What changed in this filing

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Item 9A. Controls and Procedures

2024-03-19 compared with 2023-03-15 · 353 added, 476 removed, 675 unchanged (55% of the section changed)

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There are inherent limitations to the effectiveness of any system of disclosure controls and procedures.

These limitations include the possibility of human error, the circumvention or overriding of the controls

and procedures and reasonable resource constraints.

These limitations include the possibility of human error, the circumvention or overriding of the controls and procedures and reasonable resource constraints.

In addition, because we have designed our system of controls based on certain assumptions, which we believe are reasonable, about the likelihood of future events, our system of controls may not achieve its desired purpose under all possible future conditions.

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Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed our internal control over financial reporting as of December 31, 2023.

Management based its assessment on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and concluded that our internal control over financial reporting was effective at the reasonable assurance level as of December 31, 2022.

This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for “emerging growth companies”.

This Annual Report on Form 10-K does not include an attestation report from our registered public accounting firm regarding internal control over financial reporting.

As we are a non-accelerated filer, management’s report is not subject to attestation by our registered public accounting firm.

We cannot assure you that material weaknesses or significant deficiencies will not occur in the future or that we will be able to remediate such weaknesses or deficiencies in a timely manner, which could impair our ability to accurately and timely report our financial position, results of operations or cash flows.

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Other than as stated above, no change in our internal control over our financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the year ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

As a result of the COVID-19 pandemic, we have adopted a hybrid work schedule where employees may work remotely, as appropriate.

We have not identified any material changes in our internal control over financial reporting as a result of these changes to the working environment.

We are continually monitoring and assessing the COVID-19 situation to determine any potential impacts on the design and operating effectiveness of our internal controls over financial reporting.

Other Information.

As previously disclosed, on March 12, 2021, we entered into a Capital On Demand Sales Agreement (Sales Agreement) with JonesTrading Institutional Services LLC (Sales Agent), pursuant to which we may sell from time to time, at our option, up to an aggregate of $75,000,000 of shares of the our common stock (ATM Shares), through our Sales Agent (ATM Program).

On November 8, 2022, we filed a new prospectus supplement covering the offer and sale of up to $100.0 million of shares of our common stock under the ATM Program, which included the $30.0 million of shares of our common stock not sold pursuant to the existing prospectus and up to an additional $70.0 million of shares of our common stock.

On March 13, 2024, we delivered written notice to our Sales Agent to terminate the Sales Agreement, effective as of March 15, 2024, pursuant to Section 12(b) thereof.

We are not subject to any termination penalties related to the termination of the Sales Agreement.

Prior to termination, $64.9 million of the ATM Shares had been sold and $80.1 million of the ATM Shares remained available for sale pursuant to the Sales Agreement.

As a result of the termination of the Sales Agreement, we will not offer or sell any additional shares under the ATM Program.

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.

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Directors, Executive Of ficers and Corporate Governance.

The information required by this item regarding directors, executive officers and corporate governance will be included in our 2023 Proxy Statement, which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K, and is incorporated herein by reference.

The information required by this item regarding directors, executive officers and corporate governance will be included in our 2024 Proxy Statement, which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K, and is incorporated herein by reference (excluding pay versus performance disclosure).

We have adopted a code of business conduct and ethics for directors, officers, and employees, known as the Code of Business Conduct and Ethics.

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We will promptly disclose on our website (i) the nature of any amendment to the policy that applies to our principal executive officer, principal financial officer, or controller, or persons performing similar functions and (ii) the nature of any waiver, including an implicit waiver, from a provision of the policy that is granted to one of these specified individuals, the name of such person who is granted the waiver and the date of the waiver.

Shareholders may request a free copy of the Code of Business Conduct and Ethics from our Compliance Officer, c/o Adicet Bio, Inc., 200 Berkeley Street, 19th Floor, Boston, MA 02116.

Shareholders may request a free copy of the Code of Business Conduct and Ethics from our Compliance Officer, c/o Adicet Bio, Inc., 131 Dartmouth Street, 3rd Floor, Boston, Massachusetts 02116.

Executiv e Compensation.

The information required by this item regarding executive compensation will be included in our 2023 Proxy Statement, which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K, and is incorporated herein by reference.

The information required by this item regarding executive compensation will be included in our 2024 Proxy Statement, which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K, and is incorporated herein by reference (excluding pay versus performance disclosure).

Security Ownership of Certain Beneficial Ow ners and Management and Related Stockholder Matters.

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• Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’

• Consolidated Statements of Operations

• Consolidated Statements of Stockholders’ Equity

• Consolidated Statements of Cash Flows

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Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021

Consolidated Statements of Stockholders’

Equity for the years ended December 31, 2022 and 2021

Consolidated Statements of Operations for the years ended December 31, 2023 and 2022

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

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We have audited the accompanying consolidated balance sheets of Adicet Bio, Inc.

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, stockholders’

equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

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Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2020.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

We have served as the Company’s auditor since 2020.

Boston, Massachusetts

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Cash and cash equivalents

Accounts receivable—related party

Prepaid expenses and other current assets

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Operating lease right-of-use asset

Restricted cash

Other non-current assets

Liabilities and Stockholders’

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

Contract liabilities —

related party, current

Accrued and other current liabilities

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Commitments and contingencies (Note 9)

Stockholders’

Stockholders’ equity:

Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized as of December 31, 2023 and December 31, 2022, respectively;

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Accumulated deficit

Accumulated other comprehensive income

Total stockholders’

Total liabilities and stockholders’

Total stockholders’ equity

Total liabilities and stockholders’ equity

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

Adicet Bio, Inc.

Consolidated Statements of Ope rations and Comprehensive Loss

Consolidated Statements of Ope rations

(in thousands, except share and per share amounts)

Year Ended December 31,

Revenue —

related party

Revenue — related party

Operating expenses:

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General and administrative

Goodwill impairment

Total operating expenses

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

Other comprehensive loss:

Unrealized loss on marketable debt securities, net of tax

Total other comprehensive loss

Comprehensive loss

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

Adicet Bio, Inc.

Consolidated Statements of Stockholders’

Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

Comprehensive

Shareholders'

Income (Loss)

Stockholders'

Balance at December 31, 2021

Issuance of common stock upon exercise of stock options

Issuance of common stock related to financing, net of issuance costs of $ 823,940

Issuance of common stock for cashless exercise of warrants

Issuance of common stock upon vesting of restricted stock

Issuance of common stock upon exercise of warrants

Shares withheld for taxes

Purchase of common stock under Employee Stock Purchase Plan

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

Stock-based compensation expense

Other comprehensive loss

Balance at December 31, 2022

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Issuance of common stock upon vesting of restricted stock

Issuance of common stock upon exercise of warrants

Shares withheld for taxes

Purchase of common stock under Employee Stock Purchase Plan

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

Stock-based compensation expense

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(in thousands)

Year Ended December 31,

Twelve Months Ended December 31,

Cash flows from operating activities

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Stock-based compensation expense

Net amortization of premiums and accretion discounts on investments

Loss on disposal of property, plant, and equipment

Goodwill impairment

Loss on disposal of lease assets

Amortization of deferred debt issuance costs

Impairment of in-process research and development

Remeasurement of contingent consideration liability

Changes in operating assets and liabilities:

Accounts receivable - related party

Prepaid expenses and other current assets

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Accounts payable

Contract liabilities —

related party

Contract liabilities — related party

Operating lease liability

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Cash flows from investing activities

Proceeds from sales of marketable debt securities

Proceeds from maturities of marketable debt securities

Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities

Proceeds from issuance of common stock, net of issuance costs

Proceeds from Employee Stock Purchase Plan

Proceeds from issuance of common stock pursuant to at-the-market offering, net of issuance costs

Proceeds from exercise of stock options

Proceeds from Employee Stock Purchase Plan

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

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Net cash provided by financing activities

Net change in cash, cash equivalents and restricted cash

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

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

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents

Restricted cash

Cash, cash equivalents and restricted cash

Net change in cash and cash equivalents

Cash and cash equivalents at the beginning of period

Cash and cash equivalents, at the end of period

Supplemental cash flow information

Cash received from tax refund

Cash paid for income taxes

Supplemental disclosures of noncash investing and financing activities

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Operating right-of-use assets obtained in exchange for operating lease liabilities

Common stock offering costs included in accrued liabilities at period end

Adjustment to goodwill

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

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(formerly resTORbio, Inc.

(resTORbio)), together with its subsidiaries, (the Company) is a clinical stage biotechnology company discovering and developing allogeneic gamma delta T cell therapies for cancer.

The Company is advancing a pipeline of “off-the-shelf”

gamma delta T cells, engineered with chimeric antigen receptors (CARs) and adaptors (CAds), to enhance selective tumor targeting and facilitate innate and adaptive anti-tumor immune response for durable activity in patients.

(resTORbio)), together with its subsidiaries, (the Company) is a clinical stage biotechnology company discovering and developing allogeneic gamma delta T cell therapies for autoimmune diseases and cancer.

The Company is advancing a pipeline of “off-the-shelf” gamma delta T cells, engineered with chimeric antigen receptors (CARs), to facilitate durable activity in patients.

The Company's approach to activate, engineer, and manufacture allogeneic gamma delta T cell product candidates derived from the peripheral blood cells of unrelated donors allows it to generate new product candidates in a rapid and cost-efficient manner.

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(when referred to prior to the merger, Former Adicet) was incorporated in November 2014 in Delaware.

On September 15, 2020, Former Adicet completed a merger (Merger) with resTORbio, pursuant to which Former Adicet merged with a wholly owned subsidiary of resTORbio in an all-stock transaction with Former Adicet surviving as a wholly owned subsidiary of resTORbio and changing its name to “Adicet Therapeutics, Inc.”

(Adicet Therapeutics).

In connection with the Merger, the Company changed its name from “resTORbio, Inc.”

to “Adicet Bio, Inc.”

The Company’s principal executive offices are located in Boston, Massachusetts.

In connection with the Merger, the Company changed its name from “resTORbio, Inc.” to “Adicet Bio, Inc.” The Company’s principal executive offices are located in Boston, Massachusetts.

The Company also has offices in Redwood City, California.

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The Company has historically financed its operations primarily through a collaboration and licensing arrangement, public and private placements of equity securities and debt, and cash received in the Merger with resTORbio.

To date, none of the Company’s product candidates have been approved for sale and therefore the Company has not generated any revenue from product sales.

Management expects operating losses and negative cash flows to continue for the foreseeable future, until such time, if ever, that it can generate significant sales of its product candidates currently in development.

In February 2021, the Company completed an underwritten public offering of 10,575,513 shares of its common stock at a public offering price of $ 13.00 per share.

