate material required for the manufacture of our end engineered SPEAR T-cell therapy) or provide their services in the future, we may be forced to find an alternative third-party service provider, which we may not be able to do on commercially reasonable terms, if at all. Failure to identify a suitable alternative service provider could impact our business, financial condition or results of operations.

We rely on a limited number of third-party manufacturers and third party service providers for clinical trial product supplies and services at each stage of the manufacturing process, and as a result we are exposed to the following risks:

● We may be unable to contract with manufacturers on commercially acceptable terms or at all because the number of potential manufacturers is limited and the FDA, EMA and other comparable foreign regulators must approve any replacement manufacturer, which would require new testing and compliance inspections. In addition, a new manufacturer would have to be educated in, and develop substantially equivalent processes for, production of our SPEAR T-cells after receipt of any applicable regulatory approval.

● We may not be able to obtain lentiviral delivery manufacturing slots with third party contract manufacturers within the timescales we require for supply of lentiviral delivery vector or to obtain agreed dates for such manufacturing slots sufficiently in advance of the requirement for supply.

● Our third-party manufacturers might be unable to timely formulate and manufacture our SPEAR T-cells or produce the quantity and quality required to meet our clinical trial and commercial needs, if any.

● With any new manufacturing process or new CMO we will need to transfer the manufacturing process or new process to that CMO. Any delay in the development and transfer of these new processes to the third-party contract supplier or inability of the third-party contract supplier to replicate or carry out the transferred process at the appropriate level and quality or in a reproducible fashion will result in delays in our ability to progress clinical programs, further develop our SPEAR T-cells and obtain marketing approval for our SPEAR T-cells.

● Introduction of new raw material or intermediate material manufacturers, such as CMOs for vectors, may require comparability testing to be carried out to show that the manufacturing process and end material is comparable to the currently used manufacturing process and/or material. Any inability to show comparability or delay in comparability testing may result in delays to the supply of the affected materials and as a result delays to clinical trials.

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● Contract manufacturers may not be able to execute our manufacturing procedures appropriately, or we may be unable to transfer our manufacturing processes to contract manufacturers successfully or without additional time and cost. Even where CMOs fail to manufacture our SPEAR T-cell products successfully, it may not be possible to achieve re-manufacture quickly or without expending resources or additional costs.

● Our future contract manufacturers may not perform as agreed, may be acquired by competitors or may not remain in the contract manufacturing business for the time required to supply our clinical trials or to successfully produce, store and distribute our SPEAR T-cells. In addition, contract manufacturers may not manufacture within agreed timescales for manufacture and/or may cancel pre-agreed manufacturing slots, which would result in delays in manufacturing and could require us to find replacement manufacturers which may not be available to us on favorable terms or at all.

● Manufacturers are subject to ongoing periodic unannounced inspection by the FDA, EMA, and other comparable foreign regulators and corresponding state agencies to ensure strict compliance with cGMP and other government regulations and corresponding foreign standards. Although we do not have day-to-day control over third-party manufacturers’ compliance with these regulations and standards, we are responsible for ensuring compliance with such regulations and standards.

● We may not own, or may have to share, the intellectual property rights to any improvements made by our third-party manufacturers in the manufacturing process for our SPEAR T-cells. Our third party manufacturers may use processes which infringe or potentially infringe third party intellectual property rights which may result in inability to use such processes going forward, an increase in the pricing of such processes or a need to change a different process.

● Our third party manufacturers may fail to perform testing and analysis services accurately, in a manner that can be interpreted or on a timely basis. This could delay or prevent release of our SPEAR T-cell product and as a result delay clinical trials and patient treatment.

● Our third-party manufacturers could breach or terminate their agreement with us.

● Our third-party manufacturers may cease to be able to do business with us (whether for insolvency or other reasons, including takeover, merger or acquisition) at a time when we are unable to source such manufacture elsewhere or at our own manufacturing facility.

● Increased costs, unexpected delays, equipment failures, lack of reproducibility, labor shortages, natural disasters, power failures and numerous other factors which are outside of our control or which may be imposed by our CMOs.

Certain raw materials or precursor materials used in the manufacture and supply of our SPEAR T-cells may come from sole source or limited source suppliers. For example, there are currently a limited number of third party manufacturers within the United States that can supply us with our lentiviral delivery vector and ThermoFisher is currently the only supplier of the Dynabeads® CD3/CD28 technology. Should such suppliers be unable to supply or manufacture such raw materials or precursor materials either at all or within required timescales we may be unable to supply our SPEAR T-cells or such supply may be significantly delayed. Inability to obtain such raw materials or precursor materials may also necessitate changes in the manufacturing process used for supply of our SPEAR T-cells. Such changes to the manufacturing process may need to be developed internally or by a third party and may also require additional regulatory approvals to be obtained before they can be used for the manufacture and supply of our SPEAR T-cells for clinical trials.

In addition, we may focus manufacture of our SPEAR T-cells at a single manufacturing site, namely our Navy Yard facility. Should the Navy Yard facility be unable to manufacture our SPEAR T-cells for any reason, including natural disaster, contamination or for any regulatory reason, we may be unable to supply SPEAR T-cells for our clinical trials unless we can procure manufacture from a third party manufacturer. There is no assurance we will be able to procure manufacture from a third party manufacturer or that such manufacture will be provided within the timescales we require or at an acceptable price. Any change in manufacturer used to produce our SPEAR T-cells requires notification to regulatory authorities which can be time consuming. There is no assurance regulatory authorities will agree that any change in manufacturer is acceptable or that the processes used at such manufacturer are comparable to the processes previously used and additional evidence of comparability may be required.

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Our contract manufacturers are also subject to the same risks we face in developing our own manufacturing capabilities, as described above. Each of these risks could delay our clinical trials, the approval, if any, of our SPEAR T-cells by the FDA or the commercialization of our SPEAR T-cells or result in higher costs or deprive us of potential product revenue. We have insurance to cover certain costs and expenses related to business interruption, which is capped at £3.0 million in the aggregate.

In addition, we will rely on third parties to perform release tests on our SPEAR T-cells prior to delivery to patients. If these tests are not appropriately performed and test data is not reliable, patients could be put at risk of serious harm. For example, if the HLA testing is not accurate then a patient without the correct HLA-type could be provided with incompatible SPEAR T-cells and as a result such patient could suffer severe side effects or fatality.

We also rely on certain third parties to assist us in the future development of SPEAR T-cells including next generation SPEAR T-cells and manufacture and supply of SPEAR T-cells for patient administration. For example, we have a research collaboration with Universal Cells, Inc. in which we are looking to develop affinity engineered donor T-cells that are universally applicable to all patients. As with any research and development program there is no guarantee of the success of such program or that such program will be carried out by us or Universal Cells, Inc. within the timescales we currently anticipate.

We have a shared development history with Immunocore, and as a result jointly-own certain intellectual property rights which are required for our ongoing business.

Our TCR technology was originally developed by Avidex, which was subsequently acquired by Medigene in 2006. We were formed as a new, separate company and licensed our TCR technology for T-cell therapy from Medigene in July 2008. Immunocore was subsequently formed as a new separate company and acquired the TCR technology for soluble TCRs from Medigene later in 2008 to develop soluble TCR proteins. Certain of our shareholders also hold shares in Immunocore.

Since January 1, 2018, the Company no longer considers Immunocore to be a related party due to several factors including the mutual termination of the target collaboration agreement that terminated effective March 1, 2017, our lack of common directors and the decrease in Immunocore’s share ownership in 2017 to less than 5% of our ordinary shares. However, under the terms of that target collaboration agreement, we will continue to share a database of identified targets with Immunocore which resulted from the joint target identification efforts under that agreement.

In addition, many of the patents relating to our underlying core technology in TCR engineering, are co-owned by us and Immunocore pursuant to a separate assignment and license agreement. Under this agreement, both Immunocore and Adaptimmune utilize the jointly owned patents and know-how, with Adaptimmune focused on the treatment of patients with engineered SPEAR T-cells and Immunocore focused on the treatment of patients with soluble TCRs. Under the agreement, each of Immunocore and Adaptimmune grants the other an exclusive, royalty-free, irrevocable license, with the right to sub-license, to certain jointly owned patents and know-how. However, there is the potential that Immunocore could develop a soluble TCR product targeting the same cancer target that one of our SPEAR T-cells is targeting, and therefore compete directly with us.

We rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval of or commercialize our SPEAR T-cells.

We depend upon independent investigators and collaborators, such as universities, medical institutions, CROs and strategic partners to conduct our preclinical programs and sponsored clinical trials under agreements with us. We expect to have to negotiate budgets and contracts with CROs and trial sites (either directly or through a third party consultant), which may result in delays to our development timelines and increased costs. We rely heavily on these third parties over the course of our clinical trials, and we do not have day-to-day control of their activities. Nevertheless, we are responsible for ensuring that each of our trials is conducted in accordance with applicable protocols and legal, regulatory and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities. We and these third parties are required to comply with cGCPs, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for SPEAR T-cells in clinical development. Regulatory authorities enforce these cGCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of these third parties fail to comply with applicable cGCP regulations and guidelines, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing authorization applications. We cannot provide assurances that, upon inspection, such regulatory authorities will determine that any of our clinical trials comply with the cGCP regulations. In addition, our clinical trials must be conducted with biologic product produced under cGMPs and

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will require a large number of subjects. Our failure or any failure by these third parties to comply with these regulations or to support BLA for approval of any of our SPEAR T-cells for the treatment of a sufficient number of patients may require us to repeat clinical trials, which would delay the regulatory approval process. Moreover, our business may be implicated if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.

Any third parties conducting our clinical trials are not and will not be our employees and, except for remedies available to us under our agreements with such third parties which could be limited, we cannot control whether or not they devote sufficient time and resources to our ongoing clinical trials and preclinical programs. These third parties may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other drug or biologic development activities, which could affect their performance on our behalf. If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to complete development of, obtain regulatory approval of, or successfully commercialize our SPEAR T-cells. As a result, our financial results and the commercial prospects for our SPEAR T-cells would be harmed, our costs could increase and our ability to generate revenue could be delayed.

Switching or adding third parties to conduct our clinical trials involves substantial cost and requires extensive management time and focus. In addition, there is a natural transition period when a new third party commences work. As a result, delays may occur, which can materially impact our ability to meet our timelines for bringing our SPEAR T-cells to market, if at all.

We rely on third parties to obtain reagents and raw materials.

The manufacture of our SPEAR T-cells requires access to a number of reagents and other raw materials from third parties. Such third parties may refuse to supply such reagents or other raw materials or alternatively refuse to supply on commercially reasonable terms. There may also be capacity issues at such third-party suppliers that impact our ability to increase production of our SPEAR T-cells.

Some of the materials used in the manufacture and processing of our SPEAR T-cells may only be supplied by one or a few vendors, which means that, should those vendors be unable to supply, for whatever reason, our ability to manufacture SPEAR T-cells and progress SPEAR T-cells through clinical trials could be severely impacted and result in additional delays. Such failure to supply could also impact other supply relationships with other third parties and potentially result in additional payments being made or required in relation to such delays. In addition, where any raw material or precursor material (including, for example, lentiviral delivery vector, medium or other essential raw material) is currently supplied by one or a few vendors, replacing such raw material or precursor or finding alternative vendors may not be possible or may significantly impact on the timescales for manufacture and supply of our SPEAR T-cells. Even where alternative materials or precursors or alternative vendors are identified, such alternative materials, precursors or vendors will need to be properly assessed, validated and qualified and additional regulatory approvals may also need to be obtained all of which could result in significant delays to the supply of our SPEAR T-cells or an inability to supply SPEAR T-cells within anticipated timescales, if at all.

We rely on third parties for equipment and components necessary to manufacture our SPEAR T-cells.

As we further develop our manufacturing process, the manufacture of our SPEAR T-cells may require access to specialized or customized equipment and components from third parties. Such third parties may refuse to supply such equipment and components or alternatively refuse to supply on commercially reasonable terms. There may also be capacity issues at such third-party suppliers that impact our ability to manufacture our SPEAR T-cells.

Some of the equipment and components used in the manufacture and processing of our SPEAR T-cells may only be supplied by one or a few vendors, which means that, should those vendors be unable to supply, for whatever reason, our ability to manufacture SPEAR T-cells and progress SPEAR T-cells through clinical trials could be severely impacted and result in additional delays. While other equipment and components may be available to perform the same or similar operational steps, such alternative equipment and components may be less efficient, more costly, and may result in production delays that may detrimentally impact timescales for the manufacture and supply of our SPEAR T-cells. Even where alternative equipment and components are available, such alternatives will need to be properly assessed, validated and qualified and additional regulatory approvals may also need to be obtained all of which could result in significant delays to the supply of our SPEAR T-cells or an inability to supply SPEAR T-cells within anticipated timescales, if at all.

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We have formed and may form or seek collaboration agreements or enter into additional licensing arrangements with third parties and either fail to realize the benefits of such relationships or incur substantial additional costs in performing such relationships.

We have formed and may form or seek further third party alliances, create joint ventures or collaborations or enter into additional licensing arrangements with third parties that we believe will complement or augment our development, manufacturing and commercialization efforts with respect to our SPEAR T-cell therapies and any future products. For any of these third party alliances we are reliant on performance of a third party to achieve the end aims of the alliances. For example, we have a collaboration agreement with Universal Cells Inc. (“Universal”) under which Universal is required to perform certain collaboration activities. Any delays in the performance of these activities or any requirement to amend or modify those activities will result in delay to the overall program. Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business. There is no guarantee that such third party relationships will result in any positive improvements to our SPEAR T-cells or associated manufacturing processes or that performance of such third party relationships will occur in accordance with expected timelines. Such third party alliances may result in us incurring additional costs or requiring additional resources over and above the costs and resources committed to those alliances. In addition, we face significant competition in seeking appropriate partners and the negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish third party arrangements for our SPEAR T-cells which may impact our ability to further develop our SPEAR T-cells or delay the further development of our SPEAR T-cells.

Risks Related to Our Intellectual Property

SPEAR T-cells could be at risk of biosimilar development.

Expedited routes or abbreviated procedures for obtaining regulatory approval for products aiming to target the same cancer peptide as any SPEAR T-cells we have developed may be available to third parties, which we cannot control or prevent. For example, third parties could develop affinity-enhanced TCRs binding to the same targets and regulatory authorities may accept that they are interchangeable with our corresponding SPEAR T-cells and, as a result, grant regulatory approval for such competing products. Entry into the market of such competing products may impact the price of SPEAR T-cells and the extent of commercialization possible in relation to such SPEAR T-cells.

We may be forced to litigate to enforce or defend our intellectual property rights, and/or the intellectual property rights of our licensors.

We may be forced to litigate to enforce or defend our intellectual property rights against infringement and unauthorized use by competitors, and to protect our trade secrets. In so doing, we may place our intellectual property at risk of being invalidated, held unenforceable, narrowed in scope or otherwise limited. Further, an adverse result in any litigation or defense proceedings may increase the risk of non-issuance of pending applications. In addition, if any licensor fails to enforce or defend its intellectual property rights, this may adversely affect our ability to develop and commercialize our SPEAR T-cells and to prevent competitors from making, using, and selling competing products. Any such litigation could be very costly and could distract our management from focusing on operating our business. The existence and/or outcome of any such litigation could harm our business, results of operations and financial condition.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential and proprietary information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our ADSs.

We may not be able to protect our proprietary technology in the marketplace or the cost of doing so may be prohibitive or excessive.

Our success will depend, in part, on our ability to obtain patents, protect our trade secrets and operate without infringing on the proprietary rights of others. We rely upon a combination of patents, trade secret protection (i.e., know-how), and confidentiality agreements to protect the intellectual property of our SPEAR T-cells. The scope and validity of patents in the pharmaceutical field involve complex legal and scientific questions and can be uncertain. Where appropriate, we seek patent protection for certain aspects of our SPEAR T-cells and technology. Filing, prosecuting and defending patents throughout the world would be prohibitively expensive, so our policy is to patent technology in jurisdictions with significant commercial opportunities. However, patent protection may not be available for some of the SPEAR T-cells or technology we are developing. If we must spend significant time and money protecting or enforcing our

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patents, designing around patents held by others or licensing, potentially for large fees, patents or other proprietary rights held by others, our business results of operations and financial condition may be harmed. We may not develop additional proprietary products that are patentable.

Many companies have encountered significant problems in protecting and enforcing intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property rights, particularly those relating to pharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

In addition, patents have a limited lifespan. In most countries, including the United States, the standard expiration of a patent is 20 years from the effective filing date. Various extensions of patent term may be available in particular countries; however, in all circumstances the life of a patent, and the protection it affords, has a limited term. If we encounter delays in obtaining regulatory approvals, the period of time during which we could market a product under patent protection could be reduced. We expect to seek extensions of patent terms where these are available in any countries where we are prosecuting patents. Such possible extensions include those permitted under the Drug Price Competition and Patent Term Restoration Act of 1984 in the United States, which permits a patent term extension of up to five years to cover an FDA-approved product. The actual length of the extension will depend on the amount of patent term lost while the product was in clinical trials. However, the applicable authorities, including the FDA in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and non-clinical data, and then may be able to launch their product earlier than might otherwise be the case.

Any loss of, or failure to obtain, patent protection could have a material adverse impact on our business. Enforcement of patents may also be cost prohibitive and we may be unable to prevent competitors from entering the market with products that are similar to or the same as our SPEAR T-cells. This is particularly the case where third parties are using T-cell therapies falling within the scope of our patents in clinical trials. It may not be possible to enforce our patents against such third parties during the course of those clinical trials.

Further given that our technology relates to the field of genetic engineering, political pressure or ethical decisions may result in a change to the scope of patent claims for which we may be eligible. Different patent offices throughout the world may adopt different procedures and guidelines in relation to what is and is not patentable and as a result different protection could be obtained in different areas of the world which may impact our ability to maximize commercialization of our technology.

We may also incur increased expenses and cost in relation to the filing and prosecution of patent applications where third parties choose to challenge the scope or oppose the grant of any patent application or, following grant, seek to limit or invalidate any patent. Any increased prosecution or defense required in relation to such patents and patent applications, whether relating to this third party observation or any other third party challenge or opposition, entails increased cost and resource commitment to the business and may result in patents and patent applications being abandoned, invalidated or narrowed in scope.

We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

We rely on trade secrets to protect our proprietary know-how and technological advances, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. We rely, in part, on confidentiality agreements with our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to protect our trade secrets and other proprietary information. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover our trade secrets and proprietary information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights. Failure to obtain or maintain trade secret protection, or failure to adequately protect our intellectual property, could enable competitors to develop generic products or use our proprietary information to develop other products that compete with our SPEAR T-cells or have additional, material adverse effects upon our business, results of operations and financial condition.

In addition, we provide samples to third parties under material transfer agreements, including to research institutions or other organizations that we cannot control. There is a risk that such third parties could disclose details of those samples or carry out further research in relation to provided samples which results in intellectual property rights that block our future freedom to operate, and to which

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we may not be able to obtain a license on commercially acceptable terms or at all. In addition, provision of samples and our confidential information to such parties could facilitate or assist such parties in development of competing products.

If third parties claim that our activities or products infringe upon their intellectual property, our operations could be adversely affected.

There is a substantial amount of litigation, both within and outside the United States, involving patents and other intellectual property rights in the pharmaceutical industry. We may, from time to time, be notified of claims that we or our third party suppliers are infringing upon patents, trademarks, copyrights, or other intellectual property rights owned by third parties, and we cannot provide assurances that other companies will not, in the future, pursue such infringement claims against us or any third-party proprietary technologies we have licensed. If we or our third party suppliers were found to infringe upon a patent or other intellectual property right, or if we failed to obtain or renew a license under a patent or other intellectual property right from a third party, or if a third party that we were licensing technologies from was found to infringe upon a patent or other intellectual property rights of another third party, we may be required to pay damages, including triple damages if the infringement is found to be willful, suspend the manufacture of certain SPEAR T-cells or reengineer or rebrand our SPEAR T-cells, if feasible, or we may be unable to enter certain new product markets. Any such claims could also be expensive and time- consuming to defend and divert management’s attention and resources. Our competitive position could suffer as a result. In addition, if we have declined to enter into a valid non-disclosure or assignment agreement for any reason, we may not own an invention or intellectual property rights and may not be adequately protected. Although we have reviewed certain third-party patents and patent filings that we believe may be relevant to our SPEAR T-cells, we have not conducted a full freedom-to-operate search or analysis for such SPEAR T-cells, and we may not be aware of patents or pending or future patent applications that, if issued, would block us from commercializing our SPEAR T-cells. Thus, we cannot guarantee that we can successfully commercialize SPEAR T-cells in a way that will not infringe any third party’s intellectual property.

Licenses may be required from third parties in relation to any SPEAR T-cells developed or commercialized by us.

We may identify third-party intellectual property rights that are required to enable the further development, commercialization, manufacture or development of our SPEAR T-cells. Licenses to such intellectual property rights may or may not be available on commercial terms that are acceptable to us. As a result we may incur additional license fees for such intellectual property rights, or the cost and expenses to identify an alternative route for commercialization, that does not require the relevant third-party intellectual property rights, or the cost and diversion of resources required to challenge any such third party intellectual property rights.

We may also require licenses under third-party patents covering certain peptide sequences or the use of those peptides. Such licenses will require payment of sums by us and we cannot guarantee that the terms of such licenses will be available on commercially acceptable terms or at all, which could limit the peptides which can be used by us and the efficacy of the final affinity- enhanced TCRs that we are able to offer.

As we change, develop and modify our manufacturing processes we may identify further third-party patents covering those developments and modifications. We cannot guarantee that we will be able to obtain licenses under these third-party patents or other intellectual property rights and as a result we may not be able to undertake the developments of modifications that we wish, either at all or in the timescales we require. This could ultimately impact our ability to deliver commercial T-cell products at the cost required.

The fees associated with such third-party licenses, including any associated up-front fees, milestone payments, and/or on-going royalty payments may be significant and may not be aligned with the value obtained by us from such licenses. For example, we may not be successful in commercializing any next-generation SPEAR T-cell products which incorporate licensed technology to offset any up-front or milestone payments we may have incurred in the development of such next-generation SPEAR T-cell products.

Further or other third-party patents and patent applications may be identified from time to time that require prospective action by us to prevent the grant of broad claims. Such prospective action requires time and expense and also impacts on the resources generally available to us.

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Where we license certain technology from a third party, the prosecution, maintenance and defense of the patent rights licensed from such third party may be controlled by the third party which may impact the scope of patent protection which will be obtained or enforced.

Where we license patent rights or technology from a third-party, control of such third party patent rights may vest in the licensor, particularly where the license is non-exclusive or field restricted. This may mean that we are not able to control or affect the scope of the claims of any relevant third-party patent or have control over any enforcement of such a patent. Where a licensor brings an enforcement action, this could negatively impact our business or result in additional restrictions being imposed on the license we have and the scope of such license, or result in invalidation or limitation of the scope of the licensed patent. In addition, should we wish to enforce the relevant patent rights against a third person, we may be reliant on consent from the relevant licensor or the cooperation of the licensor. The licensor may refuse to bring such action and leave us unable to restrict competitor entry into the market.

Issued patents protecting our SPEAR T-cells could be found invalid or unenforceable if challenged in court or at the USPTO.

If we or one of our collaborators initiate legal proceedings against a third party to enforce a patent protecting one of our SPEAR T-cells, the defendant could counterclaim that the patent protecting our SPEAR T-cell, as applicable, is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace, and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post grant review, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in revocation or amendment to our patents in such a way that they no longer cover our SPEAR T-cells. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we, our patent counsel and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection for our SPEAR T-cells. Such a loss of patent protection could have a material adverse impact our business, financial condition and results of operations.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. For example, in Assoc. for Molecular Pathology v. Myriad Genetics, Inc., the U.S. Supreme Court held that certain claims to DNA molecules are not patentable. While we do not believe that any of the patents owned or licensed by us will be found invalid based on this decision, we cannot predict how future decisions by the courts, the U.S. Congress or the USPTO may impact the value of our patents.