The Company received net proceeds from the offering, after deducting underwriting discounts and commissions and offering expenses of approximately $ 128.8 million.

In connection with the offering, the Company also entered into a stock purchase agreement with certain existing investors for $ 15.0 million of shares of the Company’s common stock at a price per share equal to the public offering price, with an initial closing for certain investors held simultaneously with the closing of the offering and a subsequent closing for certain additional investors.

In December 2021, the Company closed an underwritten public offering of 7,187,500 shares of its common stock at a public offering price of $ 14.00 per share.

The Company received net proceeds from the offering, after deducting underwriting discounts and commissions and offering expenses, of approximately $ 94.2 million.

On March 12, 2021, the Company entered into a Capital On Demand Sales Agreement (the Sales Agreement) with JonesTrading Institutional Services LLC, as sales agent, to provide for the offering, issuance and sale of up to an aggregate amount of $ 75.0 million shares of common stock from time to time in “at-the-market”

(ATM) offerings under a registration statement on Form S-3 (File No.

333-254193) (2021 Shelf Registration Statement) filed with the SEC, which was declared effective on March 30, 2021.

On March 12, 2021, the Company entered into a Capital On Demand Sales Agreement (the Sales Agreement) with JonesTrading Institutional Services LLC, as sales agent, to provide for the offering, issuance and sale of up to an aggregate amount of $ 75.0 million of shares of common stock from time to time in “at-the-market” (ATM) offerings under a registration statement on Form S-3 (File No.

333-254193) (2021 Shelf Registration Statement) filed with the U.S.

Securities and Exchange Commission (the SEC), which was declared effective on March 30, 2021.

In August 2022, pursuant to the Sales Agreement and subject to the limitations thereof, the Company sold an aggregate of 2,611,723 shares of common stock at $ 17.23 per share resulting in net proceeds to the Company of $ 43.4 million after deducting sales agent commissions and expenses.

In November 2022, the Company filed a new prospectus supplement to the 2021 Shelf Registration Statement for the offer and sale of up to $ 100.0 million of shares of common stock from time to time through the sales agent, which includes the $ 30.0 million of shares of common stock not sold under the original prospectus and up to an additional $ 70.0 million of shares of common stock.

The Company expects that its cash and cash equivalents will be sufficient to fund its forecasted operating expenses, capital expenditure requirements and debt service payments for at least the next twelve months from the issuance of these consolidated financial statements.

All of the Company’s revenue to date has been generated from a collaboration and license agreement with Regeneron Pharmaceuticals Inc, (Regeneron).

The Company does not expect to generate any significant product revenue until it obtains regulatory approval of and commercializes any of the Company’s product candidates or enters into additional collaborative

During the year ended December 31, 2023 , no shares were sold under the ATM Program.

Subsequent to December 31, 2023, the Company raised aggregate net proceeds of approximately $ 19.3 million through its ATM Program and approximately $ 91.8 million through an underwritten public offering (the Offering).

Refer to Note 19.

Subsequent Events for additional details on these financings subsequent to December 31, 2023.

The Company expects that its cash and cash equivalents, together with the proceeds raised subsequent to year-end through our ATM Program and the Offering, will be sufficient to fund its forecasted operating expenses, capital expenditure requirements and debt service payments for at least the next twelve months from the issuance of these consolidated financial statements.

All of the Company’s revenue to date has been generated from a collaboration and license agreement with Regeneron Pharmaceuticals Inc, (Regeneron).

The Company expects to continue to incur significant losses for the foreseeable future, and it expects the losses to increase as the Company continues the development of, and seeks regulatory approvals for, its product candidates and begins to commercialize any approved products.

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

agreements with third parties, and it does not know when, or if, either will occur.

The Company is subject to all of the risks typically related to the development of new product candidates, including, but not limited to, raising additional capital, development by its competitors of new technological innovations, risk of failure in preclinical and clinical studies, safety and efficacy of its product candidates in clinical trials, the risk of relying on external parties such as contract research organizations (CROs) and contract drug manufacturing organizations (CDMOs), the regulatory approval process, market acceptance of the Company’s products once approved, lack of marketing and sales history, dependence on key personnel and protection of proprietary technology and it may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect its business.

studies, safety and efficacy of its product candidates in clinical trials, the risk of relying on external parties such as contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs), the regulatory approval process, market acceptance of the Company’s products once approved, lack of marketing and sales history, dependence on key personnel and protection of proprietary technology and it may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect its business.

Until such time as the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operations through the sale of equity, debt financings, collaborative or other arrangements with corporate or other sources of financing.

Adequate funding may not be available to the Company on acceptable terms or at all.

The Company’s failure to raise capital as and when needed could have a negative impact on its financial condition and the Company’s ability to pursue its business strategies.

Although the Company continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

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The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the reporting period.

Such estimates include deferred tax assets, useful lives of property and equipment, accruals for research and development activities, revenue recognition and stock-based compensation and the Company’s incremental borrowing rate.

Actual results could differ from those estimates.

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If the fair value of the reporting unit exceeds the carrying value of the net assets, goodwill is not impaired, and no further testing is required.

If the fair value of the reporting unit is less than the carrying value, the Company measures the amount of impairment loss, if

If the fair value of the reporting unit is less than the carrying value, the Company measures the amount of impairment loss, if any, as the excess of the carrying value over the fair value of the reporting unit.

The Company performed an interim test for goodwill impairment in the third quarter of the fiscal year ended December 31, 2023 and determined that goodwill was impaired.

For additional information regarding this assessment, refer to Note 16.

Goodwill to our consolidated financial statements.

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

any, as the excess of the carrying value over the fair value of the reporting unit.

The Company performed an annual test for goodwill impairment in the fourth quarter of the fiscal year ended December 31, 2022 and determined that goodwill was no t impaired.

The Company operates and manages its business as one reportable and operating segment, which is the business of research and development of allogeneic immunotherapies for cancer and other diseases.

The Company’s Chief Executive Officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance.

The Company operates and manages its business as one reportable and operating segment, which is the business of research and development of allogeneic gamma delta T cell therapies for autoimmune diseases and cancer .

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents.

The Company’s cash and cash equivalents are held at one financial institution in the U.S.

The Company’s cash and cash equivalents are held at two financial institutions in the U.S.

and one financial institution in Israel and such amounts may, at times, exceed insured limits.

The Company invests its cash equivalents in money market funds.

The Company invests its cash equivalents in money market funds and treasury securities.

The Company limits its credit risk associated with cash equivalents by placing them with banks and institutions it believes are highly creditworthy and in highly rated investments.

The Company has not experienced any losses on its deposits of cash and cash equivalents to date.

The Company has one customer, Regeneron, which represents 100 % of the Company’s total revenue during the years ended December 31, 2022 and 2021 and outstanding accounts receivable as of December 31, 2021 (see Note 8).

The Company has one customer, Regeneron, which represents 100 % of the Company’s total revenue during the year ended December 31, 2022 (see Note 8).

The Company did not have any revenue for the year ended December 31, 2023.

Risks and Uncertainties

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These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting.

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

There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained or maintained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable.

Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales.

The Company operates in an environment of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies.

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The Company considers all highly liquid investments purchased with maturities of three months or less from the purchase date to be cash equivalents.

As of December 31, 2022 and 2021, cash and cash equivalents consist of cash deposited with banks and investments in money market funds with maturities of three months or less from the date of purchase.

Restricted Cash

Restricted cash is comprised of cash that is restricted as to withdrawal or use under the terms of certain contractual agreements.

The Company did no t have any restricted cash as of December 31, 2022 .

Restricted cash for the year ended December 31, 2021 consists of collateral for letters of credit issued in connection with real estate leases (see Note 10).

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2023 and 2022, cash and cash equivalents consist of cash deposited with banks, investments in money market funds with maturities of three months or less from the date of purchase, and overnight treasury securities.

Fair Value of Financial Instruments

The carrying amounts of certain financial instruments of the Company, including cash equivalents, restricted cash, accounts receivable, accounts payable and accrued and other current liabilities approximate fair value due to their relatively short maturities.

The carrying amounts of certain financial instruments of the Company, including cash equivalents, accounts receivable, accounts payable and accrued and other current liabilities approximate fair value due to their relatively short maturities.

Property and Equipment, Net

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Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, generally three years.

Leasehold improvements are amortized using the straight-line method over the lesser of the assets’

estimated useful lives or the remaining term of the lease.

Leasehold improvements are amortized using the straight-line method over the lesser of the assets’ estimated useful lives or the remaining term of the lease.

Maintenance and repairs are charged to operations as incurred.

When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is reflected in the consolidated statements of operations and comprehensive loss in the period realized.

When assets are retired or otherwise disposed of, the cost and

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is reflected in the consolidated statements of operations in the period realized.

Impairment of Long-Lived Assets

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If such asset or asset group is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group.

The Company performed a review for impairment of in process research and development (IPR&D) during the second quarter of the year ended December 31, 2021 and recognized an impairment charge of $ 1.2 million, which was recorded as research and development expenses in the consolidated statement of operations and comprehensive loss.

This impairment charge reduced the carrying value of the asset to $ 0 at December 31, 2021.

There has been no such impairment of long-lived assets during the year ended December 31, 2022.

The Company performed a long-lived asset impairment test in conjunction with its goodwill impairment test in the third quarter of 2023 and concluded that there was no impairment of long-lived assets.

There was also no impairment of long-lived assets for the year ended December 31, 2022.

Revenue Recognition

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(v) recognize revenue when (or as) the Company satisfies a performance obligation.

A contract with a customer exists when (i) the Company enters into a legally enforceable contract with a customer that defines each party’s rights regarding the products or services to be transferred and identifies the payment terms related to these products or services, (ii) the contract has commercial substance and (iii) the Company determines that collection of substantially all consideration for products or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company identifies the goods or services promised and determines the performance obligations by assessing whether each promised good or service is distinct.

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The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

All of the Company’s revenues for the years ended December 31, 2022 and 2021 are derived through a license and collaboration agreement with Regeneron (see Note 8).

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

All of the Company’s revenues for the year ended December 31, 2022 are derived through a license and collaboration agreement with Regeneron (see Note 8).

The Company did not have any revenue for the year ended December 31, 2023.

For revenue recognition purposes, the Company determines the term of its license or collaboration agreements by evaluating the period during which present and enforceable rights and obligations exist.

This determination is impacted by the existence of substantive termination penalties, among other factors.

The Company recognizes revenue under the Company’s license or collaboration agreements that are within the scope of ASC 606.

These agreements include promises related to licenses to intellectual property and research and development services.

If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license.

For licenses that are bundled with other promises, the Company utilizes judgement to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees.