Our ability to protect our intellectual property rights in territories outside of the United States may vary and thus affect our ability to obtain revenue from our SPEAR T-cells.

Filing, prosecuting and defending patents on our SPEAR T-cells in all countries throughout the world would be prohibitively expensive, and the extent of intellectual property rights may be less extensive than those which can be obtained in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

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Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biopharmaceutical products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Risks Related to Employee Matters and Managing Growth

We depend upon our key personnel and our ability to attract and retain employees.

We are heavily dependent on the ongoing employment and involvement of certain key employees in particular, Adrian Rawcliffe, our Chief Executive Officer; Dr. Helen Tayton-Martin, our Chief Business Officer; William Bertrand, our Chief Operating Officer; and John Lunger, our Chief Patient Supply Officer. Michael Garone is serving as our Interim Chief Financial Officer. We do not hold key-man insurance for our senior managers.

Our business is dependent on our ability to recruit experienced and suitably trained employees or consultants, and to retain such employees on a long-term basis. In particular, we are recruiting for a Chief Medical Officer and a permanent Chief Financial Officer. There is no guarantee that we will be able to secure candidates for either role on suitable timelines or at all and this may compromise our ability to progress our development and research programs in accordance with currently anticipated timelines.

To induce employees to remain at our company, in addition to salary and cash incentives, we have provided share options that vest over time, with higher awards of share options being made to senior employees. The value to employees of share options that vest over time may be significantly affected by movements in our share price that are beyond our control and may at any time be insufficient to counteract more lucrative offers from other companies. Despite our efforts to retain valuable employees, members of our management, scientific and development teams may terminate their employment with us on short notice. Although we have employment agreements with all of our employees in the United Kingdom, these employment agreements provide for a mutual nine months’ notice period in the case of Dr. Tayton-Martin; mutual three months’ or two months’ notice periods in the case of senior managers and mutual one-month notice periods for all other employees. In the United States, the employment agreements provide for at-will employment except that, under their employment agreements, Mr. Rawcliffe, Mr. Bertrand and Mr. Lunger must provide 60 days’ written notice. This means that any of our employees in the United States, except for Mr. Rawcliffe, Mr. Bertrand and Mr. Lunger, could leave our employment at any time, with or without notice. Our success also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level and senior managers as well as junior, mid-level and senior scientific and medical personnel.

We will need to grow the size and capabilities of our organization, and we may experience difficulties in managing this growth.

As of September 30, 2019, we had 404 employees. As our development and commercialization plans and strategies develop, we must add a significant number of additional managerial, operational, sales, marketing, financial, and other personnel. Future growth will impose significant added responsibilities on members of management, including:

● identifying, recruiting, integrating, maintaining, and motivating additional employees;

● managing our internal development efforts effectively, including the clinical and FDA review process for our SPEAR T-cells, while complying with our contractual obligations to contractors and other third parties; and

● improving our operational, financial and management controls, reporting systems, and procedures.

Our future financial performance and our ability to commercialize our SPEAR T-cells will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.

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We also rely on third parties to provide certain of our manufacturing and quality capabilities. See “Risks Related to Our Reliance Upon Third Parties.”

If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further develop and commercialize our SPEAR T-cells and, accordingly, may not achieve our research, development, and commercialization goals.

We have opened a manufacturing facility of our own which may result in increased costs being incurred by the company

During 2017, we opened a manufacturing facility for our SPEAR T-cell products within our Navy Yard facility in Philadelphia, Pennsylvania and have started manufacturing SPEAR T-cells for use in our clinical trials. As a company we have never previously operated our own manufacturing facility or manufactured SPEAR T-cells ourselves. We cannot guarantee that the regulatory authorities, in particular the FDA, will continue to approve our ability to manufacture SPEAR T-cells at the Navy Yard facility.

Our ability to successfully manufacture our own SPEAR T-cells at the Navy Yard facility within a reasonable period of time and within currently projected costs is dependent on a number of factors including:

● our ability to recruit the required employees at a suitable level and experience and within required timescales and to maintain employment of such required employees;

● our ability to obtain regulatory approval for the facility and for the manufacture of SPEAR T-cells at the facility and to satisfy regulatory authorities on an ongoing basis;

● our ability to manufacture SPEAR T-cells reliably and reproducibly and to timescales sufficient to support required patient administration;

● our ability to manufacture SPEAR T-cells in compliance with the applicable regulatory requirements, including requirements applicable in both the United States and European Union;

● our ability to develop internal quality controls and processes sufficient to enable manufacture and supply of SPEAR T-cells at our Navy Yard facility;

● our ability to establish comparability with currently used manufacturing processes and for such comparability data to be accepted by the appropriate regulatory authorities; and

● our ability to be able to fund the ongoing development including equipment requirements necessary for successful manufacture of SPEAR T-cells at our facility.

Any delay or failure in manufacture at our facility could result in delays to the supply of SPEAR T-cells for our clinical programs. Should any of our third party manufacturers also cease to be able to supply SPEAR T-cells at a time where our own manufacturing facility is unable to produce SPEAR T-cells for use in our clinical programs or is unable to produce SPEAR T-cells at the required level, then we will be unable to support such clinical programs until alternative manufacturing capability is secured.

We are in the process of increasing the number of manufacturing slots available at our Navy Yard facility. The cost of developing, out-fitting and operating a larger manufacturing facility may also be greater than currently anticipated and we may require additional capital for the completion of the upscaling of the manufacturing facility which may result in the need for us to raise additional funds earlier than expected.

We cannot guarantee that we will be successful in manufacturing SPEAR T-cells at all or in a manner that complies with regulatory requirements. For example, there is a risk that any SPEAR T-cells we manufacture are contaminated or are otherwise incorrectly manufactured resulting in injury or death to any patient receiving those SPEAR T-cells. Such failure could result in a halt being placed on manufacture at our Navy Yard facility. We may also face difficulties in properly tracking and administering our SPEAR T-cells to patients, again potentially resulting in injury or death to any patient receiving those SPEAR T-cells.

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We may also be unable to support use of our own manufacturing facility together with third party suppliers and become the sole supply for our SPEAR T-cells. Any inability to supply SPEAR T-cells at the required levels and to the required specifications, will result in delays to clinical trials and may result in holds being applied to such clinical trials.

We expect to face intense competition, which may be from companies with greater resources and experience than we have.

Immunotherapy is an active area of research and a number of immune-related products have been identified in recent years that are alleged to modulate the immune system. Many of these products utilize dendritic cells, a form of immune cell that presents cancer target peptides to T cells and that can in turn result in T-cell activation. More recently, bi-specific antibodies and checkpoint inhibitors (for instance PD-1/PD-L1 antibodies) have been identified as having utility in the treatment of cancer. Bi-specific antibodies commonly target both the cancer peptide and the TCR, thus bringing both cancer cells and T cells into close proximity to maximize the chance of TCR binding and hence an immune response to the cancer cells. Checkpoint inhibitors on the other hand work by targeting receptors that inhibit T-cell effectiveness and proliferation and essentially activate T cells. Other immunotherapies that are being actively investigated include: antibody-drug complexes, TCR-mimic antibodies, oncolytic viruses, cancer vaccines. A variety of cell-based autologous and allogeneic (“off-the-shelf”) approaches are also being researched and developed, including but not limited to: CAR-T cell, TCR T-cell, GammaDelta T-cell, CAR-NK cell, NK cell, NKT cell and CTL.

● CAR-T in hematological malignancies: Engineered T-cell therapeutics have been identified using antibody recognition systems engineered into T cells, so-called CAR-T cells. A number of targets in hematological malignancies have been well characterized including, but not limited to: BCMA, CD4, CD5, CD19, CD22, CD20, CD33, CD38, CD70, CS1 and CD123. Two CD-19 directed CAR-T cell products have been approved by the U.S. Food and Drug Administration (“FDA”) Kymriah™ (tisagenlecleucel) and Yescarta™ (axicabtagene ciloleucel) as well as by the European Medicines Agency (EMA) in the European Union. More recently, Kymriah™ has been approved by the MHLW in Japan. A number of companies and academic institutions are developing CAR-T cell products including but not limited to Allogene Therapeutics, Atara Bio, Autolus, Baylor College of Medicine, bluebird bio, CASI Pharmaceuticals, Celyad, Celgene, Cellectis, CRISPR Therapeutics, Fate Therapeutics, Intrexon, Janssen (JNJ with Nanjing Legend), Juno Therapeutics, Kite Pharma (Gilead), Linea Rx, Mustang Bio, Novartis, Precigen, Refuge Biotechnologies Inc, Servier, Sorrento Therapeutics, Xenetic Biosciences and Ziopharm Oncology.

● CAR-T in solid tumors: In addition to hematological malignancies, there are a growing number of pharmaceutical, biotechnology, and academic institutions researching and developing autologous and allogeneic CAR-T therapies in the solid tumor setting. These CAR-T cell therapies are at a variety of stages of preclinical and clinical development, as well as directed towards a broad target spectrum, including but not limited to: DLL3, EGFR, GD2, HER-2, IL13rα2, Lewis Y, L1-CAM, Mesothelin, MUC16, PSCA, PSMA and ROR1. Competitors include but are not limited to: Allogene Therapeutics, Amgen, Atara Bio, Aurora Biopharma, Avid Biotics / Xyphos, Baylor College of Medicine, Cell Medica, Bellicum, BioNTech, Carisma Therapeutics (formerly CARMA Therapeutics), Carsgen, Celgene (with Obsidian Therapeutics) Cellectis Therapeutics, Celyad, CRISPR Therapeutics, Endocyte (a Novartis Company), Fate Therapeutics, Formula Therapeutics, Fred Hutchinson Cancer Research Center, Helix BioPharma, Juno Therapeutics, Lyell Immunopharma, MaxCyte, Memorial Sloan Kettering Cancer Center, Minerva Biotechnologies, Mustang bio, OncoSec Immunotherapies, Oncternal Therapeutics, Poseida Therapeutics, Senti Biosciences, Sorrento Therapeutics, Symvivo, Targazyme and Tmunity.

● CARs & TCR-mimics targeting peptide-HLA complexes: Most CAR-T therapies in development are directed towards suitable antigen targets. Another area of development is the creation of CAR-T that selectively binds to the peptide-HLA (pHLA) complex (the natural binding site for endogenous TCR). Furthermore, competitors are also looking at pHLA antibodies or TCR mimic antibodies that can either be engineered in T-cells or developed as standalone antibody therapies in cancer indications (both hematologic malignancies and solid tumors). Targets of such pHLA CAR-T or TCR mimic antibodies include: AFP, CD19, BCMA, NY-ESO-1, p53 and WT1. A number of pharmaceutical, biotechnology, and academic institutions are researching and developing CARs & TCR-mimics targeting the peptide-HLA complex, including but not limited to: Adicet Bio / Regeneron, Altor Bioscience, Cancer Research Technology/CRUK, Eureka Therapeutics, Gritstone Oncology, Morphosys, Xencor and Ziopharm Oncology.

● TCR T-cells: TCR T-cells are being developed by competitors that are directed towards a multitude of targets including: AFP, CD20, HPV-16 E6/E7, KRAS, MAGE-A1, MAGE-A3, MAGE A3/A6, MART1, NRAS, NY-ESO-1, p53, PRAME, TGFβRII frameshift antigen WT1, as well as personalized neoantigens. Juno Therapeutics (a Celgene Company) has

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developed an engineered TCR therapeutic candidate where the end TCR is purported to have enhanced affinity through stem-cell selection. Juno’s candidate JTCR016 (WT1-specific TCR), in collaboration with Fred Hutchinson Cancer Research Center and the National Cancer Institute (NCI), is currently undergoing a Phase 1/2 trial in NSCLC and mesothelioma setting as well as a separate Phase 1/2 in AML. Medigene AG has reported development of a PRAME TCR therapeutic candidate (MDG1011), which has begun a Phase 1/2 clinical investigation in AML, MM and myelodysplastic syndromes. In addition to Juno there is a growing number of TCR companies that are adopting approaches to TCR affinity enhancement, for example Axis Therapeutics, Takara, Takara Bio, Fred Hutchinson Cancer Centre and Immatics. In addition other TCR-focused competitors include, but are not limited to: 3T, Adaptive Biotechnologies (with Genentech), AgenTus, Atreca, Baylor College, Bellicum, BioNTech (with Eli Lilly), bluebird bio, Captain T cell, Celgene (with Immatics), Cellular Biomedicine Group Inc, Cell Medica Ltd, Cytovant Sciences, GigaMune, GSK, Immunocellular Therapeutics, Immunocore, Intellia Therapeutics, Inc. (with Ospedale San Raffaele), Juno Therapeutics, Kiromic, Kite Pharma (Gilead), Lion TCR LTD, MD Anderson Cancer Center, MediGene AG, NCI, Neon Therapeutics, PACT Pharma, Parker Institute, Refuge Biotechnologies Inc., Roswell Park Cancer Institute, Scancell (with BioNTech), Tactiva Therapeutics, Takara Bio Inc, Takeda (T-CIRA), TCR Cure, T-Cure, TCR x immunotherapies, T-Knife, Tmunity, University of Leiden, Zelluna (with Oslo University Hospital) and Ziopharm Oncology.

There are a number of different approaches being developed for allogeneic or “off-the-shelf” immunotherapy products including stem-cell derived products, HLA-matched products, healthy-donor derived products and use of cells with no or limited HLA type (for example GammaDelta T-cell, or NK cells). Competitors include Century Therapeutics (with FujiFilm Cellular Dynamics), Editas, Fate Therapeutics, Takeda (in collaboration with CiRA), Thyas, Editas, UCLA and T-CiRA.

In addition to adoptive cell therapy approaches aforementioned, our competitors are also investigating other cell-based approaches, including the potential of GammaDelta T-cell, CAR-Macrophages, CAR-NK cell, NK cell, NKT cell, CTLs, TILs, Marrow-infiltrating lymphocytes (MILs), Multi-tumor-associated antigen (TAA)-specific T-cells and virus-specific T-cells either preclinically or in a clinical setting (both hematologic malignancies and solid tumors). In this space there are a number of potential competitors, including, but not limited to: Adicet Bio, Atara Bio, Aurora BioPharma, Cell Medica, Cellular Biomedicine Group Inc, CytomX, Celgene, Fate Therapeutics, Fortress Biotech, Gadeta (with Kite Pharma), Gamma Delta Therapeutics (with Takeda), Gamida cell, Genocea, Glycostem Therapeutics, iCell Gene Therapeutics, Immatics, Iovance Biotherapeutics (formerly Lion Bio), KSQ Therapeutics, MD Anderson Cancer Center, Multimmune, NantKwest, NexImmune, Nkarta, Sorrento Therapeutics, Marker Therapeutics, Tessa Therapeutics, TC Biopharm (with bluebird bio), Torque Therapeutics, Unum Therapeutics, WindMIL Therapeutics and Ziopharm Oncology. Although Immunocore is focused on soluble TCRs rather than engineered SPEAR T-cells, we could also face competition from Immunocore if it develops or acquires products directed at the same targets or indications as our TCR therapeutic product candidates. Moreover, many of our employees have come from a shared background within Immunocore and there is an awareness within Immunocore of certain of our confidential information on the technology platform controlled through confidentiality agreements. This knowledge could be used by Immunocore to facilitate its own developments or to target competitive products against our products placing it in a preferable position as compared to third party competitors.

The results of the United Kingdom’s referendum on withdrawal from the European Union (“Brexit”) may have a negative effect on global economic conditions, financial markets and our business.

The United Kingdom is currently negotiating the terms of its exit from the European Union (“Brexit”). In November 2018, the U.K. and the European Union agreed upon a draft withdrawal agreement (“Withdrawal Agreement”) that sets out the terms of the U.K.’s departure, including commitments on citizen rights after Brexit, a financial settlement from the U.K., and a transition period from March 29, 2019 through December 31, 2020 to allow time for a future trade agreement to be agreed. On January 15, 2019, the draft Withdrawal Agreement was rejected by the U.K. Parliament creating significant uncertainty about the terms and timing under which the U.K. will leave the European Union. On April 11, 2019, the European Council agreed at its Special Meeting to extend the UK’s departure date to October 31, 2019, and then on October 28, 2019, the European Council informally agreed to further extend the departure date to January 31, 2020, though this latest extension allows the UK to withdraw from the EU prior to January 31, 2020 if a transition agreement is ratified by both the UK Parliament and the European Parliament.

If no agreement can be reached and the U.K. leaves the European Union with no agreement (“hard Brexit”), there will be a period of considerable uncertainty particularly in relation to United Kingdom financial and banking markets, the regulatory process in Europe and movement of goods and people between U.K. and European Union. The effects of Brexit will depend on whether the UK retains access to EU markets either during a transitional period or more permanently. Brexit could disrupt the single internal market principle, which

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ensures the free movement of goods, services and people between the UK and the EU, undermine bilateral cooperation in key policy areas and significantly disturb trade relationships between the UK and the EU. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the UK determines which EU laws to replace, amend or adopt.

As a result of this uncertainty, financial markets could experience volatility which could adversely affect the market price of our ADSs. We may also face new regulatory costs and challenges that could have a material adverse effect on our operations. In this regard, the EMA has already issued a notice reminding marketing authorization holders of centrally authorized medicinal products for human and veterinary use of certain legal requirements that need to be considered as part of Brexit, such as the requirement for the marketing authorization holder of a product centrally approved by the European Commission to be established in the European Union, and the requirement for some activities relating to centrally approved products, such as batch release and pharmacovigilance, to be performed by entities or individuals in the European Union. In the absence of any clear indication that any agreed form of Withdrawal Agreement will contain a contrary requirement, we are already in the process of ensuring that any impact on our operations is limited. In addition, currency exchange rates in the pound sterling and the euro with respect to each other and the U.S. dollar have already been adversely affected by Brexit. Should this foreign exchange volatility continue it could cause volatility in our financial results.

Failure of our information technology systems could significantly disrupt the operation of our business.

Our ability to execute our business plan and to comply with regulators’ requirements with respect to data control and data integrity, depends, in part, on the continued and uninterrupted performance of our information technology systems and similar systems used by third-party providers that we rely on. These systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security and back-up measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our information systems, sustained or repeated system failures or problems arising during the upgrade of any of our information systems that interrupt our ability to generate and maintain data, and in particular to operate our proprietary technology platform, could adversely affect our ability to operate our business. In addition, where disruption to such systems occurs at third-party providers, we may have limited ability to find alternative providers in any required timeframes or at all, and such disruption could significantly affect our ability to proceed with clinical or analytical or development programs.

Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our operations and those of our third party suppliers and collaborators could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes or other extreme weather conditions, medical epidemics, labor disputes or other business interruptions. While the company has business interruption insurance policies in place, any interruption could seriously harm our ability to timely proceed with any clinical programs or to supply SPEAR T-cells on a commercial basis or for use in clinical programs.

We are exposed to risks related to currency exchange rates.

We conduct a significant portion of our operations within the United Kingdom in both U.S. dollars and pounds sterling and our arrangements with GSK are denominated in pounds sterling. Changes in currency exchange rates have had and could have a significant effect on our operating results. Exchange rate fluctuations between the U.S. dollar and local currencies create risk in several ways, including the following: weakening of the pound sterling may increase the cost of overseas research and development expenses and other costs outside the United Kingdom; strengthening of the U.S. dollar may decrease the value of any future revenues denominated in other currencies. Effects of exchange rates on transactions and cash deposits held in a currency other than the functional currency of a subsidiary can distort our financial results; and commercial pricing and profit margins are affected by currency fluctuations.

We may be classified as a passive foreign investment company in any taxable year and U.S. holders of our ADSs could be subject to adverse U.S. federal income tax consequences.

The rules governing passive foreign investment companies, or PFICs, can have adverse effects for U.S. federal income tax purposes. The tests for determining PFIC status for a taxable year depend upon the relative values of certain categories of assets and the relative amounts of certain kinds of income. The determination of whether we are a PFIC depends on the particular facts and circumstances (such as the valuation of our assets, including goodwill and other intangible assets) and may also be affected by the

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application of the PFIC rules, which are subject to differing interpretations. Based on our estimated gross income, the average value of our assets, including goodwill and the nature of our active business, we do not believe that the Company was classified as a PFIC for U.S. federal income tax purposes for the U.S. taxable year ended December 31, 2018. There can be no assurance, however, that we will not be considered to be a PFIC for this taxable year or any particular year in the future because PFIC status is factual in nature, depends upon factors not wholly within our control, generally cannot be determined until the close of the taxable year in question and is determined annually.

If we are a PFIC, U.S. holders of our ADSs would be subject to adverse U.S. federal income tax consequences, such as ineligibility for any preferred tax rates on capital gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting requirements under U.S. federal income tax laws and regulations. A U.S. holder of our ADSs may be able to mitigate some of the adverse U.S. federal income tax consequences described above with respect to owning the ADSs if we are classified as a PFIC, provided that such U.S. investor is eligible to make, and validly makes, a “mark-to-market” election. In certain circumstances a U.S. Holder can make a “qualified electing fund” election to mitigate some of the adverse tax consequences described with respect to an ownership interest in a PFIC by including in income its share of the PFIC’s income on a current basis. However, we do not currently intend to prepare or provide the information that would enable a U.S. Holder to make a qualified electing fund election.

Investors should consult their own tax advisors regarding all aspects of the application of the PFIC rules to our ordinary shares.

Risks Related to Ownership of our American Depositary Shares (ADSs)

The market price and trading volume of our ADSs may be volatile.

Many factors may have a material adverse effect on the market price of the ADSs, including but not limited to:

● the commencement, enrollment or results of our planned clinical trials;

● the loss of any of our key scientific or management personnel;

● announcements of the failure to obtain regulatory approvals or receipt of a complete response letter from the FDA;

● announcements of undesirable restricted labeling indications or patient populations, or changes or delays in regulatory review processes;

● announcements of therapeutic innovations or new products by us or our competitors;

● adverse actions taken by regulatory agencies with respect to our clinical trials, manufacturing supply chain or sales and marketing activities;

● changes or developments in laws or regulations applicable to SPEAR T-cells;

● any adverse changes to our relationship with licensors, manufacturers or suppliers;

● the failure of our testing and clinical trials;

● unanticipated safety concerns;

● the failure to retain our existing, or obtain new, collaboration partners;

● announcements concerning our competitors or the pharmaceutical industry in general;

● the achievement of expected product sales and profitability;

● the failure to obtain reimbursements for SPEAR T-cells, if approved for marketing, or price reductions;

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● manufacture, supply or distribution shortages;

● actual or anticipated fluctuations in our operating results;

● our cash position;

● changes in financial estimates or recommendations by securities analysts;

● potential acquisitions;

● the trading volume of ADSs on the Nasdaq Global Select Market, or Nasdaq;

● sales of our ADSs by us, our executive officers and directors or our shareholders in the future;

● general economic and market conditions and overall fluctuations in the U.S. equity markets; and

● changes in accounting principles.

In addition, the stock market in general, and Nasdaq and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our ADSs, regardless of our actual operating performance. Further, a decline in the financial markets and related factors beyond our control may cause the price of our ADSs to decline rapidly and unexpectedly. In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and could divert our management and other resources.

We may not be able to maintain compliance with the continued listing requirements of Nasdaq.

Our ADSs are listed on Nasdaq. In order to maintain that listing, we must satisfy minimum financial and other requirements including, without limitation, a requirement that our closing bid price must not fall below $1.00 per ADS for 30 consecutive business days. In the event that it was necessary to regain compliance with this closing bid price requirement, we would be permitted 180 days in which to do so and would need to demonstrate that we had maintained a closing bid price of a minimum of $1.00 per ADS for 10 consecutive business days. In the event that we were unable to regain compliance during this initial 180 day period, or a possible further 180 day period, we may need to implement reverse stock splits or change the ratio of ADSs to ordinary shares or take other measures in order to regain compliance with this closing bid price requirement. If we fail to continue to meet all applicable continued listing requirements for Nasdaq in the future and Nasdaq determines to delist our ADSs, the delisting could adversely affect the market liquidity of our ADSs and our ability to obtain financing to fund our operations.

Substantial future sales of our ADSs in the public market, or the perception that these sales could occur, could cause the price of the ADSs to decline and dilute shareholders.

Substantial future sales of our ADSs in the public market, or the perception that these sales could occur, could cause the market price of the ADSs to decline. Sales of a substantial number of our ADSs in the public market could occur at any time. Moreover, certain shareholders have rights under an investors rights agreement dated as of February 23, 2015, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other shareholders. In addition, we have registered an aggregate of 151,248,916 ordinary shares that we may issue under our equity compensation plans and, as a result, they can be freely sold in the public market upon issuance and following conversion into ADSs, but subject to volume limitations applicable to affiliates under Rule 144. Additionally, the majority of ordinary shares that may be issued under our equity compensation plans also remain subject to vesting in tranches over a four-year period. As of September 30, 2019, an aggregate of 50,102,483 options over our ordinary shares had vested and become exercisable. If a large number of our ADSs are sold in the public market after they become eligible for sale, the sales could reduce the trading price of our ADSs and impede our ability to raise capital in the future.

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We incur increased costs as a result of being a public company whose ADSs are publicly traded in the United States and our management must devote substantial time to public company compliance and other compliance requirements.

As a U.S. public company whose ADSs trade on Nasdaq, we have incurred and will continue to incur significant legal, accounting, insurance and other expenses. We are subject to the reporting requirements of the Exchange Act, which requires, among other things, that we file with the SEC annual, quarterly and current reports with respect to our business and financial condition and must comply with the Nasdaq listing requirements and other applicable securities rules and regulations. In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and the Nasdaq to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC has adopted and will adopt additional rules and regulations, such as mandatory “say on pay” voting requirements, that we must comply with. We expect the rules and regulations applicable to public companies to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly. Our insurance costs have increased, particularly for directors and officers liability insurance, and we may be required to incur further substantial increased costs to maintain the same or similar coverage or be forced to accept reduced coverage in future. To the extent these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. The increased costs will increase our net loss and may require us to reduce costs in other areas of our business. These laws and regulations could also make it more difficult and expensive for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of the ADSs from Nasdaq, fines, sanctions and other regulatory action and potentially civil litigation.

If we fail to establish and maintain proper internal controls, our ability to produce accurate financial statements or comply with applicable regulations could be impaired.

We must maintain effective internal control over financial reporting in order to accurately and timely report our results of operations and financial condition. In addition, as a U.S. public company, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires, among other things, that we assess the effectiveness of our disclosure controls and procedures and the effectiveness of our internal control over financial reporting at the end of each fiscal period. Pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to furnish a report by our management on our internal control over financial reporting, and we are required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. The rules governing the standards that must be met for our management to assess our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act are complex and require significant documentation, testing and possible remediation. These stringent standards require that our audit committee be advised and regularly updated on management’s review of internal control over financial reporting.

Our compliance with applicable provisions of Section 404 requires that we incur substantial accounting expenses and expend significant management attention and time on compliance-related issues as we implement additional corporate governance practices and comply with reporting requirements. If we fail to staff our accounting and finance function adequately or maintain internal control over financial reporting adequate to meet the requirements of the Sarbanes-Oxley Act, our business and reputation may be harmed. Moreover, if we are not able to comply with the applicable requirements of Section 404 in a timely manner, we may be subject to sanctions or investigations by regulatory authorities, including the SEC and Nasdaq. Furthermore, if we are unable to conclude that our internal control over financial reporting is effective or if our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our ADSs could decline, and we could be subject to sanctions or investigations by the SEC, Nasdaq or other regulatory authorities. Failure to implement or maintain effective internal control systems required of U.S. public companies could also restrict our access to the capital markets. The occurrence of any of the foregoing would also require additional financial and management resources.

U.S. investors may have difficulty enforcing civil liabilities against our company, our directors, officers and members of senior management.

We are incorporated under the laws of England and Wales. The rights of holders of our ordinary shares and, therefore, certain of the rights of holders of ADSs, are governed by English law, including the provisions of the Companies Act 2006, and by our articles of

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association. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations organized in, for example, Delaware. Some of our directors, officers and members of senior management reside outside the United States, and a substantial portion of our assets and all or a substantial portion of the assets of such persons are located outside the United States. As a result, it may be difficult for you to serve legal process on us or our directors and executive officers or have any of them appear in a U.S. court. The United States and the United Kingdom do not currently have a treaty providing for the recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. The enforceability in the United Kingdom of any judgment of a U.S. federal or state court will depend on the particular facts of the case as well as the laws and any treaties in effect at the time, including conflicts of laws principles (such as those bearing on the question of whether a U.K. court would recognize the basis on which a U.S. court had purported to exercise jurisdiction over a defendant). In this context, there is doubt as to the enforceability in the United Kingdom, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities based solely on the federal securities laws of the United States. In addition, awards for punitive damages in actions brought in the United States or elsewhere may be unenforceable in the United Kingdom. An award for monetary damages under the U.S. securities laws would likely be considered punitive if it did not seek to compensate the claimant for loss or damage suffered and was intended to punish the defendant.

Provisions in the U.K. City Code on Takeovers and Mergers that may have anti-takeover effects do not apply to us.

The U.K. City Code on Takeovers and Mergers, or the Takeover Code, applies to an offer for, among other things, a public company whose registered office is in the United Kingdom if the company is considered by the Panel on Takeovers and Mergers, or the Takeover Panel, to have its place of central management and control in the United Kingdom (or the Channel Islands or the Isle of Man). This is known as the “residency test.” The test for central management and control under the Takeover Code is different from that used by the U.K. tax authorities. Under the Takeover Code, the Takeover Panel will determine whether we have our place of central management and control in the United Kingdom by looking at various factors, including the structure of our Board, the functions of the directors and where they are resident.

In July 2018, the Takeover Panel confirmed that, based on our current circumstances, we are not subject to the Takeover Code. As a result, our shareholders are not entitled to the benefit of certain takeover offer protections provided under the Takeover Code. We believe that this position is unlikely to change at any time in the near future but, in accordance with good practice, we will review the situation on a regular basis and consult with the Takeover Panel if there is any change in our circumstances which may have a bearing on whether the Takeover Panel would determine our place of central management and control to be in the United Kingdom.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

The following exhibits are either provided with this Quarterly Report on Form 10-Q or are incorporated herein by reference:

Exhibit Number	Description of Exhibit
10.1**	Agreement dated as of September 30, 2019 by and between La Fosse Associates Limited and Adaptimmune, LLC.
10.2**	Agreement dated as of September 30, 2019 by and between La Fosse Associates Limited, GAR-1 Business Advisory Services and Adaptimmune, LLC.
31.1**	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101**	The following financial information from Adaptimmune Therapeutics plc’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018, (ii) Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018, (iii) Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2019 and 2018, (iv) Unaudited Condensed Consolidated Statements of Change in Equity for the three and nine months ended September 30, 2019 and 2018, (v) Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 and (vi) Notes to the Unaudited Condensed Consolidated Financial Statements.
104**	Cover Page Interactive data File (formatted in Inline XBRL and contained in Exhibit 101)

*      Previously filed.

**    Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ADAPTIMMUNE THERAPEUTICS PLC
Date: November 6, 2019	/s/ Adrian Rawcliffe
	Adrian Rawcliffe
	Chief Executive Officer
Date: November 6, 2019	/s/ Michael Garone
	Michael Garone
	Interim Chief Financial Officer

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EX-10.1

Exhibit 10.1

These terms and conditions apply in relation to any recruitment services provided by La Fosse Associates Limited (Company No: 6729790) a company incorporated in England and Wales whose registered office is 30 City Road, London, EC1Y 2AB (the "Company") to any client (the "Client").

Between:

(1)         La Fosse Associates Limited (Company No: 6729790) a company incorporated in England and Wales whose registered office is 30 City Road, London, EC1Y 2AB (the "Company"); and

(2)         Adaptimmune LLC a Delaware company with principal address at 351 Rouse Boulevard, Philadelphia, PA19112 (the "Client").

Background:

(A)         This Agreement is a framework agreement, the terms of which shall apply to any and each Assignment Schedule agreed between the parties.

It is agreed as follows:

Definitions and interpretation

In this Agreement, unless the context otherwise requires, the following definitions shall apply:

"Agreement" means the agreement between the Company and the Client comprising the terms set out in this document including each Assignment Schedule.

"Assignment Schedule" means the schedule confirming the details of each Assignment; the term "Assignment" shall be construed accordingly.

"Business Day" means any day (other than Saturday or Sunday) on which clearing banks are open for business in New York City, New York, United States of America .

"Client's Group" means the Client, any body corporate of which the Client is a subsidiary (as defined in section 1159 of the Companies Act 2006), any other subsidiary of such body corporate and any subsidiary of the Client and in particular Adaptimmune Limited and Adaptimmune Therapeutics Plc

"Client's Systems" means the systems which the Client makes available to the Supplier and/or the Consultant for use in relation to the Services.

"Company's Group" means the Company, any body corporate of which the Company is a subsidiary, any other subsidiary of such body corporate and any subsidiary of the Company.

"Conduct Regulations" means The Conduct of Employment Agencies and Employment Businesses Regulations 2003.

"Consultant" means the individual named in the relevant Assignment Schedule, assigned to the performance of the Services as at the Start Date of the relevant Assignment and any substitute pursuant to clause 5.

"Conversion Fee" means if the Consultant is engaged as a permanent employee or engaged directly as a PSC Contractor:

25% of the Consultant's first year's base salary (excluding discretionary bonuses, options, shares, benefits, pension scheme payments and healthcare payments)

"End User" means any client or customer of the Client for whom, or at whose premises, the Services are performed under this Agreement.

"Engagement" means the Client's direct or indirect via any person other than the Company:

engagement or employment of:

the Consultant;

the Supplier; or

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any individual, such as the Consultant or their substitute, engaged through the Company and/or the Supplier; or

other arrangement for Consultant or Supplier to provide services to the Client or any member of the Client's Group or an End User;

"Force Majeure" means any cause preventing a party from performing any or all of its obligations arising from or attributable to acts, events, omissions or accidents beyond the reasonable control of the party so affected.

"Good Industry Practice" means the exercise of the skill, diligence, prudence, foresight and judgment which would be expected from a suitably skilled and experienced person engaged in the same type of services as the Services, applying the best standards currently generally applied in the relevant industry.

"Introduction" means

(a)         the interview by the Client of:

the Supplier; or

an employee, worker, officer or representative of the Supplier (including, for the avoidance of doubt, the Consultant or their substitute)

in person, by telephone or by video link; or

(b)         the passing by the Company to the Client of information which identifies or relates to any of the persons in (a)(i), (a)(ii) or (a) (iii) above,

and the date of Introduction shall be whichever is the earlier of the interview or the passing of such information. "Introduces" and "Introduced" shall have the corresponding meaning.

"Loss" means any demand, contribution, claim, action, proceeding, liability, loss, damage, costs, expenses, tax, national insurance contributions (to the extent permitted by law) and charges and any related penalties, fines or interest whatsoever whether founded in statute, contract, tort or otherwise made or brought against or incurred (including without limitation all losses, liabilities and costs incurred as a result of defending or settling any claims); the term

"Losses" shall be construed accordingly.

"Payment Rate" has the definition as set out in the Assignment Schedule.

“PSC Contractor” means a contractor employed through or via a personal service company.

"Relevant Period" means whichever of the following periods ends later:

(c)         the period of 8 weeks commencing on the day after the day on which the Supplier and/or the Consultant last provided services to the Client via the Company (whether under this Agreement or otherwise); or

(d)         the period of 14 weeks commencing on the first day on which the Supplier and/or the Consultant provided services to the Client pursuant to the most recent supply of the Supplier's and/or the Consultant's services to the Client by the Company (as adjusted in accordance with Regulation 10 of the Conduct Regulations to take into account any break between supplies or 42 days or more).

"Services" means as defined in the relevant Assignment Schedule.

"Supplier" means (if applicable) a supplier, whose details are set out in the relevant Assignment Schedule, engaged by the Company to supply the services of the Consultant.

"Systems" means telecommunications systems, IT systems and security systems.

1.2        Each term starting with a capital letter and not defined in clause 1  or elsewhere in this Agreement is as defined in the Assignment Schedule.

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1.3        References to "Supplier" are relevant only if the Company engages the services of the Consultant via a contractual intermediary such as, without limitation, a personal service company or an umbrella company.

1.4        Any reference, express or implied, to an enactment includes a reference to that enactment as from time to time amended, modified, extended, re-enacted, replaced or applied by or under any other enactment (whether before or after the date of this Agreement) and all subordinate legislation made (before or after the date of this Agreement) under it from time to time.

1.5        Where the context permits, words denoting:

(a)         persons shall include bodies corporate and unincorporated associations of persons;

(b)         the singular includes the plural and vice versa; and

(c)         one gender shall include any gender.

1.6        These terms apply from 30 September 2019, following signature of Client to Assignment Schedule and shall apply thereafter in relation to each subsequent Introduction and/or issued Assignment specification and to each Assignment Schedule agreed between the parties hereunder.  In the event of any conflict or inconsistency between an Assignment Schedule and the terms in this main agreement the terms of the relevant Assignment Schedule shall take precedence.

2.          The Company's obligations

2.1        Subject to the provisions of clauses 5,  6 and 7, the Company will procure that the Services will be provided during the relevant Assignment period and up to Assignment End Date.

2.2        The Company will procure that the Supplier (where appropriate) and the Consultant each:

(a)         supply the Services at the Location(s) in accordance with Good Industry Practice and in accordance with all laws, regulations, governance requirements, orders and equivalent applicable to the performance of the Services;

(b)         comply with the Client's reasonable requirements as may be notified by the Client to the Company from time to time;

(c)         comply with all relevant Client regulations, policies and protocols as notified by the Client to the Company, Supplier or Consultant from time to time, including on health and safety and security; and

(d)         provide a suitable substitute consultant when the Consultant is incapacitated, unavailable or otherwise unwilling to provide the Services;

(e)         warrant that the Services will be performed with all due care and that they shall not perform any acts or omit to perform any acts fraudulently or with gross negligence or wilful misconduct; and

(f)          are not subject to any restriction, debarment, criminal sanction or other reason which would prevent them performing the Services. Company warrants that it has obtained reasonable evidence of qualifications and references.

2.3        Where the Supplier is based in the United Kingdom, the Company will require the Supplier and the Consultant to confirm that the Consultant has:

(a)         valid and subsisting leave to enter and remain in the United Kingdom for the duration of the relevant Assignment; and

(b)         is not (in relation to the leave in clause 2.3(a)) subject to any conditions which may preclude or have an adverse effect on the provision of the Services.

3.          The Client's obligations

3.1        In the event the Client requests that the Company issues, or caused to be issued, any advertisement in order to source potentially suitable service providers to provide the Services

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(or similar services), the Client warrants that it has, prior to any such issue, given the Company authority to source such service providers.

3.2        The Client warrants and confirms that to the best of its knowledge it has (or will, prior to the relevant Start Date) give to the Company accurate information in order for the Company properly to consider the suitability of the Supplier and/or the Consultant to supply the Services, including but not limited to:

(a)         the identity of the Client and, if applicable, the nature of the Client's business;

(b)         details of the Services including, but not limited to, the type of work, the location at which and the hours during which the Services are to be provided; and

(c)         the experience, training, qualifications and any authorisations which the Client considers are necessary.

3.3        The Client confirms that the Company has supplied it (or will supply, prior to the relevant Start date) with confirmation of the following:

(a)         the identity of the Consultant and (where appropriate) the Supplier;

(b)         that the Supplier/Consultant has the experience, training, qualifications and any authorisation which the Client considers are necessary, or which are required by law or by any professional body, to perform the Services; and

(c)         that the Consultant and any Supplier are willing to provide the Services.

3.4        In the event that the Company is unaware or not given sufficient time to complete appropriate commitments outlined in Clause 3.3, the Client agrees that if the Consultant or the Supplier fails to have the experience, training, qualifications and/or any authorisation which the Client considers are necessary, or which are required by law or by any professional body to perform the Services, the Company shall have no liability to the Client in respect of this.

3.5        The Client shall:

(a)         carry out risk assessments of the Services to be undertaken and notify the Consultant promptly of any specific or potential hazards relating to the Assignment and any precautions the Consultant and any Supplier should take in relation to such risks;

(b)         not allow the Consultant or the Supplier to undertake any work that is hazardous without first undertaking a risk assessment and notifying the Supplier/Consultant of any risks identified;

(c)         if applicable, make clear to the Company, any Supplier and the Consultant what rules (including but not limited to health and safety, site and security policies, procedures and regulations) apply in respect of the Location(s);

(d)         check and sign or electronically verify timesheets (in a form approved by the Company) verifying the number of hours worked by the Supplier/Consultant and evidencing performance of the Services by the Supplier/Consultant;

(e)         allow the Consultant and the Supplier to determine generally how the Services should be supplied, provided such supply is in all cases in accordance with Client policies and all applicable laws and regulations;

(f)          notify the Company promptly if it is dissatisfied with the performance by the Supplier or Consultant of the Services (in which case the provisions of clause 5 shall apply), and, for the avoidance of doubt, the Client has no authority to discipline any Supplier or Consultant or to terminate the provision of the Services via any Supplier or Consultant save as provided in the contract between Client, Supplier and Company;

(g)         (without limitation to the above) not commit any act or omission constituting unlawful discrimination or harassment of any Supplier or Consultant in connection with the performance of the Services;

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3.6        The Client agrees to the terms relating to Absence Entitlement set out in the relevant Assignment Schedule.

4.          Payment of Fees

4.1        The Company will be entitled to issue invoices in respect of the Services supplied during the relevant invoicing period (being calculated as a multiple of the number of hours/days (as appropriate) during which the Services have been provided and the relevant Payment Rate).

4.2        Unless otherwise agreed in writing, the Company shall be entitled to invoice the Service charges to the Client on a two weekly basis and such invoices shall be payable by the Client within 14 days of the date of invoice.

4.3        For the avoidance of doubt, in the calculation of the sums due to the Company in relation to Services performed by the Supplier/Consultant a timesheet signed by a representative of the Client shall be conclusive evidence that the Services have been performed at the times and for the total period of time set out in such timesheet.  If the Client disputes the hours claimed, it shall inform the Company within 2 days of receipt of the disputed timesheet or if later on obtaining knowledge of any default in hours claimed and in any event, no later than 5 days from the date of invoice or default in hours being identified and shall co-operate with the Company to establish the hours worked by the Supplier/Consultant.  Failure by the Client to sign any such timesheet does not absolve the Client from its obligation to pay the Company the fees for the Services in accordance with this clause 4.

4.4        As between the Company and the Client, the Company shall not be liable for fraudulent timesheets submitted by or on behalf of a Supplier/Consultant. Such exclusion shall not preclude the Client bringing any action or recourse directly against the Supplier/Consultant.

4.5        Unless otherwise agreed in writing by a director of the Company, the Company will not be obliged to make any rebates or refunds of fees or other sums payable to the Company by the Client. Such rebates will be agreed by the Company in the event that it is shown that any fees have been paid in error or that any timesheet included any error in hours worked.

4.6        All amounts due under this Agreement shall be paid in full without any deduction or withholding other than as required by law.  The Client shall not be entitled to assert any credit, set-off or counterclaim against the Company in order to justify withholding payment of any such amount in whole or in part.

4.7        Unless otherwise agreed by the Company, all payments due to it under this Agreement shall be paid by direct bank transfer to the Company's bank account.

4.8        Company shall be entitled to charge interest on any amounts due to the Company from Client, which are not paid by the Company by the due day and on provision of 2 Business Day’s notice. Interest shall accrue from the date said amount was due at the rate of four percent (4%) per annum.

4.9        All amounts payable under this Agreement (including, for the avoidance of doubt, those under clause 6) are exclusive of value added tax and any other like taxes applicable to a Location(s), which shall be payable by the Client at the rate prevailing at the time and accounted to the relevant taxation authority by the Company.

5.          Substitution of Supplier/Consultant

5.1        The Company shall be entitled from time to time, without prejudice to the other terms of this Agreement, to offer the Client a suitably qualified, skilled and experienced substitute Consultant or Supplier. The Client shall be under no obligation to accept such substitute or to agree to substitution of any Consultant or Supplier.

5.2        If within 10 working days of the relevant Start Date a Consultant or Supplier fails in the reasonable opinion of the Client to perform the relevant Services satisfactorily, the Client shall notify the Company in writing to that effect and the Company will use its reasonable endeavours to procure that a suitable substitute Supplier or Consultant is available to perform the Services as soon as possible.  If no such substitute is available within 5 Business Days after receipt by

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the Company of the Client's written notification of unsatisfactory performance, then the Client may terminate the relevant Assignment Schedule by written notice in accordance with clause 7.

6.          Transfer Provisions

6.1        Save as otherwise agreed in the Assignment Schedule, if, following an Introduction, the Client wants an Engagement to commence within a period of twelve months from the date of the Introduction or an Engagement occurs within such period and the Supplier and/or the Consultant have/has not commenced provision of services via the Company, the Client shall notify the Company and pay to the Company the Conversion Fee, unless the Client elects, within 3  Business Days of the date of the Engagement by written notice to the Company to engage the Company to arrange for the Supplier and/or the Consultant to provide the required services, under and in accordance with the terms of this Agreement for such Engagement.

6.2        No refund of the Conversion Fee shall be payable if the Engagement terminates unless such Engagement terminates within a period of 3 months from start of Engagement in which case 50% of Conversion Fee shall be refunded.

7.          Termination

7.1        This Agreement shall continue unless terminated:

(a)         by written notice with immediate effect by either Party if there is any material breach of this Agreement by the other party or in the case of Client by any Consultant or Supplier, which is, in the reasonable opinion of the terminating Party, incapable of being remedied or in the case of Client if the Client is entitled to terminate this Agreement pursuant to clause 5; or

(b)         by 5 Business Days' written notice by either party if there is any material breach of this Agreement by the other party or in the case of Client by any Consultant or Supplier, which is, in the reasonable opinion of the terminating Party, capable of remedy and which is not remedied within 30 Business Days after an earlier notice requiring it to do so; or

(c)         by written notice with immediate effect by either party if that party shall become unable to commence, continue or completely perform its obligations under this Agreement by reason of illness, injury, other incapacity or by reason of Force Majeure affecting that party, which is not within that party's reasonable control; or

(d)         by written notice with immediate effect by either party if either party shall: become insolvent within the meaning of the Insolvency Act 1986, becomes bankrupt, apply for, or have made against it or him a receiving order, or makes any composition with its creditors or an administration order or if an order is made or resolution passed for the winding up of either party or either party passes a resolution to cease trading or actually ceases trading (an "Insolvency Event").

7.2        Without prejudice to the rights to terminate the whole Agreement under clause 7.1, either party may terminate an Assignment Schedule by the period of notice (if any) as agreed in the relevant Assignment Schedule. Client may also terminate an Assignment Schedule with immediate effect where there is (a) any material breach by the Consultant and/or Supplier of any of the obligations set out in Clause 2 or the Consultant is debarred, subject to any criminal sanction or government imposed sanction or otherwise prevented from performance of any of his/her duties under the Assignment; or (b) the Supplier or the Consultant has in relation to this Agreement committed an act or omission of dishonesty, gross incompetence or gross negligence; or is convicted of any indictable criminal offense (other than, where the Services do not require the Consultant to drive, a road traffic offence for which a penalty of imprisonment is not imposed); or becomes bankrupt, applies for, or has made against it or him, a receiving order or makes any composition with its creditors or an administration order or order is made or resolution passed for the winding up of the Supplier.

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7.3        The Client shall notify the Company promptly, and in any event within 24 hours or becoming aware, if a Supplier or Consultant fails to attend for the purposes of providing their Services under an Assignment or notifies the Client that the Supplier or Consultant is unable to attend for any reason.