Accordingly, the transaction price is generally comprised of a fixed fee due at contract inception and at specified future dates, variable consideration in the form of milestone payments due upon the achievement of specified events and tiered royalties earned when customers recognize net sales of licensed products.

The Company measures the transaction price based on the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods and/or services to the customer.

The Company utilizes the “most likely amount”

method to estimate the amount of variable consideration to which it will be entitled for the contract.

The Company measures the transaction price based on the amount of consideration to which it expects to be

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

entitled in exchange for transferring the promised goods and/or services to the customer.

The Company utilizes the “most likely amount” method to estimate the amount of variable consideration to which it will be entitled for the contract.

Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

At the inception of each arrangement that includes development and regulatory milestone payments, the Company evaluates whether the associated event is considered most likely to be achieved and estimates the amount to be included in the transaction price.

Payments or reimbursements for the Company’s research and development efforts where such efforts are considered part of or a single performance obligation are recognized over time using a measure of progress that best reflects the Company’s performance in satisfying the obligation.

Upfront payments are recorded as contract liabilities upon receipt or when due and may require deferral of revenue recognition to a future period until the Company performs its obligation under these arrangements.

Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional.

The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

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Research and development expenses include costs directly attributable to the conduct of research and development programs, including payroll and related expenses, costs for CDMOs, costs for CROs, materials, supplies, depreciation on and maintenance of research equipment, consulting costs, and the allocated portions of facility costs, such as rent, utilities, insurance, repairs and maintenance, depreciation, information technology costs and general support services.

All costs associated with research and development are expensed within the consolidated statements of operations and comprehensive loss as incurred.

All costs associated with research and development are expensed within the consolidated statements of operations as incurred.

Costs incurred in obtaining technology licenses are charged to research and development expense as acquired in-process research and development if the technology licensed has not reached technological feasibility and has no alternative future use.

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The Company has entered into various agreements with CDMOs and CROs.

The Company’s research and development accruals are estimated based on the level of services performed, progress of the studies, including the phase or completion of events, and contracted costs.

The estimated costs of research and development provided, but not yet invoiced are included in accrued and other current liabilities on the consolidated balance sheets.

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Payments made to CDMOs and CROs under these arrangements in advance of the performance of the related services are recorded as prepaid expenses and other current assets on the consolidated balance sheets until the services are rendered.

Through December 31, 2022 there had been no material adjustments to the Company’s prior period estimates of accrued research and development expenses.

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

Through December 31, 2023 there had been no material adjustments to the Company’s prior period estimates of accrued research and development expenses.

Consistent with ASU No.

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The Company typically only includes an initial lease term in its assessment of a lease arrangement.

Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew.

The Company monitors its plan to renew its leases no less than on a quarterly basis.

In addition, the Company’s lease agreements generally do not contain any residual value guarantees or restrictive covenants.

In accordance with ASU 2016-02, the ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term.

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate (IBR), which is the estimated rate the Company would be required to pay for a fully collateralized borrowing equal to the total lease payments over the term of the lease, to determine the present value of future minimum lease payments.

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

minimum lease payments.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

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Changes in deferred tax assets and liabilities are recorded in the provision for income taxes.

The Company’s deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which these temporary differences are expected to be recovered or settled.

A valuation allowance is recorded to reduce deferred tax assets if it is determined that it is more likely than not that all or a portion of the deferred tax asset will not be realized.

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The Company records changes in the required valuation allowance in the period that the determination is made.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available as of the reporting date.

For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information.

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The Company records interest and penalties related to uncertain tax positions, if applicable, as a component of income tax expense (benefit).

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

Other Comprehensive Loss

Other comprehensive loss is defined as a change in equity of a business enterprise during a period, resulting from transactions from non-owner sources.

There was no other comprehensive loss for the year ended December 31, 2022.

The other comprehensive loss disclosed in the Company’s consolidated statements of operations and comprehensive loss for the year ended December 31, 2021 consists of unrealized losses on marketable debt securities.

Net Loss per Share

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Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common stock and potentially dilutive securities outstanding for the period.

The Company’s potentially dilutive shares, which include outstanding stock options, Employee Stock Purchase Plan (ESPP) awards, unvested restricted stock units (RSUs), and shares issuable upon exercise of the warrants, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

The Company’s potentially dilutive shares, which include outstanding stock options, Employee Stock Purchase Plan (ESPP) awards and unvested restricted stock units (RSUs), are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

Basic and diluted net loss per share is presented in conformity with the two-class method required for participating securities.

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The two-class method requires income (loss) available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to share in undistributed earnings as if all income (loss) for the period had been distributed.

The Company’s participating securities do not have a contractual obligation to share in the Company’s losses.

As such, the net loss is attributed entirely to common stockholders.

Since the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods.

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods.

Subsequent Events Considerations

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Recently Adopted Accounting Pronouncements

In July 2021, FASB issued ASU No.

2021-05, Lease (Topic 842), Lessors - Certain Leases with Variable Lease Payments (ASU 2021-05).

ASU 2021-05 amends the lease classification requirements for lessors when classifying and accounting for a lease with variable lease payments that do not depend on a reference rate index or a rate.

The update provides criteria, that if met, the lease would be classified and accounted for as an operating lease.

ASU 2021-05 is effective for reporting periods beginning after December 15, 2021, with early adoption permitted.

The Company adopted ASU 2021-05 in the first quarter of 2022.

The impact on its consolidated financial statements and related disclosures was not material.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

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Early adoption is permitted.

The Company plans to adopt the provisions of ASU 2016-13 effective January 1, 2023 and is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures.

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

The Company adopted ASU 2016-13 in the first quarter of 2023.

The impact on its consolidated financial statements and related disclosures was not material.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles –

Goodwill and Other (Topic 350):

2017-04, Intangibles – Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment (ASU 2017-04).

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Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The Company plans to adopt the provisions of ASU 2017-04 effective January 1, 2023 and is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures.

The Company adopted ASU 2017-04 in the first quarter of 2023.

The impact on its consolidated financial statements and related disclosures was not material.

Accounting Pronouncements Not Yet Adopted

In September 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which enhances the transparency and usefulness of income tax disclosures.

This amendment requires public issuers to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income, or loss, by the applicable statutory income tax rate.

Additionally, this amendment requires issuers to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes as well as the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received).

For SEC filers, this ASU is effective for fiscal years beginning after December 15, 2025.

Early adoption is permitted.

The Company is currently evaluating the impact the adoption that this ASU will have on its consolidated financial statements and related disclosures.

Fair Value Measurements

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

Level 1 —

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

Level 2 —

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

Level 3 —

Unobservable inputs which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

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

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

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

Level 3 — Unobservable inputs which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

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Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

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

December 31, 2023

Money market funds (1) (2)

Treasury securities (1) (2)

Total fair value of assets

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Total fair value of assets

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

(1) Included in cash and cash equivalents in the consolidated balance sheets.

(2) Treasury securities are included within Level 1 of the fair value hierarchy because they are actively traded and valued using quoted market prices.

(3) Money market funds are included within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

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Prepaid software subscription and licensing fees

Interest receivable

Prepayments to CROs

Prepaid maintenance

Prepayments to CDMOs

Prepaid professional services

Prepayments to CROs and CDMOs

Interest receivable

Other prepaid expenses and current assets

Total prepaid expenses and other current assets

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

Property and Equipment, net

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

Laboratory equipment

Leasehold improvements

Lesser of useful life or lease term

Laboratory equipment

Furniture and fixtures

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Computer equipment

Property and equipment, gross

Accumulated depreciation and amortization

Property and equipment, net

Depreciation and amortization expense for each of the years ended December 31, 2022 and 2021 was $ 2.6 million and $ 1.5 million, respectively.

All of the Company’s property and equipment as of December 31, 2022 and 2021 is located in the U.S.

On March 18, 2022, the Company's wholly-owned subsidiary Adicet Therapeutics entered into Change Order No.

3 (the Change Order No.

3) to a construction agreement between Adicet Therapeutics and CP Enterprises, Inc.

d/b/a CP Construction (CP Construction) (the Construction Agreement).

The Construction Agreement provides for pre-construction and construction services at the Company's office and laboratory space in Redwood City, California (1000 Bridge Parkway) for consideration of approximately $ 13.8 million to CP Construction, including previous change orders.

The Change Order No.

3 increased the budget for the construction by approximately $ 5.3 million in order to build one good manufacturing practice (GMP) cell processing and one vector manufacturing suite in addition to controlled materials warehousing at 1000 Bridge Parkway.

In June 2022, the Company moved its operations to 1000 Bridge Parkway which resulted in reclassifying $ 18.4 million from construction in progress to leasehold improvements for the twelve months ended December 31, 2022.

The remaining $ 9.3 million in Construction in Progress as of December 31, 2022 primarily relates to leasehold improvements and laboratory equipment for the internal GMP manufacturing suite.

In the year ended December 31, 2022, the Company disposed of an aggregate of $ 0.2 million of fixed assets within furniture and fixtures, computer equipment and software.

This disposal related to assets obtained through the Merger with resTORbio as well as assets disposed of when the Company moved its operations to 1000 Bridge Parkway.

The Company did not receive any proceeds as a result of these disposals and recognized a loss of less than $ 0.1 million related to this transaction.

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

All of the Company’s property and equipment as of December 31, 2023 and 2022 is located in the U.S.

Depreciation and amortization expense for the years ended December 31, 2023 and 2022 was $ 6.1 million and $ 2.6 million, respectively.

The increase in expense is primarily due to the completion and subsequent depreciation of the Company's good manufacturing practice (GMP) cell processing and vector manufacturing suite at the Company's office in Redwood City, California (1000 Bridge Parkway) which was completed in February 2023.

Construction in progress has decreased by $ 9.0 million during the year ended December 31, 2023 , compared to the balance at December 31, 2022, due to the Company's completion of the Company's GMP cell processing and vector manufacturing suite in February 2023.

The remaining $ 0.3 million in construction in progress as of December 31, 2023 is primarily related to lab and computer equipment not yet placed into service.

Accrued and Other Current Liabilities

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Total accrued and other liabilities

On April 28, 2020, the Company entered into a Loan and Security Agreement with Pacific Western Bank (PacWest) for a term loan not exceeding $ 12.0 million (the Loan Agreement) to finance leasehold improvements for the facilities in Redwood City, CA and other purposes permitted under the Loan Agreement, with an interest rate equal to the greater of 0.25 % above the Prime Rate (as defined in the Loan Agreement) or 5.00 %.

The Loan Agreement granted to Pacific Western Bank a security interest on substantially all of the Company’s assets other than intellectual property to secure the performance of the Company’s obligations under the Loan Agreement, and contains a variety of affirmative and negative covenants, including required financial reporting, limitations on certain dispositions of assets or distributions, limitations on the incurrence of additional debt or liens and other customary requirements.