7.4        If, for any reason, the Client does not require the Consultant or the Supplier to perform Services during any termination notice period the Client shall, nevertheless, pay the Company as though the Consultant or Supplier was providing Services for 40 hours per week (or the average hours per week provided over preceding month by such Consultant or Supplier) for the duration of the notice period. Termination of this Agreement shall be without prejudice to the rights of either party arising prior to termination.

7.5        Any termination of this Agreement (howsoever occasioned and whether in whole or in part) shall be without prejudice to any other rights or remedies a party may be entitled to hereunder or at law and shall not affect any accrued (before termination) right or liabilities of either party nor the coming into or continuance in force of any provision hereof which is expressly or by implication intended to come into or continue in force on or after such termination.

8.          Acknowledgements and Liability

8.1        Nothing contained in this Agreement shall in any way constitute:

(a)         the Supplier or the Consultant as the employee(s) or worker(s) of the Company or the Client; or

(b)         (where there is no Supplier,) the Consultant as the employee of the Company or the employee of the Client,

and the Company confirms that the Supplier, or (where there is no Supplier) the Consultant, is engaged under a contract for services (in respect of which, without limitation, the Client does not supervise and/or have the right to control the actions of the Supplier or the Consultant in the way that it would if an employment relationship existed).

8.2        Where the Services are performed by a PSC Contractor, the Company and the Client acknowledge that the PSC Contractor offers their services on an independent business to business basis and accordingly neither the Client nor the Company supervises and/or has the right to control the actions of the PSC Contractor in the way that it would if an employment or worker relationship existed.  If the Client does, or intends to, supervise and direct any PSC Contractor, the Client shall immediately notify the Company of that fact.

8.3        The parties acknowledge that the Company is not obliged to put the Supplier and/or the Consultant forward for consideration by the Client for the provision of services and the Supplier and/or the Consultant is not obliged to provide services to the Client beyond the termination of the relevant Assignment.

8.4        The Client acknowledges that the Company is in the business of providing resourcing services which comprise the sourcing and introduction of suitable service suppliers to the Client and the contractual arrangements for the provision of their services to the Client.  Whilst every effort is made by the Company to ensure a reasonable standard of skill, integrity and reliability from the Supplier/Consultant and to provide the Supplier/Consultant in accordance with the Client's requirements, the Company cannot accept full responsibility for the quality of the Services provided by the Supplier and the Consultant or their activities while at the Location(s).  Accordingly, the Company's liability is limited as set out in this clause 8.

8.5        The Client acknowledges that the Company shall not be responsible for supervising, monitoring or directing the Supplier(s) and/or Consultant(s) whilst working on Assignment and that accordingly, only the Client is in a position to assess and insure against risks in respect of or during or arising out of the period for which the Supplier and/or the Consultant is performing the Services.

8.6        The charges made by the Company reflect only those Supplier/Consultant sourcing, selection and introduction services agreed to be supplied by the Company and do not indicate acceptance of any liability for the Supplier's or the Consultant's acts or omissions.

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8.7        Subject to clause 8.9,  and as between Company and Client, Company shall not be liable for any Losses or delay arising from:

(a)         any failure of the Supplier and/or Consultant to provide the Services for all or part of the term of this Agreement unless such failure results from an act or omission of the Company or breach of the terms of this Agreement by the Company;

(b)         the negligent, wrongful, dishonest or fraudulent acts or omissions or misrepresentations of the Supplier or the Consultant, including, without limitation, any lack of skill of the Supplier/Consultant unless the Company has itself contributed to such acts, omissions or misrepresentations; or

(c)         theft of any data or materials or the negligent driving of the Supplier and/or Consultant.

For clarity, exclusion of liability under this clause 8.7 shall not prevent Client from enforcing any provisions of the agreement between Company and Supplier/Consultant directly against such Supplier and/or Consultant in accordance with the terms of the Agreement between Company and Supplier and/or Consultant.

8.8        the Company shall not be liable for any Losses arising out of:

(a)         any act or omission or misrepresentation (whether before or after the date of this Agreement) of the Supplier or the Consultant;

(b)         any special, indirect or consequential damages or loss; or

(c)         any loss of profit (other than direct loss arising from a breach of confidentiality), business, revenue, goodwill, anticipated savings, arising out of any failure by the Company to perform any obligations under this Agreement.

8.9        Nothing in this Agreement shall operate to exclude or limit the Company's liability for:

(a)         death or personal injury caused by the Company's negligence;

(b)         its own fraudulent acts or omissions or its own acts or omissions which result in a breach of any term under this Agreement; or

(c)         any other liability which cannot by law be excluded.

8.10      The Client shall indemnify and keep indemnified the Company against any Losses incurred by the Company arising out of this Agreement and/or as a result of any breach of this Agreement by the Client. For clarity such obligation to indemnify shall not apply to the extent any Losses are caused by Company’s own acts or omissions in breach of any term of this Agreement or any fraudulent acts or omissions or negligent acts or omissions of Company.

9.          Confidentiality and Intellectual Property

9.1        The Company undertakes to the Client that it shall, and shall require that the Supplier and the Consultant shall:

(a)         keep confidential, all information relating to work results, intellectual property rights in the work results or otherwise arising in the performance of the Services and the Client's business and affairs (including, for the avoidance of doubt, Payment Rates) ("Confidential Information") which may become known to it/them in connection with the supply of the Services; and

(b)         require that the Supplier and the Consultant shall enter into any and all assignments of intellectual property Rights (relating to work results or otherwise arising during the performance of the Services) or confidentiality undertakings that the Client may reasonably require it or them to enter into and hereby confirms that such work results and intellectual property rights are owned by and shall be owned by the Client; and

(c)         shall procure that Supplier and Consultant shall not use the Confidential Information for any purpose other than the performance of the Services.

The obligations set out in this clause 9 shall survive any termination of this Agreement indefinitely. This clause shall not override any confidentiality or other similar agreements

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entered into directly between the Supplier and the Consultant and the Client or any member of the Client’s group. Clause 9.1(a) shall not apply to any information which is public or which subsequently becomes public other than through a breach of this Agreement.

10.        Information and Data Protection

10.1      Any information and data provided by the Company to the Client and used by the Client directly or indirectly in the performance of this Agreement shall remain at all times the property of the Company. It shall be identified, clearly marked and recorded as such by the Company and the Client shall retain such labels on all media and in all documentation. For clarity, any deliverables provided by the Supplier or Consultant in the performance of the Services shall be owned by the Client and Company shall not place any restriction on the use of such deliverables by the Client.

10.2      The Client shall take all reasonable precautions to preserve the integrity and prevent any corruption or loss, damage or destruction of the Company's data and information.

10.3      In the event of termination of this Agreement the Client shall when directed to do so by the Company, and instruct all its agents and sub-contractors to, erase all information and data provided by the Company and all copies of any part of the information and data provided by the Company from the Client's systems and magnetic data save that (a) Client shall be entitled to retain one copy of such information for the purposes of ensuring compliance with this Agreement; and (b) Client shall not be required to delete Company information from its back-ups provided such back-ups are not accessible to all employees at Client.

10.4      Both parties agree to comply with the data protection requirements set out in Annex A.

11.        Anti-Bribery

11.1      The Bribery Act affects the Company and the Client in their business relations anywhere in the world. Under the Bribery Act, it is an offence to:

(i)          Bribe a person i.e. to offer, promise or give a financial or other advantage to another person, whether in the UK or abroad, with the intention of inducing or rewarding improper conduct; or

(ii)         Receive a bribe i.e. to request, agree to receive or accept a financial or other advantage for or in relation to improper conduct; or

(iii)         Bribe a foreign public official; and

(iv)        Fail to prevent bribery.

11.2      Each party acknowledges and agrees that the other party will not tolerate bribery in any form in connection with the conduct of its business.

11.3      Each party and the Company shall procure that the Supplier and Consultant shall:

(a)         comply with all applicable laws, statutes, regulations, codes and guidance relating to anti-bribery and anti-corruption ("Anti-Bribery Laws"), including without limitation the Bribery Act 2010 and the US Foreign Corrupt Practices Act;

(b)         not engage in any activity, practice or conduct which would constitute an offence under the Bribery Act 2010 if such activity, practice or conduct had been carried out in the United Kingdom;

(c)         not do, or omit to do, any act that will cause the other party to be in breach of the Anti-Bribery Laws; and

(d)         promptly report to the other party any request or demand for any undue financial or other advantage of any kind received in connection with the performance of this Agreement.

11.4      Each party prohibits the offering, the giving, the solicitation or the acceptance of any bribe, whether cash or other inducement to or from any person or company, wherever they are situated and whether they are a public official of body or private person or company by any individual

9

employee, agent or other person or body acting on a party's behalf in order to gain any commercial, contractual or regulatory advantage for such party in a way which is unethical or in order to gain any personal advantage, pecuniary or otherwise, for the individual or anyone connected with the individual.

11.5      The parties each have in place policies governing anti-bribery and each party will comply with its policy.

11.6      Breach of this clause 11 shall be deemed a material breach of this Agreement.

12.        General

12.1      This Agreement together with each Assignment Schedule agreed by the parties and any agreement between the parties relating to credit terms pursuant to clause 4.2 constitute the entire agreement between the parties and supersede all previous agreements and arrangements (if any) whether written, oral or implied between the Company and the Client relating to the Services and all such agreements still effective at the date of this Agreement (if any) shall be deemed to have been terminated by mutual consent with effect from the Start Date but without prejudice to any rights which have arisen prior to such termination and so that nothing in this clause 12.1 shall operate to exclude or limit the liability of any party in respect of fraud.

12.2      The Client acknowledges that, in entering into this Agreement, it has not relied on any representations by the Company, the Supplier or the Consultant made before the execution of this Agreement other than those expressly set out in this Agreement. Nothing in this clause 12.2 shall exclude any liability for fraudulent misrepresentation.

12.3      This Agreement is personal to the Client and the Client shall not be entitled to assign or sub-contract its obligations or rights under this Agreement to any third party without the prior written consent of the Company.  The Company shall however be entitled to assign this Agreement to any member of the Company's Group and, upon such assignment, without prejudice to the assignor's rights in respect of matters arising prior to such assignment; all references to the Company shall be deemed to refer to the assignee.

12.4      No amendment to this Agreement is effective unless it is in writing and signed on behalf of each party by a person duly authorised by that party.

12.5      Any notice required to be given under this Agreement (including the delivery of any timesheet or invoice) shall be in writing signed by a person duly authorised by the sending party and delivered by hand, sent by facsimile, e-mail or prepaid first class post to the recipient at its fax number or address specified in this Agreement (or as otherwise notified from time to time to the sender by the recipient for the purposes of this Agreement).

12.6      This Agreement shall be governed by and construed in all respects in accordance with the laws of the State of New Jersey and the Courts of the state of New Jersey shall have exclusive jurisdiction.

12.7      If any provision or any part of this Agreement is held to be illegal or unenforceable, in whole or in part, under any enactment or rule of law:

(a)         such provision or part shall to that extent be deemed not to form part of this Agreement but the enforceability of the remainder of this Agreement shall not be affected; and

(b)         to the extent permitted by law, the Company and the Client shall negotiate in good faith a substitute to any provision severed under clause 12.7(a) by a provision which is of similar effect but which is not illegal or unenforceable.

12.8      None of the provisions of this Agreement is intended to be for the benefit of, or enforceable by third parties (other than permitted assignees of the Company who shall be entitled to enforce the provisions of this Agreement as if original parties to it).

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13.        Business Ethics, Sanctions and Modern Slavery

1           The Company shall and shall procure that any organisation in the Supplier’s Group shall:

(i)          comply with any trade, financial or other sanctions regime imposed by the UN, EU, UK, US (including regimes administered by the United States Department of the Treasury, Office of Foreign Assets (“OFAC”) and Her Majesty’s Treasury) and any other such regime which applies in relation to the Company’s business (“Sanctions”); and

(ii)         ensure that it shall not supply any goods or other items pursuant to the Contract from, or on behalf of, a “Restricted Person” (being any person who is listed as, or owned or controlled by any person listed as, targeted by Sanctions (including but not limited to persons on the “Specially Designated Nationals and Blocked Persons” list issued by OFAC and the “Consolidated List of Financial Sanctions Targets in the UK” issued by OFAC and the “Consolidated List of Financial Sanctions Targets in the UK” issued by Her Majesty’s Treasury, or located or incorporated in any country which is the target of country-wide Sanctions)), nor use any monies paid by the Company for the benefit of a Restricted Person.

13.2      The Company shall comply with the UK Modern Slavery Act 2015 and any other modern slavery laws, legislation, regulations or directives (“Modern Slavery Legislation”) which apply to its business or which apply in the place where the Contract is performed. The Company will not, and will procure that its employees, subcontractors, agents and representatives will not, engage in any activity, practice or conduct which would constitute an offence under any Modern Slavery Legislation.

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Assignment Schedule in relation to the supply of services provided by a corp

This Schedule is issued subject to the Company's standard terms and conditions for the supply of services to clients.

1.          Particulars of Assignment

"Absence Entitlement" n/a

"Consultant" means, the person, whose details are set out below, or any substitute pursuant to clause 5 of this Agreement.

"End Date" means 31 March 2020 or such other date as the Company and the Supplier/Consultant may agree in writing.

"Invoicing Frequency" means every two weeks and after receipt of timesheets for such period.

"Notice Period" means 30 days; such period shall not limit either parties' right to terminate on notice of less than the Notice Period for a reason set out in clause 7 of the main terms and conditions.

"Payment Rate" means Normal Rate of $3,500 per day.

"Services" means consultancy services of an Interim CFO defined by the following responsibilities

    Work with the Chief Executive Officer and Executive Team to define and execute the financing strategy for the Client

    Act as a key spokesperson for the Client with the investment community

    Lead the preparation, review and filing of the financial statements (10Q and 10K) and other associated SEC filings

    Lead and manage the finance team ensuring maintenance of an appropriate control environment for SOX compliance and control over the capital deployment of the Client

    Lead the budget/financial plan preparation, review and approval by the Board

    Lead interactions with the Audit Committee, external auditors and SOX program support specialists

"Start Date" means 1 October 2019.

"Supplier" means (if applicable) an LLC

"Timesheet Frequency" means every 14 days.

Equipment and training provision

Client agrees to provide at its own cost a laptop computer and smart phone for performance of the Services by Consultant. Client agrees to provide any additional training it requires at its cost.

2.          The Client

Client name: Adaptimmune LLC

Client address: 351 Rouse Boulevard, Philadelphia, PA 19112

Client contact: Legal@adaptimmune.com, General Counsel

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Location(s) at which Services to be performed (if different from above): Services may also be performed at locations of other members of Client group including Adaptimmune Limited facilities in the UK.

3.          The Supplier

Supplier name: GAR-1 Business Advisory Services

4.          The Consultant

Consultant name: Michael R Garone

5.          Additional Provisions

n/a

Signed by Katherine Miller on behalf of the Company	/s/ Katherine Miller
	Director
Signed by Helen Tayton-Martin on behalf of Adaptimmune LLC	/s/ Helen Tayton-Martin
	President and Secretary

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Annex A – Data Protection

1.1        In this Exhibit:

(a)      Both Client and Company are the Controller and the Processor in relation to the types of Personal Data set out below; and

(b)      the types of Personal Data and categories of Data Subject which will be processed, the nature and purpose of that processing and the duration of that processing are as set out below:

(i)       Personal Data capable of identifying any of Company’s or Supplier’s employees, contractors or other individuals working for or on behalf of Company for which Company is Controller.

(ii)       Personal Data capable of identifying any of Client’s employees, contractors or other individuals working for or on behalf of Client for which Client is Controller

(c)      Data Protection Legislation in this Exhibit refers to all applicable privacy and data protection laws including the General Data Protection Legislation ((EU) 2016/679) (GDPR) and any applicable national implementing laws, regulations and secondary legislation in England and Wales relating to the processing of personal data  and the privacy of electronic communications, as amended, replaced or updated from time to time, including the Privacy and Electronic Communications (EC Directive) Regulations 2003 (SI 2003/2426) (Privacy Regulations) as amended by the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011 (SI 2011/1208), the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2015 (SI 2015/355) and the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2016 (SI 2016/524).

(d)      Personal Data and Data Subject shall have the meanings given to them under the Data Protection Legislation.

1.2        In relation to the processing of Personal Data, Processor shall:

(a)      only process Personal Data in accordance with the Controller's written instructions from time to time (which may be specific instructions or standing instructions of general application in relation to the Services, whether set out in this Agreement or otherwise notified to the Processor, unless such processing is required by any law (other than contract law) to which the Processor is subject, in which case the Processor shall (to the extent permitted by law) inform the Controller of that legal requirement before carrying out the processing;

(b)      immediately notify the Controller if it considers that the Controller's instructions are in breach of the GDPR or other EU member state laws; and

(c)      keep a written record of all such processing activities which shall include the information required to be kept under Article 30(2) of the GDPR.

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1.3        In relation to the security and confidentiality of the Personal Data, Processor shall:

(a)      ensure that it has in place appropriate technical and organisational measures to ensure a level of security for the Personal Data which is appropriate to the risks to individuals that may result from the accidental or unlawful destruction, loss, alteration, unauthorised disclosure of, or access to the Personal Data;

(b)      in addition to the confidentiality obligations in section 6 of this Agreement:

(i)       ensure that only those of the Processor's personnel who need to have access to the Personal Data are granted access to such data and only for the purposes of the performance of this Agreement and all of the Processor's personnel required to access the Personal Data are informed of the confidential nature of the Personal Data, comply with the obligations set out in this Exhibit, and are bound by appropriate confidentiality obligations when accessing the Personal Data; and

(ii)       not publish, disclose or divulge any of the Personal Data to any third party (including for the avoidance of doubt the Data Subject itself) unless directed to do so in writing by the Controller;

(c)      not modify, amend or alter the contents of the Personal Data unless specifically authorised in writing by the Controller.

1.4        If the Processor becomes aware of a Personal Data breach, it shall notify the Controller without undue delay on becoming of aware of such a breach.

1.5        The Processor shall notify the Controller within five Business Days upon receiving the following:

(a)      a request from a Data Subject to have access to that person's Personal Data; or

(b)      a complaint or request relating to the Controller's obligations under the Data Protection Legislation; or

(c)      any other communication relating directly or indirectly to the processing of any Personal Data in connection with this agreement.

1.6        The Processor shall provide the Controller with full co-operation and assistance in order to enable the Controller to comply with its obligations under the Data Protection Legislation in relation to:

(a)      the Controller's obligations in relation to responding to Data Subject requests;

(b)      the security of the Personal Data;

(c)      notifying Personal Data breaches to the relevant supervisory authority;

(d)      communicating personal data breaches to the Data Subject; and

(e)      impact assessments and related consultations with supervisory authorities or regulators.

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1.7        The Processor shall:

(a)      make available to the Controller all information that the Controller requests from time to time to enable the Controller to verify that the Processor is in compliance with its obligations in this Exhibit; and

(b)      permit the Controller or its external advisers to inspect and audit the Processor's data processing activities and those of its agents, subsidiaries and Sub-contractors (to the extent the Processor is reasonably able to procure such third party access).

1.8        The Processor shall not engage or authorise a sub-contractor to process the Personal Data unless:

(i)       it has obtained the prior written consent of the Controller (which may be granted or withheld in the Controller's sole discretion) before transferring the Personal Data to any Sub-Contractors in connection with the provision of the Services; and

(ii)       the Sub-Contractor has either entered into a direct contract with the Controller or a contract with the Processor which incorporates the provisions equivalent to those in this agreement in relation to confidentiality, data protection and security, and

1.9        In relation to transfers of Personal Data to areas outside the European Economic Area (EEA):

(a)      the Processor shall not transfer any Personal Data outside the  EEA without the Controller's prior written consent; and

(b)      if the Controller consents to any transfers pursuant to preceding clause, the Processor shall ensure that the following conditions are met in relation to such transfers:

(i)       the Processor complies with its obligations under the Data Protection Legislation by ensuring that there is an adequate level of protection to any Personal Data that is transferred (including as relevant model clauses or adoption of Privacy Shield as appropriate);

(ii)       that there are appropriate safeguards in place in relation to that transfer;

(iii)      that Data Subjects have enforceable rights and effective legal remedies; and

(iv)      that the Processor shall comply with any other reasonable instructions as notified to it by the Controller in relation to such transfers.

1.10      The Controller acknowledges that the Processor is reliant on the Controller alone for direction as to the extent the Processor is entitled to use and process the Personal Data. The Processor shall be entitled to relief from liability in circumstances where a Data Subject makes a claim or complaint with regards to the Processor's actions to the extent that such actions directly result from instructions received from the Controller.

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1.11      On the expiry or termination of this Agreement, the Processor shall notify the Controller of the Personal Data that it holds. Promptly following such expiry or termination, and unless otherwise instructed in writing by Controller or continued storage is required by the Processor to comply with Applicable Laws, the Processor shall securely and permanently destroy all copies of Personal Data in its possession or control (other than any copy transferred to the Controller in accordance with Controller’s request).

1.12      The Processor shall, at all times during and after the term of this Agreement, indemnify the Controller and keep the Controller indemnified against all losses, damages, costs or expenses and other liabilities (including legal fees) incurred by, awarded against or agreed to be paid by the Controller arising from any breach of the Processor's obligations under this Exhibit except and to the extent that such liabilities have resulted directly from the Controller's instructions.

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EX-10.2

Exhibit 10.2

This Agreement is made on this 30th day of September, 2019 (“Effective Date”)

Between:

(1)         La Fosse Associates Limited (Company No: 6729790) having a principal place of business at 30 City Road, London, EC1Y 2AB (the "Company"); and

(2)         GAR-1 Business Advisory Services, Michael R. Garone Sole Member (EIN: 84-302-8949) a company incorporated in USA whose registered office is at 4 Hawser Way, Randolph, NJ, 07869 (the "Supplier").

(3)         Adaptimmune LLC a Delaware company with principal address at 351 Rouse Boulevard, Philadelphia, PA19112 (the “Client”)

Background:

(A)         The Supplier shall provide the Services for the Client in accordance with the terms of this Agreement which is a contract for services. The Client is only a Party to this Agreement in accordance with Section 13 and shall not be considered a Party to this Agreement for any purpose other than set out in Section 13 and 11.5.

It is agreed as follows:

1.           Definitions and interpretation

1.1        In this Agreement, unless the context otherwise requires, the following definitions shall apply:

"Agreement" means the agreement between the Company and the Supplier comprising the terms set out in this document including the Assignment Schedule.

"Application Documents" means any tender documentation, application form or other written information provided by the Supplier or the Consultant to the Company about the self-employment, tax status,  experience, training, qualifications, authorizations and general suitability of the Supplier and/or the Consultant for performing the Services and any information about any accountancy advisor or accountancy company that the Supplier or Consultant has engaged.

"Assignment Schedule" means the schedule to this Agreement as may from time to time be amended; the term "Assignment" shall be construed accordingly.

"Business Day" means any day (other than Saturday or Sunday) on which clearing banks are open for business in New York City, New York, United States of America.

"Client" means the Client defined in the Assignment Schedule.

"Client's Group" means the Client, any body corporate of which the Client is a subsidiary, any other subsidiary of such body corporate and any subsidiary of the Client.

"Client's Systems" means Systems made available by the Client to the Supplier and/or the Consultant for use in relation to the Services.

"Company's Group" means the Company, any body corporate of which the Company is a subsidiary, any other subsidiary of such body corporate and any subsidiary of the Company.

"Consultant" means the individual assigned to the performance of the Services (and any substitute pursuant to clause 7.2) as at the Start Date who controls and directs their own incorporated company through which they contract and offer their services on an independent business to business basis.

"End User" means any client or customer of the Client for whom, or at whose premises, the Services are performed under this Agreement.

"Force Majeure" means any cause preventing a party from performing any or all of its obligations arising from or attributable to acts, events, omissions or accidents beyond the reasonable control of the party so affected.

"Good Industry Practice" means the exercise of the skill, diligence, prudence, foresight and judgment which would be expected from a suitably skilled and experienced person engaged in

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the same type of services as the Services, applying the best standards currently generally applied in the relevant industry.

"Losses" means any demand, contribution, claim, action, proceeding, liability, loss, damage, costs, expenses, tax, national insurance contributions (to the extent permitted by law) and charges and any related penalties, fines or interest whatsoever whether founded in statute, contract, tort or otherwise made or brought against or incurred (including without limitation all losses, liabilities and costs incurred as a result of defending or settling any claims).

"Systems" means telecommunications systems, IT systems and security systems.

“Services” shall mean the services set out and described in the Assignment Schedule.

"Work Results" means any item of work carried out and delivered pursuant to this Agreement as part of or arising out of the Services.

1.2        Each term starting with a capital letter and not defined in clause 1.1 or elsewhere in this Agreement is as defined in the Assignment Schedule.

1.3        Any reference to an enactment includes a reference to that enactment as from time to time amended, modified, extended, re-enacted, replaced or applied by or under any other enactment (whether before or after the date of this Agreement) and all subordinate legislation made (before or after this Agreement) under it from time to time.

1.4        Where the context permits, words denoting:

a)          persons shall include bodies corporate and unincorporated associations of persons;

b)          the singular includes the plural and vice versa; and

c)          one gender shall include any gender.

1.5        The Supplier acknowledges and agrees that the terms of this Agreement shall come in to effect on the Effective Date and shall apply from the Start Date and for the term of the Assignment. In the event of any conflict or inconsistency between the Assignment Schedule and the terms in this main agreement, the terms of the main agreement shall take precedence.

1.6        Where the Services are, at the request of the Company or the Client, performed wholly or in material part at the premises and/or for the benefit of an End User then all references in this Agreement to "the Client" shall be deemed to refer to such End User.  This sub-clause shall be severable and shall not apply to the extent that it would otherwise render any provision of this Agreement void or unenforceable.

2.           Supplier's Obligations

2.1        The Supplier shall:

a)          throughout the term of the Assignment supply the Services in accordance with Good Industry Practice and in accordance with applicable laws, regulations, orders, government requirements and equivalent (including SEC requirements), in each case and at all times taking responsibility for the way in which the Services are performed;

b)          deliver completed timesheets (in a form approved by the Company) to an authorized representative of the Client for signing or electronic approval and return the same to the Company every 14 days; and the Supplier:

(i)          acknowledges that failure by the Supplier so to deliver and return any timesheet promptly after each 14 day period may delay payment to the Supplier while the Company makes inquiries to verify the hours worked;

(ii)         acknowledges and agrees that payment shall be conditional upon the production of a complete and accurate timesheet approved by an appropriate representative of the Client in accordance with clause 2.1(b);

(iii)         agrees to complete the timesheets accurately and completely;

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(iv)        confirms that, by signing this Agreement, it is aware that it could be a criminal offense for the Supplier and/or the Consultant to intentionally falsify any timesheet, for example by claiming that the Services were supplied for hours for which they were not in fact supplied, or for claiming reimbursement for costs not incurred on behalf of the Client.

c)          comply with all health and safety, site and security regulations applicable at the Location(s) to the extent that they apply to the type of work required for the provision of the Services;

d)          comply with all the Client's regulations, policies and protocols as notified by the Client and/or the Company from time to time except where such regulations and policies relate solely to employees of the Client;

e)          comply with the Client's IT security policies and protocols when accessing or using the Client's Systems (which it may only do with the consent of the Client);

f)           not engage in any conduct detrimental to the interests of the Company or the Client, including, without limitation, any conduct likely to bring the Company or the Client into disrepute;

g)          give reasonable notice to the Company and the Client of any period during which the Supplier and/or the Consultant will be unavailable or unable to perform the Services;

h)          supply to the Company copies of any relevant qualifications or authorizations that the Supplier and/or the Consultant is required by the Client or by law or any professional body to have in order to provide the Services to the Client;

i)           where the Supplier deems it necessary, but without consent of the Client or the Company, to incur training or equipment costs for any purpose, it will provide at its own cost all such equipment and training for the Consultant. If the Client or the Company determine that any training or equipment is required as is reasonable for the adequate performance of the Services, then in the case of the Company, Company will provide at its own cost all such equipment and training for the Consultant and in the case of the Client, Company will work with Client to procure that such equipment and training will be provided at cost of Client.

j)           enter into a contract with the Consultant such that he or she is under obligations which reflect the provisions of clauses 2,  4,  5,  6,  7,  8, 9, 10 and 11 as if the Consultant were a party to this Agreement in place of the Supplier, and

k)          at the request of the Company, provide reference details prior to the Start Date of the Assignment.

3.           Payment of fees

3.1        Subject to the timesheet approval requirements set out in clause 2.1(b), the Supplier shall be entitled to issue invoices in accordance with the Assignment Schedule for Services delivered.  Such invoices shall be calculated using the applicable Fee Rates and actual cost incurred in connection with the Supplier’s provision of Services on behalf the Client.  Payment to the Supplier by the Company shall not be conditioned or contingent upon the Company receiving payment from the Client.  Receipts for any cost will be provided by the Supplier with the applicable invoice. Subject to the Supplier performing the Services in accordance with this Agreement, the Company will pay the Supplier's invoices in accordance with the timescales set out in the Assignment Schedule.

3.2        The Supplier shall only be entitled to issue invoices based on rates other than the Fee Rate where the Client and the Company have authorized the relevant work to be done at such rates.

3.3        The Company shall be entitled to set off, withhold or deduct against any sum it may be liable to pay the Supplier if:

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a)          The Company has made a payment to the Supplier which is not properly due to the Supplier; or

b)          In the event the Supplier fails to return any equipment or property of the Client, the setoff is limited to the value of said equipment or property.

3.4        Any travel, related or other costs incurred by the Supplier in connection with the provision of Services on behalf of the Client will be reimbursable by Company with prior written consent of the Client; such written consent will not be withheld unreasonably. An exception from this provision will be that any travel and related costs incurred by the Supplier arising from the provision of Services at the Client’s Philadelphia location will not be reimbursable and the Supplier will not be entitled to submit a claim for reimbursement of such costs. Unless otherwise agreed in writing, neither the Supplier nor the Consultant shall be entitled to claim from the Company (or the Client) any expenses incurred in connection with the performance of the Services.

4.           Supplier's status

4.1        The parties acknowledge that neither the Supplier nor the Consultant is the employee, worker, agency worker, agent, partner or servant of the Company (or the Client) and accordingly:

a)          this Agreement is not an exclusive arrangement and (subject to clause 2.1(f))  and if applicable 6) nothing in this Agreement shall prevent the Supplier or the Consultant from engaging in other services for any third party;

b)          the Company is not obliged to put the Supplier or the Consultant forward for consideration by the Client for the provision of services nor is the Supplier or the Consultant obliged to provide services to the Client beyond the termination or expiration of this Agreement;

c)          the Supplier shall account on a timely basis to the appropriate authorities for all tax contributions and social security levies (if any) payable in respect of sums paid to the Supplier or by it to the Consultant in connection with this Agreement and shall procure that the Consultant shall also account to the appropriate authorities for all such tax and other sums payable by the Consultant in respect of sums paid to the Consultant which relate in any way to this Agreement;

d)          the Supplier shall, in respect of any substitute consultant supplied pursuant to clause 8.2, carry out the same pre-employment checks and provide the same warranty as set out in clause 4.1

e)          the Supplier/Consultant shall, subject to working towards meeting the Client's objectives, determine generally how the Services shall be supplied.  The parties acknowledge and agree that the Supplier is engaged on the basis that its Consultant will perform the Services as an independent contractor not supervised or directed by the Client;

f)           the Supplier warrants that it operates on a business to business basis such that the supply it makes under this Agreement is one of independent professional consultancy services to the Company and the Client as customers of its business with the Client not having supervision, direction or control of how the Services shall be supplied.

4.2        Michael R. Garone, Managing Member of the Supplier, shall promptly supply to the Company at the end of each month (or other period from time to time required by the Company) confirmation in writing as follows:

a)          the names of all Consultants or workers supplied via the Supplier in that month and such information as the company may require relating to such workers;

4.3        in relation to any such Consultant/worker who operates via a personal service company, up to date documentary evidence that such company is registered.

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4.4        The Supplier warrants covenants and undertakes that the confirmation and documentary evidence supplied for the purposes described above shall be full and accurate.  The Supplier warrants, covenants and undertakes that:

a)          where it pays employment earnings to a worker these will be subject to the appropriate taxes;

b)          all Consultants supplied via it are paid from a US bank account and into a US bank account only;

c)          the Supplier agrees that the Company may audit the Supplier during normal business hours on reasonable notice to verify the Supplier’s compliance with the terms of this Agreement. The Supplier shall provide the Company with all reasonable co-operation and shall allow the Company to have access to and take copies of the Supplier’s records and documentation, in respect of such audit.

5.           Confidentiality and intellectual property

5.1        The Supplier shall:

a)          keep confidential all information relating to the Company's, the Client's or any End User's business and affairs (including, for the avoidance of doubt, Payment Rates) ("Confidential Information") which may become known to it in connection with the supply of the Services or this Agreement. Confidential Information shall not include any public information or information that becomes public through no breach of this Agreement at any point during the term of this Agreement;

b)          not use any Confidential Information except for the purposes of performing the Services;

c)          without delay enter into any and all assignments of intellectual property rights (relating to the Work Results or otherwise arising from the performance of the Services) or confidentiality undertakings that the Company or the Client may require it to enter into;

d)          not without the Client's express written permission transfer or delete any information from the Client’s Systems; and on request, return to the Company (or any other entity as the Company may direct) all material in its or the Consultant's possession or control and belonging to the Client or the Company and/or containing Confidential Information.

5.2        The Supplier shall at the request of the Company, execute and do all acts and things reasonably necessary to enable the Company (or the Company's nominee) to apply for and obtain protection (including copyright and patent rights) for the Work Results and any other intellectual property rights arising from the performance of the Services in any and all countries and to vest title to the Work Results in the Company (or the Company's nominee) absolutely.

5.3        The Supplier hereby assigns to the Company (or the Company's nominee) all present and future intellectual property rights in or relating to the Work Results or otherwise arising from the performance of the Services including, without limitation, the right to sue for past infringements. Supplier acknowledges that no additional compensation is due and owing in relation to such assignments.

5.4        The Supplier shall from time to time do all such acts and things and sign all such documents (without cost to the Company or the Client) at the request of the Company as may be necessary to perfect the assignments referred to in clauses 5.2 and/or 5.3.

The provisions of this clause 5 shall survive termination of this Agreement.

6.           Protection of the Company's business

6.1        The Supplier shall procure that neither the Consultant nor any substitute shall alone or jointly with another or others in any capacity and whether or not for his benefit and whether directly or indirectly either during the term of this Agreement or for a period of 3 calendar months after the date of termination or expiry of this Agreement:

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a)          enter into (or approach with a view to entering into) a similar contract of service or for services:

(i)          direct with the Client without prior written consent of the Company; or

(ii)         with any member of the Client's Group without prior written consent of the Company;

b)          enter into a contract or other form of agreement with a person other than the Company for the supply of services to the Client or any member of the Client's Group without prior written consent of the Company.

7.           Termination

7.1        This Agreement shall automatically expire at close of business on the End Date save that if the Assignment has not been completed by the End Date and the Client has confirmed to the Company and the Supplier that it wishes to extend the Assignment, expiration shall be upon the date of actual completion of the Assignment as notified by the Client to the Company and the Supplier.

7.2        This Agreement may be terminated prior to the End Date:

a)          by the Company for any reason in accordance with the Company Notice Period;

b)          by the Company by written notice if:

(i)          the Supplier is in material breach of any term of this Agreement, which is, in the reasonable opinion of the Company, incapable of being remedied; or, where such breach is in the opinion of the Company capable of being remedied, the Supplier fails to remedy such breach to the Company's satisfaction and at no additional cost to the Company (or the Client) within 15 Business Days after an earlier notice requiring it to do so;

c)          by the Company by notice with immediate effect if:

(i)          the Supplier or the Consultant has in relation to this Agreement committed an act or omission of dishonesty, gross incompetence or gross negligence; or is convicted of any indictable criminal offense (other than, where the Services do not require the Consultant to drive, a road traffic offence for which a penalty of imprisonment is not imposed); or becomes bankrupt, applies for, or has made against it or him, a receiving order or makes any composition with its creditors or an administration order or order is made or resolution passed for the winding up of the Supplier;

d)          by the Supplier, for any reason, in accordance with the Supplier Notice Period;

e)          by the Supplier by 3 Business Days notice if payment required to be made under this Agreement to the Supplier is not timely made save for Clauses 3.2, and 3.4 and such non-payment is not corrected within such 3 Business Day period.

7.3        Termination or expiry of this Agreement shall be without prejudice to the rights of the Company and/or the Client arising directly or indirectly out of the acts and/or omissions of the Supplier and/or the Consultant prior to, in connection with or as a result of such termination or expiry.

7.4        Clauses which by their nature are intended to survive termination of this Agreement shall survive such termination including this clause 7 and clause 5.

8.           Details and identity of Consultant

8.1        The Supplier warrants:

a)          That it will perform the Services with all due care and shall not perform any acts or omissions, fraudulently or with gross negligence or wilful misconduct;

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b)          the correctness of the information supplied to the Company in any Application Documents;

c)          that the Consultant has the experience, training, qualifications and any authorization which the Client considers are necessary, or which are required by law or by any professional body for the Consultant to possess in order to perform the Services; and the Supplier shall, at the request of the Company, provide confirmation of the identity of the Consultant and written references and co-operate in any checks in relation to experience, training, qualifications and authorizations relevant to the performance of the Services;

d)          that the Consultant has no criminal convictions which would reasonably affect the Company's and/or the Client's decision to allow the Consultant access to the Location(s), the Client's Systems or to provide the Services;

e)          that if, at any time prior to the Start Date or during the term of this Agreement, the Supplier has, receives or obtains any information which indicates that the Supplier and/or the Consultant is/are or may be unsuitable to perform the Services for the Client, whether or not the grounds for this are reasonable, the Supplier shall pass such information to the Company immediately, and co-operate fully with any further inquiries the Company may make in connection with that information;

f)           that neither the Supplier nor the Consultant is prevented by any other agreement or arrangement or any restriction (including, without limitation, a restriction in favor of any employment agency, employment business, or client of either of them) from fulfilling in full their respective obligations under this Agreement; and

g)          the Company reserves the right to carry out, or instruct a third party to carry out, electronic identity checking procedures to verify the identity of the Consultant.  The Supplier warrants that it has informed the Consultant of the right reserved by the Company in accordance with this clause 8.1(f) and that the Consultant has consented to the Company, or any third party instructed by the Company, carrying out such identity checks.

8.2        The Supplier may from time to time and shall as soon as possible after being required by the Company so to do, without prejudice to the other provisions of this Agreement, offer a suitable substitute consultant provided that:

a)          the Company shall be under no obligation to accept such substitute consultant if in its or the Client's reasonable opinion such substitute is not wholly suitable (whether by reason of skills, experience, training, qualifications, authorizations or otherwise); and

b)          if a substitute consultant is accepted, the Supplier shall use all due diligence to ensure that handover arrangements are made and shall, at its own expense, be responsible for the handover to the substitute consultant and shall use its reasonable endeavours to procure that a suitable substitute consultant is available to perform the Services as soon as possible.  If no such substitute is available within 5 Business Days after receipt by the Supplier of the Company's requirement of a substitute consultant, then the Company may terminate this Agreement by written notice with immediate effect.

9.           Data Protection

9.1        The Supplier warrants that:

a)          in relation to this Agreement, it shall comply strictly with all provisions and policies disclosed to the Supplier and Consultant relating to data protection;

b)          the Consultant has given his express consent to the Company, the Client, any member of the Client's Group and/or any other intermediary, involved in the supply of the Services to the Client:

(i)          processing the Consultant's personal data for purposes connected with the provision of the Services or otherwise in contemplation of providing the Services and for any purposes connected with the performance of this Agreement; and

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(ii)         exporting and/or processing the Consultant's personal data in jurisdictions outside the US for purposes connected with the performance of this Agreement.

9.2        All personal data is confidential and subject to the General Data Protection Regulation (“GDPR”) and is provided solely for the purpose of providing services. Such information must not be used for any other purpose nor divulged to any third party and the Supplier undertakes to abide by the provisions of the GDPR in receiving and processing the data at all times. In addition, information relating to the Customers business which is capable of being confidential must be kept confidential and not divulged to any third party, except information which is in the public domain. The GDPR provisions set out in the Assignment Schedule (Additional Provisions) shall additionally apply to the performance of the Services.

10.         Anti-Bribery

10.1      The Supplier acknowledges and agrees that it shall not:

(i)          Bribe a person i.e. to offer, promise or give a financial or other advantage or inducement to another person; or

(ii)         Receive a bribe i.e. to request, agree to receive or accept a financial or other advantage or inducement for or in relation to improper conduct; or

(iii)        Bribe any public official, government official or other individual employed by, acting on behalf of or able to influence the decision of any regulatory or governmental authority including any funding body or standards body;

(iv)        Encourage any third party or consultant or employee of Company or Client to give, receive any form of bribe; and

(v)         Fail to prevent bribery.

10.2      The Supplier acknowledges and agrees (and shall procure that the Consultant also acknowledges and agrees) that the Company will not tolerate bribery in any form in connection with the conduct of its business.

10.3      The Supplier shall (and shall procure that the Consultant shall):

a)          comply with all policies disclosed to it by the Company relating to anti-bribery and anti-corruption and any policy provided by Client relating to anti-bribery and anti-corruption;

b)          promptly report to the Company any request or demand for any undue financial or other advantage of any kind received by the Supplier and/or the Consultant in connection with the performance of this Agreement or the performance of the Services.

10.4      The Supplier and/or the Consultant shall promptly notify the Company if, at any time during the term of this Agreement, its circumstances, knowledge or awareness changes such that it would not be able to repeat the warranties set out in clause 10.2.

10.5      Breach of this clause 10 shall be deemed a material breach of this Agreement.

11.         General

11.1      The Supplier acknowledges that, in entering this Agreement, it has not relied on any representations by the Company, the Client or the Consultant made before the execution of this Agreement other than those expressly set out in this Agreement.

11.2      This Agreement is personal to the Supplier and the Supplier shall not be entitled to assign or sub-contract its obligations or rights under this Agreement to any third party or (save in accordance with clause 8.2) to procure that the Services are performed by any person other than the Consultant.  The Company shall, however, with prior written consent of the Supplier, be entitled to assign this Agreement to any member of the Company's Group and, upon such

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assignment, without prejudice to the assignor's rights in respect of matters arising prior to such assignment; all references to the Company shall be deemed to refer to the assignee.

11.3      No amendment to this Agreement is effective unless it is in writing and signed by or on behalf of each party by a person duly authorized by that party.

11.4      Any notice required to be given under this Agreement (including the delivery of any timesheet or invoice) shall be in writing signed by a person duly authorized by the sending party and delivered by hand, sent by facsimile, e-mail or prepaid first class mail to the recipient at its fax number or address specified in this Agreement (or as otherwise notified from time to time to the sender by the recipient for the purposes of this Agreement).

11.5      This Agreement shall be governed by and construed in all respects in accordance with the laws of the State of New Jersey and the courts of the State of New Jersey shall have exclusive jurisdiction over any dispute between the parties relating to or concerning this Agreement.

11.6      The restrictions contained in this Agreement are considered reasonable by the parties, but, if any such restriction is found void but would be valid if some part of the restriction were deleted, such restriction shall apply with such deletion as may be necessary to make it valid and effective.

11.7      Save as set out in clause 11.8 none of the provisions of this Agreement is intended to be for the benefit of, or enforceable by third parties (other than permitted assignees).

11.8      The Client shall be entitled to directly rely on and enforce the provisions of clauses 2, 4.1, 5, 8.1, notwithstanding that the Client is not a party to this Agreement.

11.9      The Supplier and/or Consultant shall be entitled to recover from the Company any and all reasonable attorneys’ fees, costs and expenses incurred by the Supplier and/or Consultant by reason of (i) the Company’s default in the payment of any amounts due under this Agreement save for Clause 3.2, 3.3 and 3.4,  (ii) the Company’s failure to perform its obligations under the Agreement; (iii) in enforcing any of the terms of this Agreement against the Company, and (iv) in exercising any of the rights or remedies afforded the Supplier and/or Consultant at law or in equity.

11.10    Any amounts due the Supplier and/or Consultant by the Company under this Agreement which are not timely paid unless due to clause 3. by the Company shall accrue interest from the date said payment was due at the rate of four percent (4%) per annum.

12.         Business Ethics

12.1      The Supplier agrees to comply with any such policy adopted by the Company relating to anti-bribery, anti-corruption, and data protection.

13.CLIENT OBLIGATIONS

13.1The Client is a Party to this Agreement solely in relation to this Section 13 and 11.5 and as provided under Clause 11.8. For clarity, the provisions of Section 1 and clause 11.1 shall apply to this Section 13.

13.2Subject to clause 13.3 and 13.4 below, to the extent that any third party or employee of Client brings any suit, action or claim against Supplier or Consultant or threatens to bring such a suit, action or claim and to the extent such suit, action, claim or threat arises as a result of the performance of the Services by the Consultant then Client shall take over the control and settlement of such suit, action or claim or threat of such and shall pay any damages, legal fees, court payments, settlement payments, costs or other charges (together “Losses”) arising as a direct result of such suit, action or claim or threat of such.

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13.3The obligations set out under clause 13.2 above are subject to the following:

a)Supplier and Consultant notifying Client in writing that it is requiring Client to assume control of the suit, action or claim under clause 13.2 above;

b)Supplier and Consultant permitting and enabling Client to have control of any suit, action or claim including to enter and defend proceedings on behalf of Supplier and Consultant. Should Supplier or Consultant wish to appoint its own legal advisors in such proceedings, Supplier or Consultant as applicable may do so but will be responsible for the costs of such legal advisors (and such costs will not be reimbursed by Client under clause 13.2 above);

c)Neither Supplier or Consultant will make any admission in relation to any suit, action or claim or threat of such unless explicitly authorised in writing by Client.

d)Supplier and Consultant will provide prompt notice of any suit, action or claim or threat of such in relation to which they are claiming under clause 13.2 and in any event within 72 hours of receiving such suit, action or claim or threat of such. Client will not reimburse for any costs or payments made or incurred by Supplier or Consultant prior to receiving notice of the suit, action or claim or threat of such;

e)Supplier and Consultant will provide all reasonable assistance to Client (or if relevant to Client’s insurers) to enable Client to defend and control any suit, action or claim including attendance at depositions, provision of witness evidence, attendance at court proceedings; and

f)Client shall be entitled to settle any claim, suit or action under clause 13.2 in its sole discretion save that where such settlement involves any admission of liability by Supplier or Consultant or would result in any restriction or financial obligation being placed on Supplier or Consultant, consent of Supplier or Consultant as relevant will be required, such consent not to be unreasonably withheld or delayed.

13.4The obligations under clause 13.2 shall not apply to any suit, action or claim and shall not cover any Losses to the extent such suit, claim or action or Losses are caused by (a) the breach of any term of this Contract by Supplier or Consultant, including any breach of applicable laws; (b) any negligence or breach of statutory duty by Supplier or Consultant; (c) any fraud or fraudulent misrepresentation made by Supplier or Consultant; or (d) any failure to comply with any policy of the Client, to the extent Client has communicated such policy to Supplier or Consultant. For clarity this clause 13.4 shall not restrict or exclude operation of the Client’s Directors and Officers Liability Insurance policy.