Pursuant to the Loan Agreement, the Company may request to draw upon the term loan at any time through the date eighteen months after the date of the Loan Agreement (Availability End Date), which was October 28, 2021 .

On October 21, 2021, the Company amended the Loan Agreement with PacWest (the 2021 Loan Amendment) under which PacWest will provide one or more Term Loans, as well as Non-Formula Ancillary Services which shall not exceed $ 5.5 million in the aggregate.

On April 28, 2020, the Company entered into a Loan and Security Agreement (the Loan Agreement) as amended on July 8, 2020, September 14, 2020, September 15, 2020, October 21, 2021, December 2, 2022 (the 2022 Loan Amendment) and May 30, 2023 with Banc of California (formerly known as Pacific Western Bank) to finance leasehold improvements for the facilities in Redwood City, CA and other purposes permitted under the Loan Agreement.

Under the October 21, 2021 amendment, Banc of California will provide one or more Term Loans (as defined in the 2021 Loan Amendment), as well as Non-Formula Ancillary Services which shall not exceed $ 5.5 million in the aggregate.

Non-Formula Ancillary Services are defined as automated clearinghouse transactions, corporate credit card services, letters of credit, or other treasury management services.

The aggregate sum of the outstanding Term Loans and Non-Formula Ancillary Services shall at no time exceed $ 15.0 million, which each Term Loan to be in an amount of not less than $ 1.0 million.

Pursuant to the 2021 Loan Amendment, the interest rate for the Term Loans shall be set at an annual rate equal to the greater of (i) 0.25% above the Prime Rate then in effect and (ii) 4.25%.

On December 2, 2022, the Company further amended the Loan Agreement with PacWest (the 2022 Loan Amendment).

The 2022 Loan Amendment extends the drawdown period for any Term Loan by one year from April 19, 2023 to April 19, 2024.

In addition, pursuant to the 2022 Loan Amendment, if the Company receives at least $ 60.0 million from the sale or issuance of our equity securities and/or up-front cash payments from strategic partnerships other than payments from Regeneron on or before September 30, 2023, then the Interest Only End Date (as defined in the 2022 Loan Amendment) will be extended another six months from April 19, 2024 to October 19, 2024.

Furthermore, the 2022 Loan Amendment extends the final maturity date of any Term Loan by one year from October 19, 2025 to October 19, 2026, and the maturity date of Non-Formula Ancillary Services to November 30, 2023.

As of December 31, 2022, the Company has $ 10.6 million available under the Term Loan.

As of the date of this Annual Report on Form 10-K, the Company was in compliance with the covenants of the 2022 Loan Amendment and had no indebtedness outstanding under the Term Loan.

As of December 31, 2022, the deferred debt issuance costs were $ 0.4 million and are included in other non-current assets on the Company’s consolidated balance sheets.

Third Party Agreements

On July 29, 2016, the Company entered into a License and Collaboration Agreement with Regeneron, which was amended in April 2019, with such amendment becoming effective in connection with Regeneron’s investment in the Company’s Series B redeemable convertible preferred stock private placement transaction in July 2019 (as amended, the Regeneron Agreement).

Agreement Terms.

The Regeneron Agreement has two principal components:

(a) a research collaboration component under which the parties will research, develop, and commercialize next-generation engineered gamma delta immune cell

On March 13, 2023, the Company and Banc of California executed a letter agreeing that, notwithstanding the covenants included in the 2022 Loan Amendment, until June 30, 2023 (i) the Company and its subsidiaries will not be required to maintain the lesser of $ 200 million or seventy percent (70%) of its combined balances in demand deposit accounts, money

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

therapeutics (ICPs) namely engineered gamma delta immune cells with CARs and TCRs directed to disease-specific cell surface antigens, which includes the grant of certain licenses to intellectual property between the two parties, and (b) for a certain period following the effective date, a license that allows the Company to use certain of Regeneron’s proprietary mice to develop and commercialize ICPs generated by the Company, with certain limitations relating to targets under the Regeneron Agreement.

The term of the Regeneron Agreement expires, on a product-by-product basis, on the expiration of the obligation to pay royalties for such product.

The Regeneron Agreement is subject to early termination by either party upon uncured material breach by the other party.

The licenses to develop and commercialize an ICP to a target that one party has exclusively licensed may be terminated by such party for convenience.

market funds and/or insured cash sweep (ICS) accounts with Banc of California and (ii) the Company must maintain its combined balances at Banc of California or its affiliates, including Pacific Western Asset Management (the Letter).

On May 30, 2023, the Company further amended its Loan Agreement with Banc of California (the 2023 Loan Amendment).

Pursuant to the 2023 Loan Amendment, the Company must maintain the lesser of (i) $ 35.0 million or (ii) all of the Company’s combined balances in demand deposit accounts, money market accounts, and/or insured cash sweep accounts with Banc of California.

If the Company’s total cash and investments drop to less than $ 35.0 million, the 2023 Loan Amendment permits the Company to maintain cash and/or investments in one or more accounts outside of Banc of California up to a total of $ 2.5 million.

As of December 31, 2023, the Company has $ 12.7 million available under the Loan Agreement.

Additionally, as of December 31, 2023, the Company is in compliance with such covenants as stated in the 2023 Loan Amendment and had no indebtedness outstanding under the Loan Agreement.

Third Party Agreements

On July 29, 2016, the Company entered into a license and collaboration agreement with Regeneron, which was amended in April 2019, with such amendment becoming effective in connection with Regeneron’s investment in the Company’s Series B redeemable convertible preferred stock private placement transaction in July 2019 (as amended, the Regeneron Agreement).

Financial Terms.

The Company received a non-refundable upfront payment of $ 25.0 million from Regeneron upon execution of the Regeneron Agreement and an aggregate of $ 20.0 million of additional payments for research funding from Regeneron through December 31, 2022 .

In addition, Regeneron may have to pay the Company additional amounts in the future consisting of up to an aggregate of $ 80.0 million of option exercise fees, as specified in the Regeneron Agreement.

Regeneron must also pay the Company high single digit royalties as a percentage of net sales for immune cell products (ICPs) to targets for which it has exclusive rights, and low single digit royalties as a percentage of net sales on any non-ICP product comprising a targeting moiety generated by the Company through the use of Regeneron’s proprietary mice.

The Company must pay Regeneron mid-single to low double digit, but less than teens, of royalties as a percentage of net sales of ICPs to targets for which the Company has exercised exclusive rights, and low to mid-single digit of royalties as a percentage of net sales of targeting moieties generated from the Company’s license to use Regeneron’s proprietary mice.

Per the terms of the agreement, Regeneron must pay the Company high single digit royalties as a percentage of net sales for immune cell products (ICPs) to targets for which it has exclusive rights, and low single digit royalties as a percentage of net sales on any non-ICP product comprising a targeting moiety generated by the Company through the use of Regeneron’s proprietary mice.

Royalties are payable until the longer of the expiration or invalidity of the licensed patent rights or twelve (12) years from first commercial sale.

ASC 606 requires the Company to select a single revenue recognition method for the performance obligation that depicts the Company’s performance in transferring control of the services.

The Company has determined that the combined performance obligation was satisfied over time.

Accordingly, the Company utilizes a cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize.

The Company believes this is the best measure of progress because it reflects how the Company transfers its performance obligation to Regeneron.

In applying the cost-based input method of revenue recognition, the Company uses actual costs incurred relative to budgeted costs to fulfill the combined performance obligation.

These costs consist primarily of internal full-time equivalent effort and third-party contract costs.

Revenue is recognized based on actual costs incurred as a percentage of total budgeted costs as the Company completes its performance obligations over the research term of five years.

A cost-based input method of revenue recognition requires management to make estimates of costs to complete the Company’s performance obligations.

In making such estimates, significant judgment is required to evaluate assumptions related to cost estimates.

The cumulative effect of revisions to estimated costs to complete the Company’s performance obligations has been recorded in the period in which changes are identified and amounts can be reasonably estimated.

At contract inception, the Company determined the transaction price of the Regeneron Agreement to be $ 55.0 million, consisting of the $ 25.0 million upfront payment and the aggregate research funding fees of $ 30.0 million payable over the research term.

In order to determine the transaction price, the Company evaluated all the payments to be received during the duration of the contract.

Per the terms of the original Regeneron Agreement prior to the amendment becoming effective in April 2019, the research funding fees of $ 30.0 million were payable merely due to the passage of time and therefore did not represent a variable consideration.

After the amendment became effective in April 2019, $ 20.0 million of these fees became contingent upon meeting certain development and regulatory milestones.

Therefore, the Company concluded that after the amendment such potential payments became variable consideration.

The receipt of the variable consideration was subject to substantial uncertainty and was therefore excluded from the transaction price upon the effective date of the amendment.

Accordingly, the transaction price was reduced from $55.0 million to $ 35.0 million in July 2019.

The Company re-evaluates the transaction price if there is a significant change in facts and circumstances at least at the end of each reporting period.

The Company increased the transaction price by $ 10.0 million in June 2020 to $ 45.0 million when it achieved the milestone for the selection of a clinical candidate to the second collaboration target under the Regeneron Agreement.

During the twelve months ended December 31, 2022, the Company recognized $ 5.0 million in revenue related to the Regeneron Agreement.

The Company also recognized $ 20.0 million of revenue related to Regeneron's exercise of an option for ADI-002, which is described below, and resulted in an aggregate of $ 25.0 million recorded as revenue during the twelve months ended December 31, 2022.

The Company's performance obligations under the Regeneron Agreement were completed during the first quarter of 2022.

During the twelve months ended December 31, 2021, the Company recognized $ 9.7 million in revenue related to the Regeneron Agreement.

The Company also evaluated whether the option provided to Regeneron represents a material right that would require separate deferral and recognition.

The option exercise provided Regeneron with a development and commercial license to

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

develop and commercialize the optioned collaboration ICPs.

The Company concluded that the $25.0 million upfront payment to the Company was not negotiated to provide incremental discount for the future option fees payable upon Regeneron’s exercise of the option.

The option provided Regeneron with a license for intellectual property that will be improved from the inception of the Regeneron Agreement.

In addition, the option fee is significant compared to the sum total of the upfront payment and research funding fees in the original Regeneron Agreement.

Therefore, the Company determined that the option provided to Regeneron did not represent a material right and that any potential exercise of the option should be accounted as a separate contract.

Hence, upon the option exercise by Regeneron the option fee would be allocated to the development and commercial license which would be the only performance obligation in that separate contract and recognized as revenue on a point in time basis when control of the license rights is transferred to Regeneron.