13.5Client warrants and represents that to the best of its knowledge and belief, the Consultant will be covered by the terms of Client’s Directors and Officers Liability Insurance policy following appointment of the Consultant by the board of directors of Adaptimmune Therapeutics plc as an officer of Adaptimmune Therapeutics plc and in respect to his role as officer of Adaptimmune Therapeutics plc. The Client confirms that it will pay any retentions required to be paid in accordance with the terms of the policy.

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Assignment Schedule

This Assignment is issued subject to the Company’s standard terms and conditions for the supply of services

1.           Assignment details

"End Date" means March 31, 2020 or such other date as the Company and the Supplier may agree in writing or (if required by the Company following a request by the Client) the date on which the Extended Hire Period ends.

"Extended Hire Period" means such period from time to time agreed by the parties as a period during which the Consultant shall provide the Services following the End Date if required by the Company.

“Notice Period” means the notice period the Company is required to give the Supplier to terminate the Assignment, being 30 days (subject to Clause 7.2 (b) of the main agreement).

"Payment Rate" means the rate paid to the Supplier being Normal Rate of $2,800 USD per day for Services performed in Normal Working Hours plus any other employment costs outlined in clause 3.1 of the Agreement’ such employment costs to be charged at cost.

"Invoice Frequency" means monthly.

"Services" means consultancy services of an Interim CFO defined by the following responsibilities

    Work with the Chief Executive Officer and Executive Team to define and execute the financing strategy for the Client

    Act as a key spokesperson for the Client with the investment community

    Lead the preparation, review and filing of the financial statements (10Q and 10K) and other associated SEC filings

    Lead and manage the finance team ensuring maintenance of an appropriate control environment for SOX compliance and control over the capital deployment of the Client

    Lead the budget/financial plan preparation, review and approval by the Board

    Lead interactions with the Audit Committee, external auditors and SOX program support specialists

"Start Date" means October 1, 2019

"Supplier invoice payment terms" means 7  working days from client authorization of time sheet, subject to the terms of this Agreement.

“Supplier Notice Period” means the notice period a Supplier is required to provide to the Company to terminate the Assignment, being 30 days.

Signed by Katherine Miller on behalf of the Company	/s/ Katherine Miller
	Director
Signed by Michael Garone on behalf of GAR-1 Business Advisory Services	/s/ Michael Garone
	Managing Member
Signed by Helen Tayton-Martin on behalf of ADAPTIMMUNE LLC	/s/ Helen Tayton-Martin
	President and Secretary

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2.           The Client

Client name:	Adaptimmune LLC
Client address:	351 Rouse Boulevard, Philadelphia PA 19112
Client contact:	Adrian Rawcliffe
Location(s) at which Services to be performed (if different from above):	Including but not limited to 351 Rouse Boulevard, Philadelphia PA 19112, 4 Hawser Way, Randolph, NJ 07869 and 60 Jubilee Ave, Milton, Abingdon OX14 4RX

3.           The Consultant (as at the Start Date)

Consultant name:	Michael R. Garone
Consultant address:	4 Hawser Way, Randolph, NJ 07869
E-mail:	mrgarone@optonline.net
Details of a substitute must be notified to the Company

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Self-Billing Agreement

This is an agreement in relation to a self-billing procedure between:

La Fosse Associates Ltd (LFA, the “Self-Biller”) [VAT number 900 3893 42]

and

GAR-1 Business Advisory Services LLC (EIN 84-3028949, NJ Entity ID # 0450417835)

For the duration of this agreement the Self-Biller (LFA) agrees to:

1)    issue self-bill invoices for all supplies made to them by the Self Billee (the supplier)

2)    create self-bill invoices that show the supplier’s name, address and registration number together with all other details which form a full VAT invoice as dictated by HMRC & IRS

3)    create a new self-billing agreement in the event of a VAT number change for either party

4)    inform the supplier if the issue of the self-billed invoices will be outsourced to a third party.

For the duration of this agreement the Self Billee agrees to:

1)    accept invoices raised by the Self-Biller on their behalf

2)    not to raise ‘hard copy’ paper invoices

3)    notify LFA immediately if they change their VAT registration number or VAT status or sell their business or part of their business

This agreement expires on expiration of the contract between the Self-Biller and the Self Billee as detailed at ‘End Date’ in Schedule A above.

Signed:	/s/ James Parker	Signed:	/s/ Michael Garone
Name:	James Parker	Name:	Michael Garone
Position:	Director	Position:	Managing Member, GAR-1 Business Advisory
Date:		Date:	30/9/2019
For and on behalf of La Fosse Associates		For and on behalf of the Self Billee Ltd

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ADDITIONAL PROVISIONS

The following additional provisions shall apply in relation to this Assignment and Supplier and Company agree to comply with such terms.

Start Date provisions

Until the Start Date, any appointment pursuant to this Agreement shall be subject to the Client not giving notice to LFA that it no longer requires the Services of the Supplier (and, if such notice is given, LFA shall notify the Supplier and this Agreement shall automatically terminate without either party being liable to the other).

Equipment and training provision

Company confirms that Client has agreed to provide at its own cost a laptop computer and smart phone for performance of the Services by Consultant. Company confirms that Client has agreed to provide any additional training it requires at its cost.

GDPR Provisions

In this Assignment Schedule:

(a)      The Client is the Controller and the Processor is the Supplier in relation to the types of Personal Data set out below; and

(b)      the types of Personal Data and categories of Data Subject which will be processed, the nature and purpose of that processing and the duration of that processing are as set out below:

(i)        Personal Data capable of identifying any of Client’s employees, contractors, patients, clinical site staff or other individuals working for or on behalf of Client for which Client is Controller;

(ii)       Personal Data relating to individual payee information including tax status, HR status (including immigration), account information, expense information, credit card details and information and other information held in the accounting systems of Client.

For clarity, where processing of Personal Data is carried out on equipment and systems of the Client, the processing obligations set out in these GDPR provisions will be deemed to automatically apply.

(c)      Data Protection Legislation in this Assignment Schedule refers to all applicable privacy and data protection laws including the General Data Protection Legislation ((EU) 2016/679) (GDPR) and any applicable national implementing laws, regulations and secondary legislation in England and Wales relating to the processing of personal data  and the privacy of electronic communications, as amended, replaced or updated from time to time, including the Privacy and Electronic Communications (EC Directive) Regulations 2003 (SI 2003/2426) (Privacy Regulations) as amended by the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011 (SI 2011/1208), the Privacy and Electronic Communications (EC

4

Directive) (Amendment) Regulations 2015 (SI 2015/355) and the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2016 (SI 2016/524).

(d)      Personal Data and Data Subject shall have the meanings given to them under the Data Protection Legislation.

2           In relation to the processing of Personal Data, Processor shall:

(a)      only process Personal Data in accordance with the Controller's written instructions from time to time (which may be specific instructions or standing instructions of general application in relation to the Services, whether set out in this Agreement or otherwise notified to the Processor, unless such processing is required by any law (other than contract law) to which the Processor is subject, in which case the Processor shall (to the extent permitted by law) inform the Controller of that legal requirement before carrying out the processing;

(b)      immediately notify the Controller if it considers that the Controller's instructions are in breach of the GDPR or other EU member state laws; and

(c)      keep a written record of all such processing activities which shall include the information required to be kept under Article 30(2) of the GDPR.

3           In relation to the security and confidentiality of the Personal Data, Processor shall:

(a)      ensure that it has in place appropriate technical and organisational measures to ensure a level of security for the Personal Data which is appropriate to the risks to individuals that may result from the accidental or unlawful destruction, loss, alteration, unauthorised disclosure of, or access to the Personal Data;

(b)      in addition to the confidentiality obligations in section 6 of this Agreement:

(i)        ensure that only those of the Processor's personnel who need to have access to the Personal Data are granted access to such data and only for the purposes of the performance of this Agreement and all of the Processor's personnel required to access the Personal Data are informed of the confidential nature of the Personal Data, comply with the obligations set out in this Exhibit, and are bound by appropriate confidentiality obligations when accessing the Personal Data; and

(ii)       not publish, disclose or divulge any of the Personal Data to any third party (including for the avoidance of doubt the Data Subject itself) unless directed to do so in writing by the Controller;

(c)      not modify, amend or alter the contents of the Personal Data unless specifically authorised in writing by the Controller.

4           If the Processor becomes aware of a Personal Data breach, it shall notify the Controller without undue delay on becoming of aware of such a breach.

5           The Processor shall notify the Controller within five Business Days upon receiving the following:

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(a)      a request from a Data Subject to have access to that person's Personal Data; or

(b)      a complaint or request relating to the Controller's obligations under the Data Protection Legislation; or

(c)      any other communication relating directly or indirectly to the processing of any Personal Data in connection with this agreement.

6           The Processor shall provide the Controller with full co-operation and assistance in order to enable the Controller to comply with its obligations under the Data Protection Legislation in relation to:

(a)      the Controller's obligations in relation to responding to Data Subject requests;

(b)      the security of the Personal Data;

(c)      notifying Personal Data breaches to the relevant supervisory authority;

(d)      communicating personal data breaches to the Data Subject; and

(e)      impact assessments and related consultations with supervisory authorities or regulators.

7           The Processor shall:

(a)      make available to the Controller all information that the Controller requests from time to time to enable the Controller to verify that the Processor is in compliance with its obligations in this Exhibit; and

(b)      permit the Controller or its external advisers to inspect and audit the Processor's data processing activities and those of its agents, subsidiaries and Sub-contractors (to the extent the Processor is reasonably able to procure such third party access).

8           The Processor shall not engage or authorise a sub-contractor to process the Personal Data unless:

(i)        it has obtained the prior written consent of the Controller (which may be granted or withheld in the Controller's sole discretion) before transferring the Personal Data to any Sub-Contractors in connection with the provision of the Services; and

(ii)       the Sub-Contractor has either entered into a direct contract with the Controller or a contract with the Processor which incorporates the provisions equivalent to those in this agreement in relation to confidentiality, data protection and security, and

9           In relation to transfers of Personal Data to areas outside the European Economic Area (EEA):

(a)      the Processor shall not transfer any Personal Data outside the  EEA without the Controller's prior written consent; and

(b)      if the Controller consents to any transfers pursuant to preceding clause, the Processor shall ensure that the following conditions are met in relation to such transfers:

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(i)        the Processor complies with its obligations under the Data Protection Legislation by ensuring that there is an adequate level of protection to any Personal Data that is transferred (including as relevant model clauses or adoption of Privacy Shield as appropriate);

(ii)       that there are appropriate safeguards in place in relation to that transfer;

(iii)      that Data Subjects have enforceable rights and effective legal remedies; and

(iv)      that the Processor shall comply with any other reasonable instructions as notified to it by the Controller in relation to such transfers.

For clarity transfers between members of the Client Group are deemed to comply with Data Protection Legislation and Client has confirmed appropriate safeguards are in place in relation to such transfers.

10         The Controller acknowledges that the Processor is reliant on the Controller alone for direction as to the extent the Processor is entitled to use and process the Personal Data. The Processor shall be entitled to relief from liability in circumstances where a Data Subject makes a claim or complaint with regards to the Processor's actions to the extent that such actions directly result from instructions received from the Controller.

11         On the expiry or termination of this Agreement, the Processor shall notify the Controller of the Personal Data that it holds. Promptly following such expiry or termination, and unless otherwise instructed in writing by Controller or continued storage is required by the Processor to comply with Applicable Laws, the Processor shall securely and permanently destroy all copies of Personal Data in its possession or control (other than any copy transferred to the Controller in accordance with Controller’s request).

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EX-31.1

Exhibit 31.1

Form of Certification Required by Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Adrian Rawcliffe, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Adaptimmune Therapeutics plc;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a.     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2019	/s/ Adrian Rawcliffe
	Adrian Rawcliffe
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Form of Certification Required by Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael Garone, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Adaptimmune Therapeutics plc;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a.     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2019	/s/ Michael Garone
	Michael Garone
	Interim Chief Financial Officer

EX-32.1

Exhibit 32.1

Section 906 Certificate

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Adrian Rawcliffe, Chief Executive Officer of Adaptimmune Therapeutics plc, a public limited company incorporated under English law (the “Company”), hereby certify, to my knowledge, that:

1.        The Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019, to which this Certification is attached as Exhibit 32.1 (the “Quarterly Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.        The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2019

/s/ Adrian Rawcliffe

Adrian Rawcliffe

Chief Executive Officer

EX-32.2

Exhibit 32.2

Section 906 Certificate

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Michael Garone,  Interim Chief Financial Officer of Adaptimmune Therapeutics plc, a public limited company incorporated under English law (the “Company”), hereby certify, to my knowledge, that:

1.        The Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019, to which this Certification is attached as Exhibit 32.2 (the “Quarterly Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.        The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2019

/s/ Michael Garone

Michael Garone

Interim Chief Financial Officer

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities
Net loss	$ (107,801)	$ (59,341)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	5,406	5,248
Amortization	511	464
Share-based compensation expense	8,495	12,453
Realized loss on available-for-sale debt securities		2,473
Realized gain on available-for-sale debt securities	(13)
Unrealized foreign exchange losses	522	4,921
Other	(195)	262
Changes in operating assets and liabilities:
Increase in receivables and other operating assets	(20,075)	(4,140)
Decrease in non-current operating assets	1,468	490
Increase (decrease) in payables and deferred revenue	11,703	(35,533)
Net cash used in operating activities	(99,979)	(72,703)
Cash flows from investing activities
Acquisition of property, plant and equipment	(1,425)	(3,823)
Acquisition of intangibles	(1,036)	(666)
Maturity or redemption of marketable securities	92,803	114,988
Investment in marketable securities	(19,080)	(75,545)
Net cash provided by investing activities	71,262	34,954
Cash flows from financing activities
Proceeds from issuance of common stock, net of issuance costs of $0 and $347		99,653
Proceeds from exercise of stock options	366	2,933
Net cash provided by financing activities	366	102,586
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash	(398)	4,111
Net decrease in cash and cash equivalents	(28,749)	68,948
Cash, cash equivalents and restricted cash at start of period	72,476	88,296
Cash, cash equivalents and restricted cash at end of period	$ 43,727	$ 157,244

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Revenue

9 Months Ended

Sep. 30, 2019

Revenue

Revenue

Note 3 — Revenue

Revenue from contracts with customers arises from one customer, which is GlaxoSmithKline (“GSK”), in one geographic location, which is the United Kingdom. Revenue comprises the following categories (in thousands):

	Three months ended		Three months ended		Nine months ended		Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2019		2018		2019		2018
Development	$	237	$	1,678	$	394	$	18,912
Licenses		—		39,114		—		39,114
	$	237	$	40,792	$	394	$	58,026

The Company has one contract with a customer, which is the GSK Collaboration and License Agreement. The GSK Collaboration and License Agreement consists of multiple performance obligations. In 2019, GSK nominated a third target under the Collaboration and License Agreement. Development of products to this target commenced during the nine months ended September 30, 2019.

The amount of the transaction price probable of being received that is allocated to performance obligations that are unsatisfied or partially satisfied at September 30, 2019 was $2.7 million. The revenue allocated to the third target program will be recognized over an estimated period up to the end of 2020 as the development of products to the target progresses.

The Company received $3.2 million from GSK following the nomination of the third target. Under the terms of the GSK Collaboration and License Agreement, the Company may also be entitled to development and regulatory milestones. The development and regulatory milestones are per product milestones and are dependent on achievement of certain obligations, the nature of the product being developed, stage of development of product, territory in which an obligation is achieved and type of indication or indications in relation to which the product is being developed. In addition, for any program multiple products may be developed to address different HLA-types. These amounts have not been included within the transaction price as of September 30, 2019 because they are not considered probable.

The Company may also receive commercialization milestones upon the first commercial sale of a product based on the indication and the territory and mid-single to low double-digit royalties on worldwide net sales. These amounts have not been included within the transaction price as of September 30, 2019 because they are sales or usage-based royalties promised in exchange for a license of intellectual property, which will be recognized when the subsequent sale or usage occurs.

Development and license revenue recognized in the three and nine months ended September 30, 2018 related to development of the second target program, PRAME, which ended in 2018, and the NY-ESO program, which was transferred to GSK on July 23, 2018.

The following table shows movements in deferred revenue for the nine months ended September 30, 2019 (in thousands):

	Deferred revenue
Deferred revenue at January 1, 2019	$	—
Amounts invoiced in the period		3,217
Revenue in the period		(394)
Foreign exchange arising on consolidation		(140)
Deferred revenue at September 30, 2019	$	2,683

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Accumulated other comprehensive income (loss)

9 Months Ended

Sep. 30, 2019

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income (loss)

Note 7 — Accumulated other comprehensive (loss) income

The following amounts were reclassified out of other comprehensive (loss) income during the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Amount reclassified				Amount reclassified
	Three months ended		Three months ended		Nine months ended		Nine months ended
	September 30,		September 30,		September 30,		September 30,
Component of accumulated other comprehensive income	2019		2018		2019		2018
Unrealized (gains) losses on available-for-sale securities
Reclassification adjustment for (gains) losses on available-for-sale debt securities	$	—	$	—	$	(13)	$	2,473

The affected line in the Condensed Consolidated Statement of Operations for the amounts reclassified out of other comprehensive income above is “Other income (expense), net”.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 05, 2019
Document and Entity Information [Abstract]
Entity Central Index Key	0001621227
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	001-37368
Entity Registrant Name	ADAPTIMMUNE THERAPEUTICS PLC
Entity Incorporation, State or Country Code	X0
Entity Address, Address Line One	60 Jubilee Avenue, Milton Park
Entity Address, City or Town	Abingdon, Oxfordshire
Entity Address, Country	GB
Entity Address, Postal Zip Code	OX14 4RX
City Area Code	44
Local Phone Number	1235 430000
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	American Depositary Shares, each representing 6 Ordinary Shares, par value £0.001 per share
Trading Symbol	ADAP
Security Exchange Name	NASDAQ
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		630,993,866
Entity Tax Identification Number	00-0000000
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3

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Summary of Significant Accounting Policies - Leases - General Information (Details) - USD ($) $ in Thousands	Jan. 01, 2019	Sep. 30, 2019	Dec. 31, 2017
Cumulative effect of applying new accounting standards	$ 0		$ 8,645
Operating lease right-of-use assets		$ 20,563
Operating lease liability		$ 24,935
ASU 2016-02 | Restatement Adjustment
Operating lease right-of-use assets	22,200
Operating lease liability	26,900
Decrease in other liabilities and prepayments	$ 4,700

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Accrued expenses and other current liabilities (Tables)

9 Months Ended

Sep. 30, 2019

Accrued expenses and other current liabilities

Schedule of accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	September 30,		December 31,
	2019		2018
Accrued clinical and development expenditure	$	11,708	$	9,637
Accrued employee expenses		6,910		7,553
Other accrued expenditure		2,641		2,422
Accrued purchase commitments		5,000		—
Other		587		742
	$	26,846	$	20,354

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CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Losses accrued on firm purchase commitments	$ 5,000	$ 5,000

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY (PARENTHETICAL) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Other comprehensive income (loss), available-for-sale securities, before reclassification adjustments, tax
Unrealized holding gains on available-for-sale debt securities, tax	$ 0	$ 0	$ 0	$ 0
Reclassification from accumulated other comprehensive income of gains on available-for-sale debt securities included in net income, tax	0	0	0	0
Foreign currency losses on intercompany loan of a long-term investment nature, tax	$ 0	$ 0	$ 0	$ 0

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Share-based compensation - Share-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Total share-based compensation expense included in the consolidated statements of operations
Total share-based compensation expense	$ 1,820	$ 4,042	$ 8,495	$ 12,453
Research and development
Total share-based compensation expense included in the consolidated statements of operations
Total share-based compensation expense	144	2,053	2,951	6,338
General and administrative
Total share-based compensation expense included in the consolidated statements of operations
Total share-based compensation expense	$ 1,676	$ 1,989	$ 5,544	$ 6,115

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Fair value measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Marketable securities:
Available-for-sale securities, Debt Securities, Current, Total	$ 63,451	$ 136,755
Recurring basis
Marketable securities:
Corporate debt securities	59,430
Agency bond	4,021
Available-for-sale securities, Debt Securities, Current, Total	63,451
Recurring basis | Level 1
Marketable securities:
Corporate debt securities	59,430
Available-for-sale securities, Debt Securities, Current, Total	59,430
Recurring basis | Level 2
Marketable securities:
Agency bond	4,021
Available-for-sale securities, Debt Securities, Current, Total	$ 4,021

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Other expense, net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Other expense, net
Foreign exchange losses	$ 235	$ (2,185)	$ (778)	$ (7,790)
Gains on redemption or maturity of available-for-sale debt securities			13
Losses on redemption or maturity of available-for-sale debt securities				(2,473)
Other	56	(64)	209	(262)
Other income, net	$ 291	$ (2,249)	$ (556)	$ (10,525)

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Accrued expenses and other current liabilities

9 Months Ended

Sep. 30, 2019

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities

Note 11 — Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	September 30,		December 31,
	2019		2018
Accrued clinical and development expenditure	$	11,708	$	9,637
Accrued employee expenses		6,910		7,553
Other accrued expenditure		2,641		2,422
Accrued purchase commitments		5,000		—
Other		587		742
	$	26,846	$	20,354

In 2016, the Company entered into a supply agreement with ThermoFisher for the supply of the Dynabeads® CD3/CD28 technology. The supply agreement runs until December 31, 2025. Under the supply agreement, the Company is required to purchase its requirements for CD3/CD28 magnetic bead product exclusively from ThermoFisher for a period of 5 years. There are minimum purchasing obligations of $5.0 million payable in 2020, which have been recognized in research and development expense in the three months ended September 30, 2019.  The related per-share amount for both the three and nine months ended September 30, 2019 is $(0.01). Management regularly updates the assessment of the utility of the Dynabeads, and in the three months ended September 30, 2019, considers that there is sufficient uncertainty surrounding the utility of the Dynabeads, which is dependent upon current study trajectories, the Company’s clinical pipeline, manufacturing methods and undetermined future projects, to result in the $5.0 million purchase commitment being recognized in the period.

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Operating Leases (Tables)

9 Months Ended

Sep. 30, 2019

Operating leases

Schedule of lease cost

The following table shows the lease costs for the three and nine months ended September 30, 2019 (in thousands):

	Three months ended		Nine months ended
	September 30,		September 30,
	2019		2019
Lease cost:
Operating lease cost	$	989	$	3,003
Short-term lease cost		62		230
	$	1,051	$	3,233
			Nine months ended
			September 30,
			2019
Other information:
Operating cash flows from operating leases (in thousands)			$	3,176
			September 30,
			2019
Weighted-average remaining lease term - operating leases			7.5 years
Weighted-average discount rate - operating leases			7.2%

Schedule of maturities of operating lease liabilities

The maturities of operating lease liabilities are as follows (in thousands):

	Operating leases
2019	$	1,003
2020		4,033
2021		4,077
2022		4,082
2023		3,775
after 2023		16,076
Total lease payments		33,046
Less: Imputed interest		(8,111)
Present value of lease liability	$	24,935

The Company has operating leases in relation to property for office and research facilities. The maximum lease term without activation of termination options is to 2041.

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Accumulated other comprehensive income (loss) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Accumulated other comprehensive income (loss)
Reclassification adjustment for (gains) losses on available-for-sale debt securities	$ (13)	$ 2,473

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Operating Leases - Maturities (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
2019	$ 1,003
2020	4,033
2021	4,077
2022	4,082
2023	3,775
after 2023	16,076
Total lease payments	33,046
Less: Imputed interest	(8,111)
Present value of lease liability	$ 24,935

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Share-based compensation

9 Months Ended

Sep. 30, 2019

Share-based compensation

Share-based compensation

Note 12 — Share-based compensation

The following table shows the total share-based compensation expense included in the unaudited consolidated statements of operations (in thousands):

		Three months ended			Nine months ended
		September 30,			September 30,
	2019		2018		2019		2018
Research and development	$	144	$	2,053	$	2,951	$	6,338
General and administrative		1,676		1,989		5,544		6,115
	$	1,820	$	4,042	$	8,495	$	12,453

The following table shows information about share options and options which have a nominal exercise price (similar to restricted stock units (RSUs)) granted:

		Three months ended			Nine months ended
		September 30,			September 30,
	2019		2018		2019		2018
Number of options over ordinary shares granted		3,733,359		757,273		15,477,255		12,187,614
Weighted average fair value of ordinary shares options	$	0.31	$	1.09	$	0.48	$	0.82
Number of additional options with a nominal exercise price granted		743,292		1,259,760		7,700,658		7,966,716
Weighted average fair value of options with a nominal exercise price	$	0.51	$	1.67	$	0.89	$	1.40

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Other expense, net (Tables)

9 Months Ended

Sep. 30, 2019

Other expense, net

Schedule of other expense, net

Other expense, net consisted of the following (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2019		2018		2019		2018
Foreign exchange gains (losses)	$	235	$	(2,185)	$	(778)	$	(7,790)
Gains (losses) on redemption or maturity of available-for-sale debt securities		—		—		13		(2,473)
Other		56		(64)		209		(262)
	$	291	$	(2,249)	$	(556)	$	(10,525)

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Fair value measurements

9 Months Ended

Sep. 30, 2019

Fair value measurements

Fair value measurements

Note 8 — Fair value measurements

Assets and liabilities measured at fair value on a recurring basis based on Level 1, Level 2, and Level 3 fair value measurement criteria as of September 30, 2019 are as follows (in thousands):

			Fair value measurements using
	September 30,		Level 1		Level 2		Level 3
	2019
Assets:
Marketable securities:
Corporate debt securities	$	59,430	$	59,430	$	—	$	—
Agency bond		4,021		—		4,021		—
	$	63,451	$	59,430	$	4,021	$	—

The Company estimates the fair value of available-for-sale debt securities with the aid of a third party valuation service, which uses actual trade and indicative prices sourced from third-party providers on a daily basis to estimate the fair value. If observed market prices are not available (for example securities with short maturities and infrequent secondary market trades), the securities are priced using a valuation model maximizing observable inputs, including market interest rates.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Common stock
Cash flows from financing activities
Stock issuance costs	$ 0	$ 347

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Operating Leases

9 Months Ended

Sep. 30, 2019

Operating leases

Operating leases

Note 4 – Operating leases

The following table shows the lease costs for the three and nine months ended September 30, 2019 (in thousands):

	Three months ended		Nine months ended
	September 30,		September 30,
	2019		2019
Lease cost:
Operating lease cost	$	989	$	3,003
Short-term lease cost		62		230
	$	1,051	$	3,233
			Nine months ended
			September 30,
			2019
Other information:
Operating cash flows from operating leases (in thousands)			$	3,176
			September 30,
			2019
Weighted-average remaining lease term - operating leases			7.5 years
Weighted-average discount rate - operating leases			7.2%

The maturities of operating lease liabilities are as follows (in thousands):

	Operating leases
2019	$	1,003
2020		4,033
2021		4,077
2022		4,082
2023		3,775
after 2023		16,076
Total lease payments		33,046
Less: Imputed interest		(8,111)
Present value of lease liability	$	24,935

The Company has operating leases in relation to property for office and research facilities. The maximum lease term without activation of termination options is to 2041.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY - USD ($) $ in Thousands	Common stock	Additional paid in capital	Accumulated foreign currency translation adjustments	Accumulated unrealized gains (losses) on available-for-sale debt securities	Accumulated deficit	Total
Increase (Decrease) in Stockholders' Equity
Cumulative effect of applying new accounting standards					$ 8,645	$ 8,645
Beginning balance as adjusted	$ 854	$ 455,401	$ (17,867)	$ (3,774)	(222,985)	211,629
Beginning balance as adjusted, shares	562,119,334
Balance at the beginning of the period at Dec. 31, 2017	$ 854	455,401	(17,867)	(3,774)	(231,630)	202,984
Balance at the beginning of the period, shares at Dec. 31, 2017	562,119,334
Increase (Decrease) in Stockholders' Equity
Net (loss) income					(20,738)	(20,738)
Issuance of shares upon exercise of stock options	$ 4	1,530				1,534
Issuance of shares upon exercise of stock options (in shares)	2,740,626
Foreign currency translation adjustments			(2,525)			(2,525)
Unrealized holding gains (losses) on available-for-sale debt securities, net of tax of $0				(4,056)		(4,056)
Reclassification from accumulated other comprehensive income of gains on available-for-sale debt securities included in net income, net of tax of $				1,163		1,163
Share-based compensation expense		4,672				4,672
Balance at the end of the period at Mar. 31, 2018	$ 858	461,603	(20,392)	(6,667)	(243,723)	191,679
Balance at the end of the period, shares at Mar. 31, 2018	564,859,960
Balance at the beginning of the period at Dec. 31, 2017	$ 854	455,401	(17,867)	(3,774)	(231,630)	202,984
Balance at the beginning of the period, shares at Dec. 31, 2017	562,119,334
Increase (Decrease) in Stockholders' Equity
Net (loss) income						(59,341)
Foreign currency translation adjustments						5,103
Unrealized holding gains (losses) on available-for-sale debt securities, net of tax of $0						1,252
Balance at the end of the period at Sep. 30, 2018	$ 939	570,355	(12,764)	(49)	(282,326)	276,155
Balance at the end of the period, shares at Sep. 30, 2018	627,222,076
Balance at the beginning of the period at Mar. 31, 2018	$ 858	461,603	(20,392)	(6,667)	(243,723)	191,679
Balance at the beginning of the period, shares at Mar. 31, 2018	564,859,960
Increase (Decrease) in Stockholders' Equity
Net (loss) income					(43,845)	(43,845)
Issuance of shares upon exercise of stock options	$ 2	887				889
Issuance of shares upon exercise of stock options (in shares)	1,636,440
Foreign currency translation adjustments			6,107			6,107
Unrealized holding gains (losses) on available-for-sale debt securities, net of tax of $0				5,223		5,223
Reclassification from accumulated other comprehensive income of gains on available-for-sale debt securities included in net income, net of tax of $				1,310		1,310
Share-based compensation expense		3,739				3,739
Balance at the end of the period at Jun. 30, 2018	$ 860	466,229	(14,285)	(134)	(287,568)	165,102
Balance at the end of the period, shares at Jun. 30, 2018	566,496,400
Increase (Decrease) in Stockholders' Equity
Net (loss) income					5,242	5,242
Issuance of shares upon completion of registered direct offering	$ 78	99,575				99,653
Issuance of shares upon completion of registered direct offering (in shares)	60,000,000
Issuance of shares upon exercise of stock options	$ 1	509				510
Issuance of shares upon exercise of stock options (in shares)	725,676
Foreign currency translation adjustments			1,521			1,521
Unrealized holding gains (losses) on available-for-sale debt securities, net of tax of $0				85		85
Share-based compensation expense		4,042				4,042
Balance at the end of the period at Sep. 30, 2018	$ 939	570,355	(12,764)	(49)	(282,326)	276,155
Balance at the end of the period, shares at Sep. 30, 2018	627,222,076
Balance at the beginning of the period at Dec. 31, 2018	$ 939	574,208	(9,607)	(156)	(318,499)	$ 246,885
Balance at the beginning of the period, shares at Dec. 31, 2018	627,454,270					627,454,270
Increase (Decrease) in Stockholders' Equity
Net (loss) income					(27,412)	$ (27,412)
Issuance of shares upon exercise of stock options	$ 1	35				36
Issuance of shares upon exercise of stock options (in shares)	840,432
Foreign currency translation adjustments			(3,543)			(3,543)
Unrealized holding gains (losses) on available-for-sale debt securities, net of tax of $0				210		210
Share-based compensation expense		3,479				3,479
Balance at the end of the period at Mar. 31, 2019	$ 940	577,722	(13,150)	54	(345,911)	219,655
Balance at the end of the period, shares at Mar. 31, 2019	628,294,702
Balance at the beginning of the period at Dec. 31, 2018	$ 939	574,208	(9,607)	(156)	(318,499)	$ 246,885
Balance at the beginning of the period, shares at Dec. 31, 2018	627,454,270					627,454,270
Increase (Decrease) in Stockholders' Equity
Net (loss) income						$ (107,801)
Foreign currency translation adjustments						7,916
Foreign currency losses on intercompany loan of a long-term investment nature, net of tax						(8,388)
Unrealized holding gains (losses) on available-for-sale debt securities, net of tax of $0						223
Balance at the end of the period at Sep. 30, 2019	$ 943	583,065	(10,079)	54	(426,300)	$ 147,683
Balance at the end of the period, shares at Sep. 30, 2019	630,952,736					630,952,736
Balance at the beginning of the period at Mar. 31, 2019	$ 940	577,722	(13,150)	54	(345,911)	$ 219,655
Balance at the beginning of the period, shares at Mar. 31, 2019	628,294,702
Increase (Decrease) in Stockholders' Equity
Net (loss) income					(41,087)	(41,087)
Issuance of shares upon exercise of stock options	$ 3	327				330
Issuance of shares upon exercise of stock options (in shares)	2,377,876
Foreign currency translation adjustments			4,842			4,842
Unrealized holding gains (losses) on available-for-sale debt securities, net of tax of $0				68		68
Reclassification from accumulated other comprehensive income of gains on available-for-sale debt securities included in net income, net of tax of $				(13)		(13)
Share-based compensation expense		3,196				3,196
Balance at the end of the period at Jun. 30, 2019	$ 943	581,245	(8,308)	109	(386,998)	186,991
Balance at the end of the period, shares at Jun. 30, 2019	630,672,578
Increase (Decrease) in Stockholders' Equity
Net (loss) income					(39,302)	(39,302)
Issuance of shares upon exercise of stock options (in shares)	280,158
Foreign currency translation adjustments			6,617			6,617
Foreign currency losses on intercompany loan of a long-term investment nature, net of tax			(8,388)			(8,388)
Unrealized holding gains (losses) on available-for-sale debt securities, net of tax of $0				(55)		(55)
Share-based compensation expense		1,820				1,820
Balance at the end of the period at Sep. 30, 2019	$ 943	$ 583,065	$ (10,079)	$ 54	$ (426,300)	$ 147,683
Balance at the end of the period, shares at Sep. 30, 2019	630,952,736					630,952,736

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Summary of Significant Accounting Policies - Basis of Presentation (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Summary of Significant Accounting Policies
Cash and cash equivalents	$ 39,409						$ 39,409		$ 68,379
Marketable securities - available-for-sale debt securities	63,451						63,451		136,755
Total stockholders' equity	147,683	$ 186,991	$ 219,655	$ 276,155	$ 165,102	$ 191,679	147,683	$ 276,155	$ 246,885	$ 202,984
Net (loss) income attributable to ordinary shareholders	(39,302)	$ (41,087)	$ (27,412)	5,242	$ (43,845)	$ (20,738)	(107,801)	(59,341)
Net cash used in operating activities							(99,979)	(72,703)
Revenue	$ 237			$ 40,792			$ 394	$ 58,026

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Other current assets (Tables)

9 Months Ended

Sep. 30, 2019

Other current assets

Summary of other current assets

Other current assets consisted of the following (in thousands):

	September 30,		December 31,
	2019		2018
Corporate tax receivable	$	30,341	$	16,459
Prepayments		10,391		6,279
Clinical materials		1,522		1,087
VAT receivable		1,385		1,505
Other current assets		471		439
	$	44,110	$	25,769

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue	$ 237	$ 40,792	$ 394	$ 58,026
Operating expenses
Research and development	(29,617)	(23,484)	(77,147)	(75,500)
General and administrative	(10,741)	(10,290)	(32,662)	(32,785)
Total operating expenses	(40,358)	(33,774)	(109,809)	(108,285)
Operating (loss) income	(40,121)	7,018	(109,415)	(50,259)
Interest income	615	606	2,324	1,805
Other income (expense), net	291	(2,249)	(556)	(10,525)
(Loss) income before income taxes	(39,215)	5,375	(107,647)	(58,979)
Income taxes	(87)	(133)	(154)	(362)
Net (loss) income attributable to ordinary shareholders	$ (39,302)	$ 5,242	$ (107,801)	$ (59,341)
Net (loss) income per ordinary share - Basic and diluted
Earnings Per Share, Basic	$ (0.06)	$ 0.01	$ (0.17)	$ (0.10)
Earnings Per Share, Diluted	$ (0.06)	$ 0.01	$ (0.17)	$ (0.10)
Weighted average shares outstanding:
Weighted Average Number of Shares Outstanding, Basic	630,866,800	582,004,954	629,403,293	573,796,275
Weighted Average Number of Shares Outstanding, Diluted	630,866,800	621,764,201	629,403,293	573,796,275
Development revenue
Revenue	$ 237	$ 1,678	$ 394	$ 18,912
License revenue
Revenue		$ 39,114		$ 39,114

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Share-based compensation - Options (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share-based compensation
Number of options granted (in shares)	3,733,359	757,273	15,477,255	12,187,614
Weighted average fair value (in dollars per share)	$ 0.31	$ 1.09	$ 0.48	$ 0.82
Number of additional options with a nominal exercise price granted	743,292	1,259,760	7,700,658	7,966,716
Weighted average fair value of options with a nominal exercise price	$ 0.51	$ 1.67	$ 0.89	$ 1.40

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Available-for-sale debt securities (Details) $ in Thousands	Sep. 30, 2019 USD ($) security	Dec. 31, 2018 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Fair market value of investments in an unrealized loss position	$ 7,200	$ 117,200
Number of debt securities | security	3	37
Number of available-for-sale securities in an unrealized loss position for more than one year | security	0
Cash equivalents
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 19,157
Aggregate estimated fair value	19,157
Marketable securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	63,396
Gross unrealized gains	57
Gross unrealized losses	(2)
Aggregate estimated fair value	63,451
Corporate Debt Securities Maturity Period Less Than Three Months | Marketable securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	24,670
Gross unrealized gains	10
Aggregate estimated fair value	24,680
Money Market Funds Maturity Period Less Than Three Months | Cash equivalents
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	19,157
Aggregate estimated fair value	19,157
Corporate Debt Securities Maturity Period Three Months To One Year | Marketable securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	34,707
Gross unrealized gains	45
Gross unrealized losses	(2)
Aggregate estimated fair value	34,750
Agency Bond Maturity Period Three Months To One Year | Marketable securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	4,019
Gross unrealized gains	2
Aggregate estimated fair value	$ 4,021

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Loss per share - Basic and diluted income (loss) per share (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Numerator for basic and diluted income (loss) per share
Net income (loss) attributable to ordinary shareholders	$ (39,302)	$ (41,087)	$ (27,412)	$ 5,242	$ (43,845)	$ (20,738)	$ (107,801)	$ (59,341)
Numerator for basic income (loss) per share	$ (39,302)			$ 5,242			$ (107,801)	$ (59,341)
Denominator for basic and diluted income (loss) per share
Denominator for basic income (loss) per share - Weighted average shares outstanding	630,866,800			582,004,954			629,403,293	573,796,275
Effect of dilutive securities:
Employee stock options (in shares)				39,759,247
Denominator for diluted income (loss) per share	630,866,800			621,764,201			629,403,293	573,796,275

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Revenue - Deferred revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Change in contract with customer, liability
Amounts invoiced in the period			$ (3,217)
Revenue in the period	$ (237)	$ (40,792)	(394)	$ (58,026)
Foreign exchange arising on consolidation			(140)
Deferred revenue at end of the period	$ 2,683		$ 2,683

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Other current assets

9 Months Ended

Sep. 30, 2019

Other current assets

Other current assets

Note 10 — Other current assets

Other current assets consisted of the following (in thousands):

	September 30,		December 31,
	2019		2018
Corporate tax receivable	$	30,341	$	16,459
Prepayments		10,391		6,279
Clinical materials		1,522		1,087
VAT receivable		1,385		1,505
Other current assets		471		439
	$	44,110	$	25,769

In October 2019, the Company received $15.8 million of the above Corporate tax receivable balance, which related to qualifying research and development expenditure in 2018. The remainder of the corporate tax receivable balance above relates to 2019.

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Revenue (Tables)

9 Months Ended

Sep. 30, 2019

Revenue

Summary of revenue categories

	Three months ended		Three months ended		Nine months ended		Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2019		2018		2019		2018
Development	$	237	$	1,678	$	394	$	18,912
Licenses		—		39,114		—		39,114
	$	237	$	40,792	$	394	$	58,026

Schedule of movements in deferred revenue

The following table shows movements in deferred revenue for the nine months ended September 30, 2019 (in thousands):

	Deferred revenue
Deferred revenue at January 1, 2019	$	—
Amounts invoiced in the period		3,217
Revenue in the period		(394)
Foreign exchange arising on consolidation		(140)
Deferred revenue at September 30, 2019	$	2,683

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Accumulated other comprehensive income (loss) (Tables)

9 Months Ended

Sep. 30, 2019

Accumulated other comprehensive income (loss)

Schedule of amounts reclassified out of other comprehensive income

The following amounts were reclassified out of other comprehensive (loss) income during the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Amount reclassified				Amount reclassified
	Three months ended		Three months ended		Nine months ended		Nine months ended
	September 30,		September 30,		September 30,		September 30,
Component of accumulated other comprehensive income	2019		2018		2019		2018
Unrealized (gains) losses on available-for-sale securities
Reclassification adjustment for (gains) losses on available-for-sale debt securities	$	—	$	—	$	(13)	$	2,473

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Revenue - (Details) - GlaxoSmithKline Intellectual Property Development Ltd	9 Months Ended
	Sep. 30, 2019 customer location contract
Revenue
Number of customers | customer	1
Number of geographic locations | location	1
Number of contracts with customers | contract	1

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 39,409	$ 68,379
Marketable securities - available-for-sale debt securities	63,451	136,755
Accounts receivable, net of allowance for doubtful accounts of $0 and $0		192
Other current assets and prepaid expenses (including current portion of clinical materials)	44,110	25,769
Total current assets	146,970	231,095
Restricted cash	4,318	4,097
Clinical materials	2,485	3,953
Operating lease right-of-use assets, net of accumulated amortization	20,563
Property, plant and equipment, net of accumulated depreciation of $20818 (2018: $15,924)	31,641	36,118
Intangibles, net of accumulated amortization	2,274	1,473
Total assets	208,251	276,736
Current liabilities
Accounts payable	5,535	4,083
Operating lease liabilities, current	2,337
Accrued expenses and other accrued liabilities	26,846	20,354
Deferred revenue	2,683
Total current liabilities	37,401	24,437
Operating lease liabilities, non-current	22,599
Other liabilities, non-current	568	5,414
Total liabilities	60,568	29,851
Stockholders' equity
Common stock - Ordinary shares par value ?0.001, 785,857,300 authorized and 630,952,736 issued and outstanding (2018: 701,103,126 authorized and 627,454,270 issued and outstanding)	943	939
Additional paid in capital	583,065	574,208
Accumulated other comprehensive loss	(10,025)	(9,763)
Accumulated deficit	(426,300)	(318,499)
Total stockholders' equity	147,683	246,885
Total liabilities and stockholders' equity	$ 208,251	$ 276,736

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Share-based compensation (Tables)

9 Months Ended

Sep. 30, 2019

Share-based compensation

Summary of share-based compensation expense included in the unaudited consolidated statements of operations

The following table shows the total share-based compensation expense included in the unaudited consolidated statements of operations (in thousands):

		Three months ended			Nine months ended
		September 30,			September 30,
	2019		2018		2019		2018
Research and development	$	144	$	2,053	$	2,951	$	6,338
General and administrative		1,676		1,989		5,544		6,115
	$	1,820	$	4,042	$	8,495	$	12,453

Summary of share options and options which have a nominal exercise price

The following table shows information about share options and options which have a nominal exercise price (similar to restricted stock units (RSUs)) granted:

		Three months ended			Nine months ended
		September 30,			September 30,
	2019		2018		2019		2018
Number of options over ordinary shares granted		3,733,359		757,273		15,477,255		12,187,614
Weighted average fair value of ordinary shares options	$	0.31	$	1.09	$	0.48	$	0.82
Number of additional options with a nominal exercise price granted		743,292		1,259,760		7,700,658		7,966,716
Weighted average fair value of options with a nominal exercise price	$	0.51	$	1.67	$	0.89	$	1.40

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Fair value measurements (Tables)

9 Months Ended

Sep. 30, 2019

Fair value measurements

Summary of fair value of assets and liabilities on a recurring basis based on fair value measurement criteria

Assets and liabilities measured at fair value on a recurring basis based on Level 1, Level 2, and Level 3 fair value measurement criteria as of September 30, 2019 are as follows (in thousands):

			Fair value measurements using
	September 30,		Level 1		Level 2		Level 3
	2019
Assets:
Marketable securities:
Corporate debt securities	$	59,430	$	59,430	$	—	$	—
Agency bond		4,021		—		4,021		—
	$	63,451	$	59,430	$	4,021	$	—

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net (loss) income	$ (39,302)	$ 5,242	$ (107,801)	$ (59,341)
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments, net of tax of $0, $0, $0 and $0	6,617	1,521	7,916	5,103
Foreign currency losses on intercompany loan of a long-term investment nature, net of tax	(8,388)		(8,388)
Unrealized (gains) losses on available-for-sale debt securities
Unrealized holding (losses) gains on available-for-sale debt securities, net of tax of $0, $0, $0 and $0	(55)	85	223	1,252
Reclassification adjustment for (gains) losses on available-for-sale debt securities included in net loss, net of tax of $0, $0, $0 and $0			(13)	2,473
Total comprehensive (loss) income for the period	$ (41,128)	$ 6,848	$ (108,063)	$ (50,513)

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2 — Summary of Significant Accounting Policies

(a)          Basis of presentation

The condensed consolidated interim financial statements of Adaptimmune Therapeutics plc and its subsidiaries and other financial information included in this Quarterly Report are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars. All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated on consolidation.

The unaudited condensed consolidated interim financial statements presented in this Quarterly Report should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2019 (the “Annual Report”). The balance sheet as of December 31, 2018 was derived from audited consolidated financial statements included in the Company’s Annual Report but does not include all disclosures required by U.S. GAAP. The Company’s significant accounting policies are described in Note 2 to those consolidated financial statements.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim period. The interim results are not necessarily indicative of results to be expected for the full year.

On January 1, 2019, the Company adopted new guidance on the accounting for leases, which has been codified within Accounting Standard Codification Topic 842, Leases (“ASC 842”). The Company has adopted the guidance using the modified retrospective approach, with the cumulative effect of initially applying the guidance recognized as an adjustment to the opening balance of equity at January 1, 2019. Therefore, the comparative financial information for the three and nine months ended September 30, 2018 and as of December 31, 2018 has not been restated and continues to be reported under previous guidance. The effect of adopting ASC 842 on the accumulated deficit, total stockholders’ equity and net assets as at January 1, 2019 was $0.

(b)          Going concern analysis

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. As of September 30, 2019, the Company had cash and cash equivalents of $39.4 million, marketable securities of $63.5 million, and stockholders’ equity of $147.7 million. During the nine months ended September 30, 2019, the Company incurred a net loss of $107.8 million, used cash of $100.0 million in its operating activities, and generated revenues of $0.4 million. The Company has incurred net losses in most periods since inception, and it expects to incur operating losses in future periods. When considered with the Company’s projected expenditure for the next 12 months, these factors raise substantial doubt about its ability to continue as a going concern for at least one year from the issuance of these condensed consolidated financial statements. If the Company does not have sufficient funding for the next 12 months, it might result in a significant reduction in its research and development activities or other operations.

The Company is considering obtaining additional capital (whether non-dilutive or dilutive). In addition, the Company continues to review and prioritize clinical development projects and costs with the aim of focusing operations on the ADP-A2M4 SPEARHEAD-1, ADP-A2M4CD8 SURPASS and ADP-A2AFP trials. Management believes that with additional funds and cost reductions, it will have sufficient capital to meet the Company’s operating expenses and obligations. While management believes the Company has the ability to raise additional funds, there is no assurance that such plans will be successful and therefore there is substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued.