No royalties have been earned or paid under the Regeneron Agreement through December 31, 2023.

On January 28, 2022, Regeneron exercised its option to license the exclusive, worldwide rights to ADI-002, an allogeneic gamma delta CAR T cell therapy directed against Glypican-3, pursuant to the Regeneron Agreement.

In conjunction with the exercise of the option, Regeneron paid an exercise fee of $ 20.0 million to the Company on January 28, 2022, and the Company completed the transfer of the associated license rights to Regeneron during the first quarter of 2022.

Pursuant to the Regeneron Agreement, upon Regeneron’s exercise of the option, the Company had a specified period of time to elect to co-fund future development costs of ADI-002, and to participate in any potential profits with Regeneron up to a specified co-funding percentage in various geographic regions, including on a worldwide basis (Co-Funding Option).

The Company elected not to exercise its Co-Funding Option for ADI-002.

Accordingly, Regeneron is responsible, at its sole cost, for all development, manufacturing and commercialization of ADI-002 and must pay the Company high single digit royalties as a percentage of any net sales of ADI-002 for a period commencing on the first commercial sale until the longer of (i) the expiration or invalidity of the licensed patent rights or (ii) a low double digit amount of years from first commercial sale.

The following tables present changes in the Company’s contract liabilities for the twelve months ended December 31, 2022 and 2021 (in thousands):

The $ 20.0 million option exercise fee, plus $ 5.0 million of revenue recognized relating to the combined performance obligation, resulted in an aggregate of $ 25.0 million recorded as revenue for the year ended December 31, 2022.

The Company's obligations under the combined performance obligation were completed during the year ended December 31, 2022.

Regeneron is responsible, at its sole cost, for all development, manufacturing and commercialization of ADI-002 and must pay the Company high single digit royalties as a percentage of any net sales of ADI-002 for a period commencing on the first commercial sale until the longer of (i) the expiration or invalidity of the licensed patent rights or (ii) a low double digit amount of years from first commercial sale.

As of December 31, 2023 and 2022, there were no contract assets related to the Regeneron Agreement.

The following tables present changes in the Company’s contract liabilities for the years ended December 31, 2023 and 2022 (in thousands):

Twelve Months Ended December 31, 2023

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Contract liability

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

Twelve Months Ended December 31, 2022

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(1) Deductions to contract liabilities relate to deferred revenue recognized as revenue during the reporting period .

(2) Deductions are shown net of additions that are the result of a reduction to cumulative revenue recognized as a result of a change in overall estimated costs, primarily due to an extension of time to fulfill the combined performance obligation, which was recorded as a change in estimate during the twelve months ended December 31, 2021.

As of December 31, 2022 , there were no contract liabilities and no contract assets related to the Regeneron Agreement.

As of December 31, 2021, contract liabilities related to the Regeneron Agreement of $ 4.8 million was comprised of the $ 25.0 million upfront payment and additional $ 5.0 million research funding fees in each of 2017 and 2018, and $ 10.0 million for achievement of the milestone for the selection of a clinical candidate to the second collaboration target in June 2020, less $ 40.2 million of cumulative license and collaboration revenue recognized from the inception of the Regeneron Agreement as of December 31, 2021.

Twist Bioscience

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The Company maintains the sole and exclusive rights to any program antibodies discovered under the Twist Agreement and has the right to patent, assign, license or transfer any work product under the agreement.

Furthermore, the Company has the right to sublicense

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

its rights to program antibodies to third parties.

Furthermore, the Company has the right to sublicense its rights to program antibodies to third parties.

The Company may terminate the Twist Agreement at any time, with or without cause, upon a specified period advance written notice.

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On a cumulative basis as of December 31, 2023 , the Company has incurred and expensed $ 1.0 million related to project initiation fees, technology access fees and projects fees as research and development expense related to this agreement.

License, Funding and Other Agreements

National Institute of Health

In May 2019, the Company was awarded a 5 -year grant for up to $ 1.5 million from the National Institutes of Health (the NIH) to study RTB101 and the regulation of antiviral immunity in the elderly.

The Company is entitled to use the award solely to conduct the research.

The Company is solely responsible for commencing and conducting the research and will furnish periodic progress updates to the NIH throughout the term of the award.

After completing the research, the Company must provide the NIH with a formal report describing the work performed and the results of the research.

For funds received under the NIH funding agreement, the Company recognizes a reduction in research and development expenses in an amount equal to the qualifying expenses incurred in each period up to the amount funded by the NIH.

Qualifying expenses incurred by the Company in advance of funding by the NIH are recorded in the consolidated balance sheets as other current assets.

For the twelve months ended December 31, 2022 , no qualifying expenses have been incurred and no thing has been funded by the NIH.

On a cumulative basis as of December 31, 2022 , $ 1.3 million has been incurred and $ 1.3 million has been funded by the NIH.

Commitments and Contingencies

Operating Leases

The Company leases office and laboratory space in Redwood City, CA, and Boston, MA.

On October 31, 2018, Adicet Therapeutics executed a non-cancelable lease agreement for an office and laboratory facility at 1000 Bridge Parkway, Redwood City, California (the Redwood City Lease), with an expiration date of February 28, 2030.

The initial annual base rent for the Redwood City Lease is an aggregate of $ 1.3 million, and such amount will increase 3 % annually.

On June 16, 2022, Adicet Therapeutics entered into a second lease amendment with Westport Office Park, LLC (the Second Amendment).

The Second Amendment further amends the lease agreement, dated as of October 31, 2018, as amended on December 30, 2020, for the premises located at 1000 Bridge Parkway in Redwood City, CA.

The Second Amendment expands the space leased by Adicet Therapeutics at 1000 Bridge Parkway to include a portion of 1200 Bridge Parkway, increasing Adicet Therapeutics’

leased space by 12,204 square feet (the Expansion Space).

Adicet Therapeutics will pay a monthly fee for the Expansion Space increasing annually from $7 3,000 to $ 78,000 over the thirty-six (36) month term of the Second Amendment.

The Second Amendment also provides Adicet Therapeutics with an allowance to construct improvements to the Expansion Space.

The initial right-of-use asset and operating lease liability for 1200 Bridge Parkway at lease commencement was $ 2.3 million.

The Company leases office and laboratory space in Redwood City, California, and Boston, Massachusetts.

In 2018, Adicet Therapeutics executed a non-cancelable lease agreement, as amended in 2022, pursuant to which the Company leases office and laboratory facility at 1000 Bridge Parkway and a portion of 1200 Bridge Parkway in Redwood City, California (the Redwood City Lease).

On January 9, 2023, Adicet Therapeutics entered into a third lease amendment with Westport Office Park, LLC (the Third Amendment).

The Third Amendment further amends the lease agreement, dated as of October 31, 2018, as amended on December 30, 2020 and June 16, 2022, for the premises located at 1000 Bridge Parkway.

The Third Amendment increases the tenant improvement allowance as of January 1, 2023 for an additional $ 3.0 million, and the Company expects to utilize the full allowance for the continued buildout of office and laboratory space at 1000 Bridge Parkway.

Per the terms of this amendment,

The Third Amendment further amends the Redwood City Lease and increases the tenant improvement allowance as of January 1, 2023 by an additional $ 3.0 million.

The Company fully utilized the allowance for the continued buildout of office and laboratory space at 1000 Bridge Parkway in 2023.

Per the terms of this amendment, this additional allowance will be repaid through equal monthly payments of principal amortization and interest on a monthly basis over the term of the lease at an interest rate of eight percent ( 8 %) per annum.

The Company received the allowance on February 21, 2023 and increased the operating lease liability accordingly.

On August 7, 2023, Adicet Therapeutics entered into a fourth lease amendment with Westport Office Park, LLC (the Fourth Amendment).

The Fourth Amendment amends the period over which the tenant improvement allowance received in the Third Amendment will be amortized and identifies the monthly amortization payable by the Company.

On September 1, 2023, Adicet Therapeutics amended its letter of credit with Westport Office Park, LLC.

The amendment reduced the amount of the letter of credit associated with 1000 Bridge Parkway by $ 2.1 million resulting in an updated letter of credit amount of $2.1 million.

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

this additional allowance will be repaid through equal monthly payments of principal amortization and interest on a monthly basis over the term of the lease at an interest rate of eight percent ( 8 %) per annum.

The Company received the allowance on February 21, 2023.

On January 8, 2018, the Company entered into a lease agreement for office space at 500 Boylston St, Boston, Massachusetts (500 Boylston Lease).

Under the terms of the 500 Boylston Lease, the Company rented 4,544 square feet of office space with an expiration date on February 28, 2021.

The base monthly rent increased annually from $ 18,933 to $ 19,691 over the term of the lease.

This lease was amended on April 1, 2019 to expand the office space to 9,501 square feet and extend the term of the lease until July 31, 2026 (500 Boylston St Amended Lease).

The base monthly rent under the 500 Boylston St Amended Lease increases annually from $ 49,089 to $ 55,282 .

Under the terms of this amended lease agreement, the Company was permitted to assign, sublease or transfer this lease, with the consent of the landlord.

On July 19, 2021, the Company entered into a Sublease (the Sublease Agreement) with RFS OPCO LLC (Sublessee), whereby the Company agreed to sublease to Sublessee all of the 9,501 rentable square feet of 500 Boylston St.

The term of the sublease started on September 1, 2021 and ends on July 30, 2026.

The aggregate base rent due to the Company under the Sublease is approximately $ 3.5 million starting October 1, 2021.

The Company records sublease income as a reduction of lease expense.

Upon execution of the Sublease Agreement, the Company received a cash security deposit of $ 0.1 million from the Subleasee which is recorded as other non-current liabilities in the consolidated balance sheets.

In 2018, the Company entered into a lease agreement, as amended in 2019, for office space at 500 Boylston St, Boston, Massachusetts (500 Boylston Lease).

Under the terms of the 500 Boylston Lease, the Company was permitted to assign, sublease or transfer this lease, with the consent of the landlord.

On July 19, 2021, the Company entered into a sublease agreement with RFS OPCO LLC (Sublessee), whereby the Company agreed to sublease to Sublessee all of the 9,501 rentable square feet of 500 Boylston St.

The expected undiscounted cash flows to be received from the sublease as of December 31, 2023 is as follows (in thousands):

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The Company recognized rent expense, net of sublease income, of $ 4.0 million and $ 3.9 million for the years ended December 31, 2023 and 2022, respectively.

Further, the Company remains liable for the remaining lease payments under the 500 Boylston Lease, totaling $ 1.7 million, which is included in the future minimum lease payments table below.

The future minimum lease payments under all non-cancelable operating lease obligations as of December 31, 2023 were as follows (in thousands):

2027 and thereafter

Total undiscounted lease payments

imputed interest

Total operating lease liability

current portion

Operating lease liability, net of current maturities

The IBR and the remaining lease terms of our facilities and their weighted average IBR and remaining terms are as follows as of December 31, 2023:

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Weighted Average

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases for the years ended December 31, 2022 and 2021:

Year ended December 31,

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

The following table presents the operating lease cost and information related to the operating lease right-of-use assets, net and operating lease liabilities for the year ended December 31, 2023 (in thousands):

Twelve Months Ended December 31,

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

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Operating cash flows used for lease liabilities

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

Weighted-average remaining lease term - operating leases

Weighted-average discount rate - operating leases

As of December 31, 2023 , operating right-of-use assets were $ 17.4 million and operating lease liabilities were $ 20.9 million.

The Company has no material finance leases.

The maturities of the operating lease liabilities as of December 31, 2022 were as follows (in thousands):

2026 and thereafter

Total undiscounted lease payments

imputed interest

Total operating lease liability

current portion

Operating lease liability, net of current maturities

The Company maintains letters of credit of $ 4.1 million and $ 0.2 million in connection with the Company’s office leases in Redwood City, CA and Boston, MA, respectively.

As of December 31, 2021, all cash amounts were recorded as restricted cash on the consolidated balance sheet.

As of December 31, 2022, these cash amounts are no longer restricted.

The Company maintains letters of credit of $ 2.1 million and $ 0.2 million in connection with the Company’s office leases in Redwood City, CA and Boston, MA, respectively.

Indemnification Agreements

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The Company has also entered into indemnification agreements with its directors and officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law.

The Company currently has directors’

and officers’

liability insurance.

The Company currently has directors’ and officers’ liability insurance.

Stockholders' Equity

The Company’s Certificate of Incorporation, as amended, authorized the Company to issue 150,000,000 shares of $ 0.0001 par value common stock as of December 31, 2022.

The Company’s Certificate of Incorporation, as amended, authorized the Company to issue 150,000,000 shares of $ 0.0001 par value common stock as of December 31, 2023.

Common stockholders are entitled to dividends if and when declared by the Board of Directors of the Company subject to the prior rights of the preferred stockholders.

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Unvested restricted stock units

Common stock warrants issued and outstanding

Total common stock reserved

Warrants to Purchase Shares of Common Stock

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

In April 2022, a warrant holder exercised 220,890 warrants at an exercise price of $ 11.32 per warrant, which resulted in a net issuance of 100,731 shares to the warrant holder.

There was no cash received by the Company as a result of this transaction.

The following provides a roll forward of outstanding warrants to purchase common stock as of December 31, 2022:

Issuance Date

Number of Shares of Common Stock Issuable

Weighted Average Exercise Price

Weight Average Contractual Term (Years)

Outstanding, December 31, 2021

Warrants issued

Warrants exercised

Outstanding, December 31, 2022

Stock-Based Compensation

Stock-based Compensation Expense

The following table presents stock-based compensation expense as reflected in the Company's consolidated statements of operations and comprehensive loss (in thousands):

The following table presents stock-based compensation expense as reflected in the Company's consolidated statements of operations (in thousands):

Year Ended December 31,

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Stock Options

A summary of stock option activity is set forth below (in thousands, except share and per share data):

A summary of stock option activity for the year ended December 31, 2023 is set forth below (in thousands, except share and per share data):

(in thousands)

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Vested and expected to vest, December 31, 2023

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

The assumptions used in the Black Scholes Model to calculate stock-based compensation are as follows:

Year Ended December 31,

Fair value of common stock

$ 1.32 - $ 9.15

$ 8.94 - $ 19.97

Expected term (years)

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The fair value of each stock option was estimated at the date of grant using a Black-Scholes option-pricing model using the following assumptions:

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

The assumptions are as follows:

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The Company has limited trading history.

As such, the expected volatility was determined by examining the historical volatilities for comparable publicly traded companies within the biotechnology and pharmaceutical industry using an average of historical volatilities of the Company’s industry peers.

• Risk-free interest rate.

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The Company will continue to use judgment in evaluating the expected volatility, risk-free interest rates, dividend yield and expected term, utilized for stock-based compensation on a prospective basis.

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company’s common stock for stock options that were in-the-money at December 31, 2022 and 2021.

The aggregate intrinsic value of stock options exercised during the years ended on December 31, 2022 and 2021 was $ 1.0 million and $ 10.1 million, respectively.

The aggregate intrinsic value of stock options exercised during the years ended on December 31, 2023 and 2022 was less than $ 0.1 million and $ 1.0 million, respectively.

The total fair value of options that vested during the years ended December 31, 2023 and 2022 was $ 17.9 million and $ 13.4 million, respectively.

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Restricted Stock Units

In October 2021, the Company granted 560,000 RSUs with service and performance conditions to certain employees, 448,000 of which vested during the year ended December 31, 2022.

Vesting of these awards is contingent on the occurrence of certain milestone events and fulfilment of any remaining service condition.

As a result, the related compensation cost is recognized as an expense when achievement of the milestone is considered probable.

The Company determined that the achievement of the milestone was considered probable as of December 31, 2021.

The expense recognized for these awards is based on the grant date fair value of the Company's common stock multiplied by the number of units granted.

The aggregate fair

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

value at of these RSU's as of the grant date was $ 4.5 million and the Company recognized $ 1.6 million and $ 2.2 million of related expense during the years ended December 31, 2021 and 2022, respectively.

The summary of RSU activity and related information for the year ended December 31, 2023 is set forth below:

Number of Units Outstanding

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Outstanding, December 31, 2022

RSUs granted (including performance-based RSUs)

RSUs forfeited

Outstanding, December 31, 2023

The Company did no t grant any RSU's in 2022.

The Company granted 513,700 RSU's in the year ended December 31, 2023 .

The Company did no t grant any RSU's in the year ended December 31, 2022.

The weighted-average grant date fair value of RSUs granted during the year ended December 31, 2023 was $ 7.69 .

As of December 31, 2022, there was approximately $ 1.1 million of unrecognized compensation cost related to unvested RSUs including performance-based RSUs that the Company expects to recognize over a remaining weighted-average period of approximately 0.7 years.

Summary of Plans

The Company has a 2014 Share Option Plan (the 2014 Plan), 2015 Stock Incentive Plan (the 2015 Plan), 2017 Stock Incentive Plan (the 2017 Plan), 2018 Stock Incentive Plan (the 2018 Plan), 2018 Employee Stock Purchase Plan (the 2018 ESPP), and 2022 Inducement Plan (the Inducement Plan, and, collectively with the 2014 Plan, the 2015 Plan, the 2017 Plan, the 2018 Plan and the 2018 ESPP, the Plans).

The Plans are administered by the Board of Directors or, at the discretion of the Board of Directors, by a committee of the Board of Directors or by the Chief Executive Officer.

The exercise prices, vesting and other restrictions are determined at the discretion of the Board of Directors, or its committee if so delegated, except that the exercise price per share of stock options may not be less than 100 % of the fair market value of the share of common stock on the date of grant and the term of the stock option may not be greater than ten years.

Incentive stock options granted to employees and restricted stock awards granted to employees, officers, members of the Board of Directors, advisors, and consultants of the Company typically vest over four years.

Non-statutory options granted to employees, officers, members of the Board of Directors, advisors, and consultants of the Company typically vest over three or four years.

Shares that are expired, terminated, surrendered or canceled under the Plans without having been fully exercised will be available for future awards.

In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards.

The 2014 Plan and 2015 Plan

As of December 31, 2022 , the number of shares of common stock available for grant under the 2014 Plan and 2015 Plan is 118,172 shares.

As of December 31, 2022 , an aggregate of 979,195 shares of common stock were issuable upon the exercise of outstanding stock options under the 2015 Plan at a weighted average exercise price of $ 12.06 per share and an aggregate of 22,987 shares of common stock were issuable upon the exercise of outstanding stock options under the 2014 Plan at a weighted average exercise price of $ 1.61 per share.

The 2017 Plan and 2018 Plan

As of December 31, 2022 , the number of shares of common stock available for grant under the 2017 Plan and 2018 Plan is 2,656,933 shares.

As of December 31, 2022 , an aggregate of 3,798,935 shares of common stock were issuable upon the exercise of outstanding stock options under the 2017 Plan and 2018 Plan at a weighted average exercise price of $ 14.88 per share.

Additionally, as of December 31, 2022 , there were 194,375 restricted stock units and 3,205 performance stock units outstanding under the 2017 and 2018 Plan.

2018 Employee Stock Purchase Plan

On January 1, 2022, as a result of the foregoing evergreen provision, the number of shares of common stock available for issuance under the 2018 Employee Stock Purchase Plan (ESPP) automatically increased from 524,775 shares to 922,144

As of December 31, 2023, there was approximately $ 2.4 million of unrecognized compensation cost related to unvested RSUs that the Company expects to recognize over a remaining weighted-average period of approximately 2.1 years.

Option repricing

On August 8, 2023, the board of directors approved a stock option repricing (the Option Repricing) to be effective on August 14, 2023 (the Effective Date) in accordance with the terms of the Company’s 2015 Stock Incentive Plan and 2018 Plan (together, the Plans).

Pursuant to the Option Repricing, and subject to a one year cliff period, the exercise price of each stock

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2022 and 2021, 46,597 shares and 15,667 shares were issued under the 2018 ESPP, respectively.

As of December 31, 2022 , 859,880 shares of common stock were available for issuance under the 2018 ESPP.

Inducement Grants

As of December 31, 2022 , the number of shares of common stock available for grant under the Inducement Plan is 96,600 shares and an aggregate of 903,400 shares of common stock were issuable upon the exercise of inducement grants of stock options, approved by the Company in accordance with Nasdaq listing Rule 5635(c)(4) and granted under the Inducement Plan, at a weighted average exercise price of $ 15.00 per share.

In addition, as of December 31, 2022 , an aggregate of 498,503 shares of common stock were issuable upon the exercise of inducement grants of stock options, approved by the Company in accordance with Nasdaq listing Rule 5635(c)(4) prior to establishing the Inducement Plan, at a weighted average exercise price of $ 15.38 per share.

option previously granted under the Plans, totaling 6,431,910 options, was amended to reduce the exercise price of such options to $ 2.14 per share, the closing price of the Company’s common stock on the Nasdaq Global Market on the Effective Date.

Under the terms of the Option Repricing, a repriced option will revert to its original exercise price if, prior to the one year anniversary of the Effective Date, (a) the option holder’s employment is terminated by the Company with cause or by the option holder or (b) the option is exercised.

The repriced options otherwise retained their existing terms and conditions as set forth in the Plans and applicable award agreements.