(c)          Use of estimates in interim financial statements

The preparation of interim financial statements, in conformity with U.S. GAAP and SEC regulations, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are primarily made in relation to the valuation of share options, valuation allowances relating to deferred tax assets, revenue recognition, estimating clinical trial expenses and estimating reimbursements from R&D tax and expenditure credits. If actual results differ from the Company’s estimates, or to the extent these estimates are adjusted in future periods, the Company’s results of operations could either benefit from, or be adversely affected by, any such change in estimate.

(d)          Fair value measurements

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The hierarchy defines three levels of valuation inputs:

Level 1 - Quoted prices in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 - Unobservable inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability

The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The fair value of marketable securities, which are measured at fair value on a recurring basis is detailed in Note 8, Fair value measurements.

(e)          Leases

On January 1, 2019, the Company adopted a new standard, Accounting Standard Update 2016-02 – Leases, which is codified in ASC 842. The comparative financial information for the three and nine months ended September 30, 2018 and as of December 31, 2018 has not been restated and is prepared in accordance with the accounting policies that are described in Note 2 to the consolidated financial statements included in the Annual Report.

The Company determines whether an arrangement is a lease at contract inception by establishing if the contract conveys the right to use, or control the use of, identified property, plant, or equipment for a period of time in exchange for consideration. Leases may be classified as finance leases or operating leases. All the Company’s leases are classified as operating leases as they were previously classed as these and the lease classification is not reassessed on adoption of ASC 842. Operating lease right-of-use (ROU) assets and operating lease liabilities recognized in the Condensed Consolidated Balance Sheet represent the right to use an underlying asset for the lease term and an obligation to make lease payments arising from the lease respectively.

Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of minimum lease payments over the lease term. Since the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rates (the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment) based on the information available at commencement date in determining the discount rate used to calculate the present value of lease payments. As the Company has no external borrowings, the incremental borrowing rates are determined using information on indicative borrowing rates that would be available to the Company based on the value, currency and borrowing term provided by financial institutions, adjusted for company and market specific factors. The lease term is based on the non-cancellable period in the lease contract, and options to extend the lease are included when it is reasonably certain that the Company will exercise that option. Any termination fees are included in the calculation of the ROU asset and lease liability when it is assumed that the lease will be terminated.

The Company accounts for lease components (e.g. fixed payments including rent and termination costs) separately from non-lease components (e.g. common-area maintenance costs and service charges based on utilization) which are recognized over the period in which the obligation occurs.

At each reporting date, the operating lease liabilities are increased by interest and reduced by repayments made under the lease agreements. The right-of-use asset is subsequently measured for an operating lease at the amount of the remeasured lease liability (i.e. the present value of the remaining lease payments), adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, and any unamortized initial direct costs.

The Company has operating leases in relation to property for office and research facilities. All of the leases have termination options, and it is assumed that the initial termination options for the buildings will be activated for most of these. The maximum lease term without activation of termination options is to 2041.

The Company has elected not to recognize a right-of-use asset and lease liability for short-term leases. A short-term lease is a lease with a lease term of 12 months or less and which does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Operating lease costs are recognized on a straight line basis over the lease term, and they are categorized within Research and development and General and administrative expenses in the Condensed Consolidated Statement of Operations. The operating lease cash flows are categorized under Net cash used in operating activities in the Condensed Consolidated Statement of Cash Flows.

(f)          Foreign currency

The reporting currency of the Company is the U.S. dollar. The Company has determined the functional currency of the ultimate parent company, Adaptimmune Therapeutics plc, is U.S. dollars because it predominately raises finance and expends cash in U.S. dollars. The functional currency of subsidiary operations is the applicable local currency. Transactions in foreign currencies are translated into the functional currency of the subsidiary in which they occur at the foreign exchange rate in effect on at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the functional currency of the relevant subsidiary at the foreign exchange rate in effect on the balance sheet date. Foreign exchange differences arising on translation are recognized within other income (expense) in the consolidated statement of operations.

The results of operations for subsidiaries, whose functional currency is not the U.S. dollar, are translated at an average rate for the period where this rate approximates to the foreign exchange rates ruling at the dates of the transactions and the balance sheet are translated at foreign exchange rates ruling at the balance sheet date. Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income (loss). The Company’s subsidiary in the United Kingdom has an intercompany loan

balance in U.S dollars payable to the ultimate parent company, Adaptimmune Therapeutics plc. Beginning on July 1, 2019, the intercompany loan will be considered of a long-term investment nature as repayment is not planned or anticipated in the foreseeable future. It is Adaptimmune Therapeutics plc’s intent not to request payment of the intercompany loan for the foreseeable future. The foreign exchange gains or losses arising on the revaluation of intercompany loans of a long-term investment nature are reported within other comprehensive income (loss).

(g)          New accounting pronouncements

Adopted in the period

Leases

On January 1, 2019, the Company adopted Accounting Standard Update 2016-02 – Leases, which is codified in ASC 842. The Company has adopted the guidance using the modified retrospective approach, with the cumulative effect of initially applying the guidance recognized as an adjustment to the opening balance of equity at January 1, 2019. Therefore, the comparative information has not been adjusted and continues to be reported under previous guidance. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed it to carry forward the historical lease classification of the Company’s leases as operating leases. The effect on the accumulated deficit, total stockholders’ equity and net assets as at January 1, 2019 was $0.

The adoption of ASC 842 has had a material impact on the Company’s financial statements. At January 1, 2019 the Company recognized right-of-use assets and liabilities for operating leases following the adoption date of $22.2 million and $26.9 million respectively and derecognized $4.7 million of other liabilities and prepayments that had been recognized under previous guidance.

To be adopted in future periods

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13 - Financial Instruments - Credit losses, which replaces the incurred loss impairment methodology for financial instruments in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods within that fiscal year. Early application is permitted for the fiscal year beginning January 1, 2019, including interim periods within that fiscal year. The FASB has issued a proposed Accounting Standards Update which could result in postponement of the effective date of the new guidance to the fiscal year beginning January 1, 2023. The guidance must be adopted using a modified-retrospective approach and a prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued ASU 2018-15 – Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods within that fiscal year. Early application is permitted for the fiscal year beginning January 1, 2019, including interim periods within that fiscal year. The guidance may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13 – Fair Value Measurement (Topic 820) - Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods

within that fiscal year. Early application is permitted. Certain amendments apply prospectively with the all other amendments applied retrospectively to all periods presented upon their effective date. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

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Loss per share

9 Months Ended

Sep. 30, 2019

Loss per share

Loss per share

Note 6 — Loss per share

The numerator for the basic and diluted (loss) income per share is as follows (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2019		2018		2019		2018
Net (loss) income attributable to ordinary shareholders	$	(39,302)	$	5,242	$	(107,801)	$	(59,341)
Numerator for basic (loss) income per share		(39,302)		5,242		(107,801)		(59,341)
Numerator for diluted (loss) income per share		(39,302)		5,242		(107,801)		(59,341)

The denominator for the basic and diluted (loss) income per share is as follows:

	Three months ended		Nine months ended
	September 30,		September 30,
	2019	2018	2019	2018
Denominator for basic (loss) income per share - Weighted average shares outstanding	630,866,800	582,004,954	629,403,293	573,796,275
Effect of dilutive securities:
Employee stock options	—	39,759,247	—	—
Denominator for diluted (loss) income per share	630,866,800	621,764,201	629,403,293	573,796,275

The dilutive effect of 90,072,300 stock options outstanding as of September 30, 2019 have been excluded from the diluted loss per share calculation for the three and nine months ended September 30, 2019, because they would have an antidilutive effect on the loss per share for the period.

The dilutive effect of 2,791,651 and 88,869,497 stock options have been excluded from the diluted earnings (loss) per share calculation for the three and nine months ended September 30, 2018, respectively, because they would have an antidilutive effect on the earnings (loss) per share for the period.

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Accrued expenses and other current liabilities - Supply agreement (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Contingencies and commitments
Purchasing obligations	$ 5.0
Period of purchase obligation	5 years
Minimum | Research and development
Contingencies and commitments
Purchasing obligations	$ 5.0

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) $ in Thousands	Sep. 30, 2019 £ / shares	Sep. 30, 2019 USD ($) shares	Dec. 31, 2018 £ / shares	Dec. 31, 2018 USD ($) shares
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
Allowance for doubtful accounts | $		$ 0		$ 0
Property, plant and equipment, accumulated depreciation | $		$ 20,818		$ 15,924
Common stock, par value | £ / shares	£ 0.001		£ 0.001
Common stock, shares authorized		785,857,300		701,103,126
Common stock, shares issued		630,952,736		627,454,270
Common stock, shares outstanding		630,952,736		627,454,270

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General (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
General
Accumulated deficit	$ 426,300	$ 318,499

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Available-for-sale debt securities (Tables)

9 Months Ended

Sep. 30, 2019

Available-for-sale debt securities

Schedule of investments in available-for-sale debt securities

As of September 30, 2019, the Company has the following investments in available-for-sale debt securities (in thousands):

				Gross		Gross		Aggregate
	Remaining	Amortized		Unrealized		Unrealized		Estimated
	Contractual Maturity	Cost		Gains		Losses		Fair Value
Cash equivalents:
Money market funds	Less than 3 months	$	19,157	$	—	$	—	$	19,157
		$	19,157	$	—	$	—	$	19,157
Marketable securities:
Corporate debt securities	Less than 3 months	$	24,670	$	10	$	—	$	24,680
Corporate debt securities	3 months to 1 year		34,707		45		(2)		34,750
Agency bond	3 months to 1 year		4,019		2		—		4,021
		$	63,396	$	57	$	(2)	$	63,451

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Foreign currency translation adjustments, tax	$ 0	$ 0	$ 0	$ 0
Foreign currency losses on intercompany loan of a long-term investment nature, tax	0	0	0	0
Unrealized holding gains on available-for-sale debt securities, tax	0	0	0	0
Reclassification adjustment for losses on available-for-sale debt securities included in net loss, tax	$ 0	$ 0	$ 0	$ 0

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Revenue - Revenue from contracts with customers (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue
Revenue, Product and Service [Extensible List]	adap:DevelopmentAndServiceMember		adap:DevelopmentAndServiceMember	adap:DevelopmentAndServiceMember
Revenue	$ 237	$ 40,792	$ 394	$ 58,026
Transaction price			2,700
Revenue recognized in the period			3,200
Development revenue
Revenue
Revenue	$ 237	1,678	$ 394	18,912
License revenue
Revenue
Revenue		$ 39,114		$ 39,114

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General

9 Months Ended

Sep. 30, 2019

General

General

Note 1 — General

Adaptimmune Therapeutics plc is registered in England and Wales. Its registered office is 60 Jubilee Avenue, Milton Park, Abingdon, Oxfordshire, OX14 4RX, United Kingdom. Adaptimmune Therapeutics plc and its subsidiaries (collectively “Adaptimmune” or the “Company”) is a clinical-stage biopharmaceutical company primarily focused on providing novel cell therapies to patients, particularly for the treatment of solid tumors. The Company’s proprietary SPEAR (Specific Peptide Enhanced Affinity Receptor) T-cell platform enables it to identify cancer targets, find and genetically engineer T-cell receptors (“TCRs”), and produce therapeutic candidates (“SPEAR T-cells”) for administration to patients. Using its affinity engineered TCRs, the Company aims to become the first company to have a TCR T-cell approved for the treatment of a solid tumor indication.

The Company is subject to a number of risks similar to other biopharmaceutical companies in the early stage of clinical development including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical programs or clinical programs, the need to obtain marketing approval for its SPEAR T-cells, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s SPEAR T-cells, the need to develop a reliable commercial manufacturing process, the need to commercialize any T-cell therapies that may be approved for marketing, and protection of proprietary technology. If the Company does not successfully commercialize any of its SPEAR T-cells, it will be unable to generate product revenue or achieve profitability. The Company had an accumulated deficit of $426.3 million as of September 30, 2019.

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Other expense, net

9 Months Ended

Sep. 30, 2019

Other expense, net

Other income, net

Note 5 — Other income (expense), net

Other expense, net consisted of the following (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2019		2018		2019		2018
Foreign exchange gains (losses)	$	235	$	(2,185)	$	(778)	$	(7,790)
Gains (losses) on redemption or maturity of available-for-sale debt securities		—		—		13		(2,473)
Other		56		(64)		209		(262)
	$	291	$	(2,249)	$	(556)	$	(10,525)

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Accrued expenses and other current liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accrued expenses and other current liabilities
Accrued clinical and development expenditure	$ 11,708	$ 9,637
Accrued employee expenses	6,910	7,553
Other accrued expenditure	2,641	2,422
Other accrued purchases	5,000
Other	587	742
Total	$ 26,846	$ 20,354

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Loss per share - Antidilutive shares (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share options
Antidilutive securities
Potentially dilutive equity instruments excluded from the diluted loss per share (in shares)	90,072,300	2,791,651	90,072,300	88,869,497

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Operating Leases - Lease Cost (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Operating leases
Operating lease cost	$ 989	$ 3,003
Short-term lease cost	62	230
Total	$ 1,051	3,233
Operating cash flows from operating leases (in thousands)		$ 3,176
Weighted-average remaining lease term - operating leases	7 years 6 months	7 years 6 months
Weighted-average discount rate - operating leases	7.20%	7.20%

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Other current assets (Details) - USD ($) $ in Thousands	Oct. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Corporate tax receivable		$ 30,341	$ 16,459
Prepayments		10,391	6,279
Clinical materials		1,522	1,087
VAT receivable		1,385	1,505
Other current assets		471	439
Total		$ 44,110	$ 25,769
Subsequent events
Amount of corporate tax receivable attributable to research and expenditures	$ 15,800

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Loss per share (Tables)

9 Months Ended

Sep. 30, 2019

Loss per share

Schedule of numerator and denominator in the basic and diluted loss per share computation

Note 6 — Loss per share

The numerator for the basic and diluted (loss) income per share is as follows (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2019		2018		2019		2018
Net (loss) income attributable to ordinary shareholders	$	(39,302)	$	5,242	$	(107,801)	$	(59,341)
Numerator for basic (loss) income per share		(39,302)		5,242		(107,801)		(59,341)
Numerator for diluted (loss) income per share		(39,302)		5,242		(107,801)		(59,341)

The denominator for the basic and diluted (loss) income per share is as follows:

	Three months ended		Nine months ended
	September 30,		September 30,
	2019	2018	2019	2018
Denominator for basic (loss) income per share - Weighted average shares outstanding	630,866,800	582,004,954	629,403,293	573,796,275
Effect of dilutive securities:
Employee stock options	—	39,759,247	—	—
Denominator for diluted (loss) income per share	630,866,800	621,764,201	629,403,293	573,796,275

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Available-for-sale debt securities

9 Months Ended

Sep. 30, 2019

Available-for-sale debt securities

Available-for-sale debt securities

Note 9 — Available-for-sale debt securities

As of September 30, 2019, the Company has the following investments in available-for-sale debt securities (in thousands):

				Gross		Gross		Aggregate
	Remaining	Amortized		Unrealized		Unrealized		Estimated
	Contractual Maturity	Cost		Gains		Losses		Fair Value
Cash equivalents:
Money market funds	Less than 3 months	$	19,157	$	—	$	—	$	19,157
		$	19,157	$	—	$	—	$	19,157
Marketable securities:
Corporate debt securities	Less than 3 months	$	24,670	$	10	$	—	$	24,680
Corporate debt securities	3 months to 1 year		34,707		45		(2)		34,750
Agency bond	3 months to 1 year		4,019		2		—		4,021
		$	63,396	$	57	$	(2)	$	63,451

Maturity information above is categorized by the period remaining after the reporting period until the maturity date. As of September 30, 2019 and December 31, 2018, the aggregate fair value of securities held by the Company in an unrealized loss position was $7.2 million and $117.2 million respectively, which consisted of 3 and 37 separate securities, respectively. No securities have been in an unrealized loss position for more than one year. As of September 30, 2019, the securities in an unrealized loss position are not considered to be other than temporarily impaired because the impairments are not severe, have been for a short duration and are due to normal market fluctuations. Furthermore, the Company does not intend to sell the debt securities in an unrealized loss position, and it is unlikely that the Company will be required to sell these securities before the recovery of the amortized cost.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Summary of Significant Accounting Policies

Use of estimates in financial statements

(c)          Use of estimates in interim financial statements

The preparation of interim financial statements, in conformity with U.S. GAAP and SEC regulations, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are primarily made in relation to the valuation of share options, valuation allowances relating to deferred tax assets, revenue recognition, estimating clinical trial expenses and estimating reimbursements from R&D tax and expenditure credits. If actual results differ from the Company’s estimates, or to the extent these estimates are adjusted in future periods, the Company’s results of operations could either benefit from, or be adversely affected by, any such change in estimate.

(d)          Fair value measurements

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The hierarchy defines three levels of valuation inputs:

Level 1 - Quoted prices in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 - Unobservable inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability

The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The fair value of marketable securities, which are measured at fair value on a recurring basis is detailed in Note 8, Fair value measurements.

Foreign currency

(f)          Foreign currency

The reporting currency of the Company is the U.S. dollar. The Company has determined the functional currency of the ultimate parent company, Adaptimmune Therapeutics plc, is U.S. dollars because it predominately raises finance and expends cash in U.S. dollars. The functional currency of subsidiary operations is the applicable local currency. Transactions in foreign currencies are translated into the functional currency of the subsidiary in which they occur at the foreign exchange rate in effect on at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the functional currency of the relevant subsidiary at the foreign exchange rate in effect on the balance sheet date. Foreign exchange differences arising on translation are recognized within other income (expense) in the consolidated statement of operations.

The results of operations for subsidiaries, whose functional currency is not the U.S. dollar, are translated at an average rate for the period where this rate approximates to the foreign exchange rates ruling at the dates of the transactions and the balance sheet are translated at foreign exchange rates ruling at the balance sheet date. Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income (loss). The Company’s subsidiary in the United Kingdom has an intercompany loan

balance in U.S dollars payable to the ultimate parent company, Adaptimmune Therapeutics plc. Beginning on July 1, 2019, the intercompany loan will be considered of a long-term investment nature as repayment is not planned or anticipated in the foreseeable future. It is Adaptimmune Therapeutics plc’s intent not to request payment of the intercompany loan for the foreseeable future. The foreign exchange gains or losses arising on the revaluation of intercompany loans of a long-term investment nature are reported within other comprehensive income (loss).

Fair value measurements

(d)          Fair value measurements

Going concern

(b)          Going concern analysis

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. As of September 30, 2019, the Company had cash and cash equivalents of $39.4 million, marketable securities of $63.5 million, and stockholders’ equity of $147.7 million. During the nine months ended September 30, 2019, the Company incurred a net loss of $107.8 million, used cash of $100.0 million in its operating activities, and generated revenues of $0.4 million. The Company has incurred net losses in most periods since inception, and it expects to incur operating losses in future periods. When considered with the Company’s projected expenditure for the next 12 months, these factors raise substantial doubt about its ability to continue as a going concern for at least one year from the issuance of these condensed consolidated financial statements. If the Company does not have sufficient funding for the next 12 months, it might result in a significant reduction in its research and development activities or other operations.

The Company is considering obtaining additional capital (whether non-dilutive or dilutive). In addition, the Company continues to review and prioritize clinical development projects and costs with the aim of focusing operations on the ADP-A2M4 SPEARHEAD-1, ADP-A2M4CD8 SURPASS and ADP-A2AFP trials. Management believes that with additional funds and cost reductions, it will have sufficient capital to meet the Company’s operating expenses and obligations. While management believes the Company has the ability to raise additional funds, there is no assurance that such plans will be successful and therefore there is substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued.

Leases

(e)          Leases

On January 1, 2019, the Company adopted a new standard, Accounting Standard Update 2016-02 – Leases, which is codified in ASC 842. The comparative financial information for the three and nine months ended September 30, 2018 and as of December 31, 2018 has not been restated and is prepared in accordance with the accounting policies that are described in Note 2 to the consolidated financial statements included in the Annual Report.

The Company determines whether an arrangement is a lease at contract inception by establishing if the contract conveys the right to use, or control the use of, identified property, plant, or equipment for a period of time in exchange for consideration. Leases may be classified as finance leases or operating leases. All the Company’s leases are classified as operating leases as they were previously classed as these and the lease classification is not reassessed on adoption of ASC 842. Operating lease right-of-use (ROU) assets and operating lease liabilities recognized in the Condensed Consolidated Balance Sheet represent the right to use an underlying asset for the lease term and an obligation to make lease payments arising from the lease respectively.

Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of minimum lease payments over the lease term. Since the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rates (the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment) based on the information available at commencement date in determining the discount rate used to calculate the present value of lease payments. As the Company has no external borrowings, the incremental borrowing rates are determined using information on indicative borrowing rates that would be available to the Company based on the value, currency and borrowing term provided by financial institutions, adjusted for company and market specific factors. The lease term is based on the non-cancellable period in the lease contract, and options to extend the lease are included when it is reasonably certain that the Company will exercise that option. Any termination fees are included in the calculation of the ROU asset and lease liability when it is assumed that the lease will be terminated.

The Company accounts for lease components (e.g. fixed payments including rent and termination costs) separately from non-lease components (e.g. common-area maintenance costs and service charges based on utilization) which are recognized over the period in which the obligation occurs.

At each reporting date, the operating lease liabilities are increased by interest and reduced by repayments made under the lease agreements. The right-of-use asset is subsequently measured for an operating lease at the amount of the remeasured lease liability (i.e. the present value of the remaining lease payments), adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, and any unamortized initial direct costs.

The Company has operating leases in relation to property for office and research facilities. All of the leases have termination options, and it is assumed that the initial termination options for the buildings will be activated for most of these. The maximum lease term without activation of termination options is to 2041.

The Company has elected not to recognize a right-of-use asset and lease liability for short-term leases. A short-term lease is a lease with a lease term of 12 months or less and which does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Operating lease costs are recognized on a straight line basis over the lease term, and they are categorized within Research and development and General and administrative expenses in the Condensed Consolidated Statement of Operations. The operating lease cash flows are categorized under Net cash used in operating activities in the Condensed Consolidated Statement of Cash Flows.

New accounting pronouncements

(g)          New accounting pronouncements

Adopted in the period

Leases

On January 1, 2019, the Company adopted Accounting Standard Update 2016-02 – Leases, which is codified in ASC 842. The Company has adopted the guidance using the modified retrospective approach, with the cumulative effect of initially applying the guidance recognized as an adjustment to the opening balance of equity at January 1, 2019. Therefore, the comparative information has not been adjusted and continues to be reported under previous guidance. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed it to carry forward the historical lease classification of the Company’s leases as operating leases. The effect on the accumulated deficit, total stockholders’ equity and net assets as at January 1, 2019 was $0.

The adoption of ASC 842 has had a material impact on the Company’s financial statements. At January 1, 2019 the Company recognized right-of-use assets and liabilities for operating leases following the adoption date of $22.2 million and $26.9 million respectively and derecognized $4.7 million of other liabilities and prepayments that had been recognized under previous guidance.

To be adopted in future periods

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13 - Financial Instruments - Credit losses, which replaces the incurred loss impairment methodology for financial instruments in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods within that fiscal year. Early application is permitted for the fiscal year beginning January 1, 2019, including interim periods within that fiscal year. The FASB has issued a proposed Accounting Standards Update which could result in postponement of the effective date of the new guidance to the fiscal year beginning January 1, 2023. The guidance must be adopted using a modified-retrospective approach and a prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the FASB issued ASU 2018-15 – Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods within that fiscal year. Early application is permitted for the fiscal year beginning January 1, 2019, including interim periods within that fiscal year. The guidance may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13 – Fair Value Measurement (Topic 820) - Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The guidance is effective for the fiscal year beginning January 1, 2020, including interim periods

within that fiscal year. Early application is permitted. Certain amendments apply prospectively with the all other amendments applied retrospectively to all periods presented upon their effective date. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.