The stock option modification resulted in an incremental compensation cost of approximately $ 4.6 million, which was calculated based on the difference between the fair value of the stock options before the repricing and the fair value as of the Effective Date, using the Black-Scholes option-pricing model.

Of the incremental compensation cost, $ 1.3 million was recognized in the year ended December 31, 2023, and the remaining amount, less any employee terminations, will be recognized on the straight-line basis over the remaining vesting period of the repriced options.

The incremental cost is included in general and administrative expense and research and development expense on the consolidated statements of operations.

In addition, as of the Effective Date, the Company issued 1,418,042 options to purchase shares of common stock under the 2018 Plan to eligible employees who held inducement awards as of August 8, 2023.

These new options were issued to eligible employees because their inducement awards granted under Nasdaq Listing Rule 5635(c)(4) are not eligible for repricing.

The prior inducement awards remain outstanding under their original terms.

Net Loss Per Share

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Options to purchase common stock

Unvested restricted stock awards

Common stock warrants

Unvested restricted stock units

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

The components of the provision for (benefit from) income taxes are as follows (in thousands):

2 unchanged sentences

Provision for (benefit from) income taxes

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

There was no income tax expense nor benefit for the year ended December 31, 2022 .

Income tax benefit of $ 0.1 million for the year ended December 31, 2021 is primarily due to the adjustment in deferred tax liability arising from the impairment charge of $ 1.2 million of acquired IPR&D

There was no income tax expense nor benefit for the years ended December 31, 2023 and 2022.

For the rate table below the (provision for) benefit from income taxes differ from the amount expected by applying the federal statutory rate to the loss before taxes as follows:

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Federal statutory income tax rate

Other permanent differences

State income taxes

2 unchanged sentences

Stock-based compensation

Goodwill Impairment

Other permanent differences

Provision for income taxes

16 unchanged sentences

Net deferred tax assets

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

On September 15, 2020 Adicet Bio and resTORbio completed the Merger upon which Adicet Bio became the parent company of the consolidated group.

4 unchanged sentences

As a result the Company capitalized such costs in its 2023 income tax provision, resulting in an increase in deferred tax assets.

Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period.

Because of the Company’s recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance.

The valuation allowance increased by $ 16.3 million and $ 15.5 million during the years ended December 31, 2022 and 2021, respectively.

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period.

The valuation allowance increased by $ 9.6 million and by $ 16.3 million during the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023 , the Company had net operating loss carryforwards of $ 294.8 million, $ 12.1 million, and $ 16.1 million to reduce future taxable income, if any, for federal, state and foreign income tax purposes, respectively.

7 unchanged sentences

As of December 31, 2023, the ownership change analysis has not been completed, however no material tax attributes are expected to be limited for full use before their respective carryforward periods expires.

The Company files income tax returns in the United States federal jurisdiction, California, Massachusetts, New York and Israel.

The Company files income tax returns in the United States federal jurisdiction, California, Massachusetts and Israel.

The tax years 2016 to 2023 remains open to United States federal and state examination to the extent of the utilization of net operating loss and credit carryovers.

Additionally, the Company is currently undergoing an audit with California’s Franchise Tax Board (FTB) regarding the apportionment of revenue for the tax year 2017 and may be obligated to make future payments to the state related to this tax year depending on the outcome of the examination.

The Company is evaluating the FTB's proposal and assessing its course of action.

As of December 31, 2023 , the Company had unrecognized tax benefits of $ 0.8 million related to the transfer of certain intellectual property from its Israeli subsidiary.

6 unchanged sentences

Balance at the end of the year

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

The Company recognizes interest expense and penalties related to the above unrecognized tax benefits within income tax expense (benefit).

2 unchanged sentences

As of December 31, 2023 , Regeneron owned 883,568 shares of the Company’s common stock.

Regeneron became a related party in July 2019 as a result of a Series B redeemable convertible preferred stock financing.

For the years ended December 31, 2022 and 2021, the Company recorded revenue related to the Regeneron Agreement of $ 25.0 million and $ 9.7 million, respectively.

At-the-Market (ATM) Offering

On March 12, 2021, the Company entered into a Sales Agreement (Initial Sales Agreement) with JonesTrading Institutional Services LLC, as sales agent, to provide for the offering, issuance and sale of up to an aggregate amount of $ 75.0 million of common stock from time to time in ATM offerings under a registration statement on Form S-3 (File No.

333-254193) filed with the SEC, which was declared effective on March 30, 2021.

On November 8, 2022, the Initial Sales Agreement was amended (Amended Sales Agreement) to cover the offer and sales of up to $ 100.0 million of shares of the Company’s common stock.

The Amended Sales Agreement includes $ 30.0 million of shares of the Company’s common stock not sold pursuant to the Initial Sales Agreement and up to an additional $ 70.0 million of shares of the Company’s common stock.

In August 2022, pursuant to the Initial Sales Agreement and subject to the limitations thereof, the Company sold an aggregate of 2,611,723 shares of common stock at $ 17.23 per share resulting in net proceeds to the Company of $ 43.4 million after deducting sales agent commissions and expenses.

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

Regeneron became a related party in July 2019 as a result of Series B redeemable convertible preferred stock financing which was subsequently converted into common stock.

For the year ended December 31, 2023 , the Company recorded no revenue from the Regeneron Agreement.

See Note 8 for a discussion of the Regeneron Agreement.

Defined Contribution Plan

1 unchanged sentence

Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal tax regulations.

During the years ended December 31, 2022 and December 31, 2021, the Company made aggregate matching contributions of $ 0.8 million and $ 0.3 million, respectively.

During the years ended December 31, 2023 and 2022, the Company made aggregate matching contributions of $ 1.2 million and $ 0.8 million, respectively.

In connection with the annual goodwill impairment analysis performed during the fourth quarter of 2022, the Company determined that the fair value of its sole reporting unit exceeded its book value, and therefore no goodwill impairment charge was recorded in 2022.

During the first and second quarters of 2023, the Company concluded that no events or changes in circumstances had occurred that indicated goodwill was more likely than not impaired.

During the third quarter of 2023, the Company experienced a significant decline in its stock price.

As of September 30, 2023, the Company’s stock price declined 44 % from its closing stock price on June 30, 2023, and the decline in stock price was sustained.

The Company determined that this decline in stock price and market capitalization of the Company constituted a substantive change in circumstances that would more likely than not reduce the fair value of the Company’s single reporting unit below its carrying amount.

Accordingly, the Company tested its goodwill for impairment as of September 30, 2023 (the Interim Testing Date).

In determining the fair value of the Company’s sole reporting unit for the interim impairment analysis as of the Interim Testing Date, the Company used a market-based approach, and the primary input in this approach was a quoted market price in an active market.

To determine the estimated fair value of the Company’s single reporting unit, the Company calculated its market capitalization based on its stock price.

Based on the Company’s interim impairment analysis as of the Interim Testing Date, the carrying value of the Company’s single reporting unit exceeded its fair value.

Accordingly, step two of the goodwill impairment test was performed.

In performing step two of the goodwill impairment test, the Company utilized observable inputs and concluded that an impairment charge was necessary for the full amount of goodwill.

As a result of the step two evaluation, the Company recorded a goodwill impairment charge of $ 19.5 million during the three month period ended September 30, 2023.

This impairment charge reduced the balance of goodwill to $ 0 .

Subsequent Events

On March 13, 2023, the Company and PacWest executed a letter agreeing that, notwithstanding the covenants included in the 2022 Loan Amendment, until June 30, 2023 (i) the Company and its subsidiaries will not be required to maintain the lesser of $200 million or seventy percent (70%) of its combined balances in demand deposit accounts, money market funds and/or insured cash sweep (ICS) accounts with PacWest and (ii) the Company must maintain its combined balances at PacWest or its affiliates, including Pacific Western Asset Management (the “Letter”).

At all times following June 30, 2023, the Company will again be required to comply with the terms of the 2022 Loan Amendment.

Upon executing the Letter, the Company wired $ 187.2 million from its ICS accounts at PacWest to Pacific Western Asset Management who subsequently invested the funds into money market funds held in custody with U.S.

Bank National Association.

The Company’s remaining balance of approximately $ 10.0 million of funds held in demand deposit accounts and ICS accounts with PacWest represents approximately 4 % of its cash and cash equivalents as of the issuance date of these consolidated financial statements.

In January 2024, 6,350,000 shares of common stock were issued in a series of sales in accordance with the ATM Program, at an average price of $ 3.13 per share for aggregate net proceeds of approximately $ 19.3 million, after deducting sales agent commissions, but before deducting any expenses related to such sales.

Underwritten Public Offering

On January 22, 2024, Adicet entered into an Underwriting Agreement (the Underwriting Agreement) with Jefferies LLC and Guggenheim Securities, LLC (the Underwriters) related to an underwritten public offering (the Offering) of 27,054,667 shares (the Shares) of common stock of the Company, par value $ 0.0001 per share (the Common Stock), and, in lieu of Common Stock to an investor, pre-funded warrants (the Pre-Funded Warrants) to purchase 8,445,333 shares of Common Stock (the Warrant Shares).

The Shares were sold at a public offering price of $ 2.40 per share and the Pre-Funded Warrants were sold at a public offering price of $ 2.3999 per underlying share, which represents the per share public offering price of each share of common stock minus the $ 0.0001 per share exercise price for each pre-funded warrant.

The purchase price paid by the

Adicet Bio, Inc.

Notes to Consolidated Financial Statements

Underwriters to the Company was $ 2.256 per Share and $ 2.2559 per Pre-Funded Warrant, representing a discount to the Underwriters of 6.0 %.

In addition, the Company granted the Underwriters an option exercisable for 30 days from the date of the Underwriting Agreement to purchase, at the public offering price less underwriting discounts and commissions, up to an additional 5,325,000 shares of Common Stock.

On January 23, 2024, the Underwriters exercised this option in full.

The Company received net proceeds from the Offering, after deducting the underwriting discount and commissions and other estimated offering expenses, of approximately $ 91.8 million.

The Company may receive nominal proceeds, if any, from the exercise of the Pre-Funded Warrants.

EXHIBIT INDEX

Description of Exhibit

Third Amended and Restated Certificate of Incorporation of the Registrant (as currently in effect) (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on January 30, 2018).

Certificate of Amendment of Third Amended and Restated Certificate of Incorporation of resTORbio, Inc.

related to the Reverse Stock Split, dated September 15, 2020 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

Certificate of Amendment of Third Amended and Restated Certificate of Incorporation of resTORbio, Inc.

related to the Name Change, dated September 15, 2020 (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

Amended and Restated Bylaws of the Registrant (as currently in effect) (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on January 30, 2018) .

Description of Securities (incorporated by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form 10-K (File No.

001-38359) filed with the SEC on March 12, 2020).

Amended and Restated Investors’

Rights Agreement, dated as of November 29, 2017, among the Registrant and the other parties thereto (incorporated by reference to Exhibit 4.2 to our Registration Statement on Form S-1 (File No.

Amended and Restated Investors’ Rights Agreement, dated as of November 29, 2017, among the Registrant and the other parties thereto (incorporated by reference to Exhibit 4.2 to our Registration Statement on Form S-1 (File No.

333-222373) filed with the SEC on December 29, 2017).

Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form 10-K (File No.

001-38359) filed with the SEC on March 15, 2022).

Stock Purchase Agreement, dated February 12, 2021, by and among the Registrant and the Investors named therein (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form 8-K, as amended (File No.

001-38359) filed with the SEC on February 16, 2021).

Loan and Security Agreement, dated as of April 28, 2020, by and between Pacific Western Bank and Adicet Therapeutics, Inc.

(incorporated by reference to Exhibit 10.26 to the Registrant’s Current Report on Form 8-K (File No.

Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on January 24, 2024).

Loan and Security Agreement, dated as of April 28, 2020, by and between Banc of California, Inc.

and Adicet Therapeutics, Inc.

(incorporated by reference to Exhibit 10.26 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

First Amendment to Loan and Security Agreement, dated as of July 8, 2020, by and between Pacific Western Bank and Adicet Therapeutics, Inc.

(incorporated by reference to Exhibit 10.32 to the Registrant’s Current Report on Form 8-K (File No.

First Amendment to Loan and Security Agreement, dated as of July 8, 2020, by and between Banc of California, Inc.

and Adicet Therapeutics, Inc.

(incorporated by reference to Exhibit 10.32 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

Second Amendment to Loan and Security Agreement, dated as of September 14, 2020, by and between Pacific Western Bank and Adicet Therapeutics, Inc.

(incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No.

Second Amendment to Loan and Security Agreement, dated as of September 14, 2020, by and between Banc of California, Inc.

and Adicet Therapeutics, Inc.

(incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

Third Amendment to Loan and Security Agreement, dated as of September 15, 2020, by and between Pacific Western Bank and Adicet Therapeutics, Inc.

(incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K (File No.

Third Amendment to Loan and Security Agreement, dated as of September 15, 2020, by and between Banc of California, Inc.

and Adicet Therapeutics, Inc.

(incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

2 unchanged sentences

and CP Enterprises, Inc.

d/b/a CP Construction (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on March 24, 2022).

2 unchanged sentences

and CP Enterprises, Inc.

d/b/a CP Construction (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on March 24, 2022).

2 unchanged sentences

and CP Enterprises, Inc.

d/b/a CP Construction (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on March 24, 2022).

Second Amendment to Lease, dated as of June 16, 2022, between Adicet Therapeutics, Inc.

as Tenant, and Westport Office Park, LLC, as Landlord (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on June 21, 2022).

Antibody Discovery Agreement, dated as of March 23, 2021, by and between the Registrant and Twist Bioscience Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-38359) filed with the SEC on November 8, 2022).

First Amendment to Antibody Discovery Agreement, dated as of November 8, 2022, by and between the Registrant and Twist Bioscience Corporation.

First Amendment to Antibody Discovery Agreement, dated as of November 8, 2022, by and between the Registrant and Twist Bioscience Corporation (incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K (File No.

001-38359) filed with the SEC on March 15, 2023).

Fourth Amendment to Loan and Security Agreement, dated as of October 21, 2021, between Adicet Therapeutics, Inc.

and Pacific Western Bank (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

and Banc of California, Inc.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on October 25, 2021).

Fifth Amendment to Loan and Security Agreement, dated as of December 2, 2022, between Adicet Therapeutics, Inc.

and Pacific Western Bank (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

and Banc of California, Inc.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on December 8, 2022).

Form of Warrant to Purchase Common Stock issued to Beech Hill Securities, dated September 15, 2020 (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

Warrant to Purchase Common Stock issued to PacWest Bancorp, dated September 15, 2020 (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

Unconditional Secured Guaranty, dated September 15, 2020 (incorporated by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

Affirmation and Amendment of Guaranty, dated as of October 21, 2021, between the Registrant and Pacific Western Bank (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No.

Affirmation and Amendment of Guaranty, dated as of October 21, 2021, between the Registrant and Banc of California, Inc.

(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on October 25, 2021).

Amended and Restated 2018 Stock Option and Incentive Plan and forms of award agreements thereunder (incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K (File No.

001-38359) filed with the SEC on March 15, 2022).

2017 Stock Incentive Plan and forms of award agreements thereunder (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1, as amended, (File No.

Second Amended and Restated 2018 Stock Option and Incentive Plan and forms of award agreements thereunder (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on June 5, 2023).

2017 Stock Incentive Plan and forms of award agreements thereunder (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1, as amended, (File No.

333-222373) filed with the SEC on January 16, 2018) .

2015 Stock Incentive Plan and forms of award agreements thereunder (incorporated by reference to Exhibit 10.13 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

Amended and Restated 2018 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K (File No.

001-38359) filed with the SEC on March 15, 2022).

2022 Inducement Plan and forms of award agreements thereunder (incorporated by reference to Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K (File No.

001-38359) filed with the SEC on March 15, 2022).

First Amendment to the 2022 Inducement Plan.

Form of Employment Agreement (incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K (File No.

First Amendment to the 2022 Inducement Plan (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K (File No.

001-38359) filed with the SEC on March 15, 2023).

Form of Indemnification Agreement between the Registrant and each of its directors and executive officers (incorporated by reference to Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 15, 2022).

Amended and Restated Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K (File No.

Form of Employment Agreement (incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K (File No.

001-38359) filed with the SEC on March 15, 2022).

Amended and Restated Senior Executive Cash Incentive Bonus Plan (incorporated by reference to Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K (File No.

Amended and Restated Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.18 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-38359) filed with the SEC on May 9, 2023).

Amended and Restated Senior Executive Cash Incentive Bonus Plan (incorporated by reference to Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K (File No.

001-38359) filed with the SEC on March 15, 2022).

Lease Agreement, dated as of October 31, 2018, by and between Adicet Bio, Inc.

as Tenant, and Westport Office Park, LLC as Landlord (incorporated by reference to Exhibit 10.23 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

First Amendment to Lease, dated as of December 30, 2020, by and between Adicet Therapeutics, Inc.

as Tenant, and Westport Office Park, LLC as Landlord (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on January 5, 2021).

Third Amendment to Lease, dated as of January 9, 2023, by and between Adicet Therapeutics, Inc.

as Tenant, and Westport Office Park, LLC as Landlord.

as Tenant, and Westport Office Park, LLC as Landlord (incorporated by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K (File No.

001-38359) filed with the SEC on March 15, 2023).

Office Lease Agreement, dated as of January 8, 2018, by and between resTORbio, Inc.

and 500 Boylston and 222 Berkeley Owner (DE) LLC (incorporated by reference to Exhibit 10.15 to the Registrant’s Registration Statement on Form S-1, as amended, (File No.

333-222373) filed with the SEC on January 16, 2018).

First Amendment to Office Lease, dated as of April 1, 2019, by and between resTORbio, Inc.

and 500 Boylston and 222 Berkeley Owner (DE) LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-38359) filed with the SEC on May 15, 2019).

Sublease Agreement, dated as of July 19, 2021, by and between Adicet Bio, Inc.

and RFS Opco LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on July 23, 2021).

Third Amendment to Business Park Lease, dated as of June 25, 2021, by and between Adicet Bio, Inc.

and Facebook, Inc.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on July 1, 2021).

Second Amendment to Business Park Lease, dated as of October 19, 2020, by and between Adicet Bio, Inc.

and Facebook, Inc.

(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No.

and RFS Opco LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on July 23, 2021).

Amendment to Business Park Lease, dated as of September 2019, by and between Adicet Bio, Inc.

Bohannon Organization (incorporated by reference to Exhibit 10.25 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

Business Park Lease, dated as of September 30, 2015, by and between Adicet Bio, Inc.

Bohannon Organization (incorporated by reference to Exhibit 10.24 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

Standard Form of Agreement between Owner and Contractor Where the Basis for Payment is a Stipulated Sum, effective as of April 2, 2021, by and between Adicet Therapeutics, Inc., as Owner, and CP Enterprises, Inc.

d/b/a CP Construction, as Contractor (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on April 9, 2021) .

1 unchanged sentence

as successor in interest to Applied Immune Technology, Ltd.

(incorporated by reference to Exhibit 10.27 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

1 unchanged sentence

1 to Amended and Restated License Agreement, dated as of June 30, 2015, by and between Technion Research and Development Foundation Ltd., acting on behalf of itself and the Technion-Israel Institute of Technology, and Applied Immune Technology, Ltd.

(incorporated by reference to Exhibit 10.28 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

1 unchanged sentence

2 to Amended and Restated License Agreement, dated as of January 13, 2016, by and between Technion Research and Development Foundation Ltd., Applied Immune Technology, Ltd., and Adicet Therapeutics, Inc.

(incorporated by reference to Exhibit 10.29 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

1 unchanged sentence

and Regeneron Pharmaceuticals, Inc.

(incorporated by reference to Exhibit 10.30 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

2 unchanged sentences

and Regeneron Pharmaceuticals, Inc.

(incorporated by reference to Exhibit 10.31 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on September 16, 2020).

Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K (File No.

Sixth Amendment to Loan and Security Agreement, dated as of May 30, 2023, by and between Banc of California, Inc.

and Adicet Therapeutics, Inc.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38359) filed with the SEC on June 5, 2023).

Fourth Amendment to Lease, dated as of August 7, 2023, by and between Adicet Therapeutics, Inc.

as Tenant, and Westport Office Park, LLC as Landlord (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-38359) filed with the SEC on August 9, 2023).

Membership Agreements, dated January 19, 2024 and March 12, 2024, by and between the Registrant and Industrious Bos 131 Dartmouth Street LLC.

Adicet Bio, Inc.

Insider Trading Policy.

Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K (File No.

001-38359) filed with the SEC on March 12, 2021).

Consent of KPMG LLP, independent registered public accounting firm.

Power of Attorney (included on signature page).

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.

2 unchanged sentences

§1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Adicet Bio, Inc.

Compensation Recovery Policy.

Inline XBRL Instance Document

8 unchanged sentences

# Indicates a management contract or any compensatory plan, contract or arrangement.

** The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed”

for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

** The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.

28 unchanged sentences

March 19, 2024

/s/ Bastiano Sanna

Bastiano Sanna, Ph.D.

/s/ Katie Peng

March 19, 2024

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures