Barinthus Biotherapeutics plc. 10-K

Item 9A. Controls and Procedures Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15I of the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of December 31, 2021. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of December 31, 2021 were not effective for the reasons set forth below. In connection with the audits of our consolidated financial statements for each of the years ended December 31, 2020, and 2021, our management and independent registered public accounting firm identified material weaknesses in our internal control over financial reporting. As a result, a number of adjustments to our consolidated financial statements for the year ended December 31, 2020 and 2021 were identified and corrected during the course of the quarterly review and audit process. The material weaknesses related to: (i) our lack of a sufficient number of personnel with an appropriate level of knowledge and experience in the application of U.S. generally accepted accounting principles, or U.S. GAAP, commensurate with our financial reporting requirements; (ii) our IT general control environment has not been sufficiently designed to include appropriate user access rights and (iii) policies and procedures with respect to the review, supervision and monitoring of our accounting and reporting functions were either not designed and in place or not operating effectively. We have commenced measures to remediate these material weaknesses, including hiring a new Head of Financial Reporting at the end of the third quarter of 2021, consultants with appropriate experience and technical accounting knowledge, and additional staff. The additional personnel are overseeing the implementation of improved processes and internal controls, building our financial management and reporting infrastructure. We continue to engage with third party specialists, as required, for complex accounting matters. Our management concluded that the material weakness related to the application of U.S GAAP as described above has been remediated as of December 31, 2021. We are also taking measures to address the IT general control environment through the implementation of a new enterprise resource planning system, of which we are in the final stages of its implementation. Although we have made progress to enhance our in-house accounting and finance function, in connection with the audit of our financial statements as of the year ended December 31, 2021, our management and our independent registered public accounting firm concluded that the two remaining material weaknesses are still present. Management’s Annual Report on Internal Control Over Financial Reporting This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by the rules of the SEC for newly public companies. Attestation Report of the Registered Public Accounting Firm This Annual Report does not include an attestation report of our registered public accounting firm due to an exemption provided by the JOBS Act for “emerging growth companies.” Changes in Internal Control over Financial Reporting Other than the changes intended to remediate the material weaknesses noted above, no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the year ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 127 Table of Contents Item 9B. Other Information On March 24, 2022, the Board of Directors of the Company established June 15, 2022 as the date for the Company’s 2022 Annual Meeting of Shareholders, or Annual Meeting, which will be held at 1:00 pm London time (8:00 am Eastern Time), and established May 6, 2022 as the record date for determining shareholders entitled to notice of, and to vote at, the Annual Meeting. Because the Company did not hold an annual meeting the previous year, shareholders of the Company who wish to have a resolution considered for inclusion in the Company’s proxy materials for the Annual Meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or Exchange Act, must ensure that such resolution is received by the Company’s Secretary c/o The Schrödinger Building, Heatley Road, The Oxford Science Park, Oxford OX4 4GE United Kingdom on or before the close of business on April 22, 2021, which the Company has determined to be a reasonable time before it expects to begin to print and distribute its proxy materials prior to the Annual Meeting. Any such resolution must also meet the requirements set forth in the rules and regulations of the Securities and Exchange Commission to be eligible for inclusion in the proxy materials for the Annual Meeting. The April 22, 2021 deadline will also apply in determining whether notice of a stockholder resolution is timely for purposes of exercising discretionary voting authority with respect to proxies under Rule 14a-4(c) of the Exchange Act. Under section 338 of the U.K. Companies Act 2006, shareholders representing at least 5% of holders entitled to vote on a resolution at an annual general meeting may require the Company to include such resolution in its notice of an annual general meeting. Provided the applicable thresholds are met, notice of the resolution must be received by the Company at the Office of the Company Secretary at the address specified above, at least six weeks prior to the date of the annual general meeting, or, if later, at the time notice of the annual general meeting is delivered to shareholders. In addition, in accordance with the requirements contained in the Company’s Articles of Association, or Charter, shareholders who wish to bring business before the Annual Meeting outside of Rule 14a-8 of the Exchange Act or to nominate a person for election as a director must ensure that written notice of such resolution (including all of the information specified in the Charter) is received by the Company’s Secretary at the address specified above no later than the close of business on April 22, 2021. Any such proposal must meet the requirements set forth in the Charter in order to be brought before the Annual Meeting. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not Applicable. ​ 128 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance The information required under this item is incorporated herein by reference to our definitive proxy statement for our 2022 Annual General Meeting to be filed with the U.S. Securities and Exchange Commission. Item 11. Executive Compensation The information required under this item is incorporated herein by reference to our definitive proxy statement for our 2022 Annual General Meeting to be filed with the U.S. Securities and Exchange Commission. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required under this item is incorporated herein by reference to our definitive proxy statement for our 2022 Annual General Meeting to be filed with the U.S. Securities and Exchange Commission. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required under this item is incorporated herein by reference to our definitive proxy statement for our 2022 Annual General Meeting to be filed with the U.S. Securities and Exchange Commission. Item 14. Principal Accounting Fees and Services The information required under this item is incorporated herein by reference to our definitive proxy statement for our 2022 Annual General Meeting to be filed with the U.S. Securities and Exchange Commission. ​ 129 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this report: (1) Financial Statements. The financial statements filed as part of this report are listed on the Index to Consolidated Financial Statements in Item 8. (2) Financial Statement Schedules. No schedules are submitted because they are not applicable, not required, or because the information is included in the consolidated financial statements or the notes thereto. (3) Exhibits. EXHIBIT INDEX ​ Exhibits number Description of exhibit 2.1† ​ Agreement and Plan of Merger and Reorganization, dated December 9, 2021, by and among Vaccitech plc, VA Merger Sub 1 Inc., VA Merger Sub 2 Inc., Avidea Technologies Inc., and Benjamin Eisler, as the Securityholder Agent (Incorporated by reference to Exhibit 2.1 to our Periodic Report on Form 8-K (File No. 001-40367) filed on December 14, 2021). ​ ​ ​ ​ ​ 2.2*† ​ Amendment No. 1 to Agreement and Plan of Merger and Reorganization, dated March 11, 2022, by and between Vaccitech plc and Benjamin Eisler, as Securityholder Agent. ​ ​ ​ ​ ​ 3.2 ​ Articles of Association of the Registrant (Incorporated by reference to Exhibit 3.1 to our Form 8-K (File No. 001-40367) filed on May 10, 2021)). ​ ​ ​ ​ ​ 4.1 ​ Form of Deposit Agreement (Incorporated by reference to Exhibit 4.1 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 4.2 ​ Form of American Depositary Receipt (included in Exhibit 4.1). ​ ​ ​ ​ ​ 4.3* ​ Description of Registrant’s Securities. ​ ​ ​ ​ ​ 10.1# ​ EMI Option Scheme and form of award agreement thereunder (Incorporated by reference to Exhibit 10.1 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.2# ​ 2021 Stock Option and Incentive Plan and forms of award agreements thereunder (Incorporated by reference to Exhibit 10.2 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.3# ​ 2021 Employee Share Purchase Plan (Incorporated by reference to Exhibit 10.2 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.4† ​ License of Technology by and between the Registrant and Oxford University Innovation Limited, dated as of March 4, 2016, as amended on January 14, 2019 and as further amended April 29, 2020 (Incorporated by reference to Exhibit 10.3 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.5† ​ License Agreement by and between the Registrant and Oxford University Innovation Limited, dated as of September 8, 2017 (Incorporated by reference to Exhibit 10.4 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ 130 Table of Contents ​ ​ ​ ​ 10.6† ​ Master Collaboration Agreement by and between the Registrant and CanSino Biologics, Inc., dated as of September 4, 2018 (Incorporated by reference to Exhibit 10.5 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.7† ​ License Agreement by and among the Registrant, The Chancellor, Masters and Scholars of the University of Oxford and Oxford University Innovation Limited, dated as of September 27, 2018 (Incorporated by reference to Exhibit 10.6 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.8† ​ License Agreement by and between the Registrant and Vaccitech Oncology Limited, dated as of November 14, 2018 (Incorporated by reference to Exhibit 10.7 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.9† ​ Clinical Trial and Option Agreement by and among Vaccitech Oncology Limited, Cancer Research Technology Limited, and Cancer Research UK, dated as of December 16, 2019 (Incorporated by reference to Exhibit 10.8 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.10# ​ Form of Deed of Indemnity between the Registrant and each of its directors and officers (Incorporated by reference to Exhibit 10.9 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.11#** ​ Form of Employment Agreement between the Registrant and William Enright (Incorporated by reference to Exhibit 10.10 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.12#** ​ Form of Employment Agreement between the Registrant and Georgy Egorov (Incorporated by reference to Exhibit 10.11 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.13#** ​ Form of Employment Agreement between the Registrant and Thomas G. Evans, MD (Incorporated by reference to Exhibit 10.12 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.14#** ​ Form of Employment Agreement between the Registrant and Margaret Marshall, MD (Incorporated by reference to Exhibit 10.13 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.15#** ​ Form of Employment Agreement between the Registrant and Chris Ellis (Incorporated by reference to Exhibit 10.14 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.16#** ​ Form of Employment Agreement between the Registrant and Graham Griffiths (Incorporated by reference to Exhibit 10.15 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.17 ​ Lease Agreement by and between the Registrant and Oxford Sciences Innovation plc, dated March 27, 2019 (Incorporated by reference to Exhibit 10.16 to our Registration Statement on Form S-1/A (File No. 333-255158) filed on April 27, 2021). ​ ​ ​ ​ ​ 10.18 ​ Lease Agreement dated September 3, 2021 by and among The Harwell Science and Innovation Campus General Partner Limited, The Harwell Science and Innovation Campus Nominee Limited, The Harwell Science and Innovation Campus Limited Partnership and Vaccitech (UK) Limited (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No. 001-40367) filed on November 12, 2021). ​ ​ ​ ​ ​ 21.1* ​ Subsidiaries of the Registrant. ​ ​ ​ ​ ​ 23.1* ​ Consent of BDO LLP, independent registered public accounting firm. ​ ​ ​ ​ ​ 24.1* ​ Power of Attorney (included on signature page to this annual report). ​ ​ ​ ​ ​ 31.1* ​ Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ ​ ​ 131 Table of Contents 31.2* ​ Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ ​ ​ 32.1*+ ​ Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ ​ ​ 101.INS* ​ XBRL Instance Document ​ ​ ​ ​ ​ 101.SCH* ​ XBRL Taxonomy Extension Schema Document ​ ​ ​ ​ ​ 101.CAL* ​ XBRL Taxonomy Extension Calculation Linkbase Document ​ ​ ​ ​ ​ 101.DEF* ​ XBRL Taxonomy Extension Definition Linkbase Document ​ ​ ​ ​ ​ 101.LAB* ​ XBRL Taxonomy Extension Label Linkbase Document ​ ​ ​ ​ ​ 101.PRE* ​ XBRL Taxonomy Extension Presentation Linkbase Document ​ ​ ​ ​ ​ 104* ​ Cover Page Interactive Data File (the cover page XBRL tags are embedded within the iXBRL document). ​ * Filed or furnished herewith. † Certain portions of this exhibit have been omitted because they are not material and the Registrant customarily and actually treats that information as private or confidential. # Indicates a management contract or any compensatory plan, contract or arrangement. ** Certain exhibits and schedules to these agreements have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will furnish copies of any of the exhibits and schedules to the Securities and Exchange Commission upon request. + The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to be furnished with this Annual Report and will not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. Item 16. Form 10-K Summary None. ​ 132 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ​ March 25, 2022 VACCITECH PLC ​ ​ ​ ​ By: /s/ WILLIAM ENRIGHT ​ ​ ​ ​ ​ William Enright ​ ​ Chief Executive Officer ​ ​ ​ 133 Table of Contents POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints William Enright and Georgy Egorov, and each of them, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: ​ Signature Title Date ​ ​ ​ ​ ​ ​ /s/ WILLIAM ENRIGHT ​ Chief Executive Officer and Director ​ March 25, 2022 ​ William Enright ​ (Principal Executive Officer) ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ GEORGY EGOROV ​ Chief Financial Officer ​ March 25, 2022 ​ Georgy Egorov ​ (Principal Financial and Accounting Officer) ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ ROBIN WRIGHT ​ Chairman and Director ​ March 25, 2022 ​ Robin Wright ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ ALEX HAMMACHER ​ Director ​ March 25, 2022 ​ Alex Hammacher ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ PIERRE A. MORGON ​ Director ​ March 25, 2022 ​ Pierre A. Morgon ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ ANNE M. PHILLIPS ​ Director ​ March 25, 2022 ​ Anne M. Phillips ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ KAREN T. DAWES ​ Director ​ March 25, 2022 ​ Karen T. Dawes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ JOSEPH C. F. SCHEEREN ​ Director ​ March 25, 2022 ​ Joseph C. F. Scheeren ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 134 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ ​ Page Report of Independent Registered Public Accounting Firm ( BDO LLP : London, United Kingdom : PCAOB ID # 1295 ) ​ ​ Consolidated Balance Sheets ​ F-1 Consolidated Statements of Operations and Comprehensive Loss ​ F-2 Consolidated Statements of Changes in Redeemable Convertible Preferred Shares and Shareholders’ Equity (Deficit) ​ F-3 Consolidated Statements of Cash Flows ​ F-5 Notes to Consolidated Financial Statements ​ F-6 ​ ​ ​ ​ Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Shareholders and Board of Directors Vaccitech plc Oxford, United Kingdom Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Vaccitech plc (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, changes in redeemable convertible preferred shares and shareholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BDO LLP BDO LLP We have served as the Company's auditor since 2017. London, United Kingdom March 25, 2022 ​ ​ ​ Table of Contents VACCITECH PLC CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS) ​ ​ ​ ​ ​ ​ ​ ​ ​ As of As of ​ ​ December 31, ​ December 31, ​ ​ ​ 2021 ​ 2020 Assets ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 214,054 ​ $ 43,266 ​ Accounts receivable ​ 20 ​ 518 ​ Research and development incentives receivable ​ 6,229 ​ 2,708 ​ Prepaid expenses and other current assets ​ 6,462 ​ 1,409 ​ Total current assets ​ 226,765 ​ 47,901 ​ Goodwill ​ 12,630 ​ — ​ Property and equipment, net ​ 1,829 ​ 629 ​ Intangible assets, net ​ 31,430 ​ — ​ Right of use assets, net ​ 7,257 ​ 2,136 ​ Other assets ​ 804 ​ — ​ Total assets ​ $ 280,715 ​ $ 50,666 ​ Liabilities, Redeemable Convertible Preferred Shares And Shareholders’ Equity (Deficit) ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ Accounts payable ​ $ 2,419 ​ $ 4,667 ​ Accrued expenses and other current liabilities ​ 7,875 ​ 2,537 ​ Deferred revenue ​ 182 ​ 245 ​ Current portion of lease liability ​ 523 ​ 192 ​ Debt ​ 159 ​ — ​ Total current liabilities ​ 11,158 ​ 7,641 ​ Convertible loan notes – non current ​ — ​ 44,700 ​ Lease liability – non current ​ 6,540 ​ 1,472 ​ Contingent consideration ​ 2,371 ​ — ​ Deferred tax liability, net ​ 8,084 ​ — ​ Total liabilities ​ 28,153 ​ 53,813 ​ Commitments and contingencies (Note 16) ​ ​ ​ Series A redeemable convertible preferred shares; £ 0.10 nominal value; no shares issued and outstanding ; (December 31,2020: issued and outstanding: 22,065 ) ​ ​ — ​ ​ 33,765 ​ Series B redeemable convertible preferred shares (Series B shares); £ 0.10 nominal value; no shares issued and outstanding ; (December 31, 2020: issued and outstanding: no shares issued or outstanding) ​ ​ — ​ ​ — ​ Shareholders’ equity (deficit): ​ ​ ​ Ordinary shares, £ 0.000025 nominal value; 37,188,730 shares authorized, issued and outstanding (December 31, 2020: authorized, issued and outstanding : 7,960,458 ) ​ ​ 1 ​ ​ 0 1 Deferred A shares, £ 1 nominal value; 63,443 shares authorized, issued and outstanding (December 31, 2020: no shares issued or outstanding ) ​ 86 ​ — ​ Deferred B shares, £ 0.01 nominal value; 570,987 shares authorized, issued and outstanding (December 31, 2020: no shares issued or outstanding ) ​ 8 ​ — ​ Deferred C shares, £ 0.000007 nominal value, 27,828,231 shares authorized , issued and outstanding (December 31, 2020: authorized, issued and outstanding : 7,960,458 ) ​ 0 1 0 1 Additional paid-in capital ​ 369,103 ​ 21,660 ​ Accumulated deficit ​ ( 108,585 ) ​ ( 57,720 ) ​ Accumulated other comprehensive loss – foreign currency translation adjustments ​ ( 8,488 ) ​ ( 1,243 ) ​ Noncontrolling interest ​ 437 ​ 391 ​ Total shareholders’ equity/(deficit) ​ ​ 252,562 ​ ​ ( 36,912 ) ​ Total liabilities, redeemable convertible preferred shares and shareholders’ equity ​ $ 280,715 ​ $ 50,666 ​ 1 Indicates amount less than thousand The accompanying notes are an integral part of these consolidated financial statements. ​ F-1 Table of Contents VACCITECH PLC CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (IN THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, ​ December 31, ​ 2021 ​ 2020 ​ License revenue $ 63 $ 2,553 ​ Service revenue ​ 21 ​ 405 ​ Research grants and contracts ​ 184 ​ 1,863 ​ Total revenue ​ 268 ​ 4,821 ​ Operating expenses ​ ​ ​ Research and development ​ 20,371 ​ 14,387 ​ General and administrative ​ 25,118 ​ 10,480 ​ Total operating expenses ​ 45,489 ​ 24,867 ​ Loss from operations ​ ( 45,221 ) ​ ( 20,046 ) ​ Other income (expense): ​ ​ ​ Change in fair value of derivatives ​ 5,994 ​ 2,039 ​ Unrealized foreign exchange gain on convertible loan notes ​ 209 ​ 448 ​ Loss on extinguishment of convertible loan notes ​ ( 13,789 ) ​ — ​ Interest expense ​ ( 2,668 ) ​ ( 3,600 ) ​ Interest income ​ 2 ​ 0 1 Research and development incentives ​ 4,001 ​ 3,279 ​ Other income, net ​ 332 ​ 42 ​ Total other (expense) income ​ ( 5,919 ) ​ 2,208 ​ Tax benefit (expense) ​ 28 ​ ( 95 ) ​ Net loss ​ ( 51,112 ) ​ ( 17,933 ) ​ Net loss attributable to noncontrolling interest ​ 247 ​ 227 ​ Net loss attributable to Vaccitech shareholders ​ $ ( 50,865 ) ​ $ ( 17,706 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average ordinary shares outstanding, basic and diluted ​ 25,894,375 ​ 7,904,529 ​ Net loss per share attributable to ordinary shareholders, basic and diluted ​ $ ( 1.96 ) ​ $ ( 2.24 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 51,112 ) ​ $ ( 17,933 ) ​ Other comprehensive loss – foreign currency translation adjustments ​ ( 7,248 ) ​ ( 776 ) ​ Comprehensive loss ​ ( 58,360 ) ​ ( 18,709 ) ​ Comprehensive loss attributable to noncontrolling interest ​ 250 ​ 227 ​ Comprehensive loss attributable to Vaccitech shareholders ​ $ ( 58,110 ) ​ $ ( 18,482 ) ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ F-2 Table of Contents VACCITECH PLC CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ EQUITY (DEFICIT) (IN THOUSANDS, EXCEPT NUMBER OF SHARES) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2021 ​ Series A Redeemable Convertible Preferred Shares ​ Series B Redeemable Convertible Preferred Shares ​ Ordinary Shares Deferred A Shares Deferred B Shares Deferred C Shares Additional Accumulated Accumulated Other Noncontrolling Total Shareholders’ ​ Shares ​ Amount Shares ​ Amount ​ Shares Amount Shares Amount Shares Amount Shares Amount Paid-in-capital Deficit Comprehensive Loss Interest (Deficit)/Equity Balance, January 1, 2021, as previously reported ​ 22,065 ​ $ 33,765 ​ — ​ $ — ​ ​ 7,960,458 ​ $ 0 1 — ​ $ — ​ — ​ $ — ​ 7,960,458 ​ $ 0 1 $ 19,531 ​ $ ( 55,591 ) ​ $ ( 1,243 ) ​ $ 391 ​ $ ( 36,912 ) Share based compensation – restatement (see note 1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,129 ​ ​ ( 2,129 ) ​ ​ ​ ​ ​ ​ ​ $ — Balance, January 1, 2021, as restated ​ 22,065 ​ $ 33,765 ​ — ​ $ — ​ ​ 7,960,458 ​ $ 0 1 — ​ $ — ​ — ​ $ — ​ 7,960,458 ​ $ 0 1 $ 21,660 ​ $ ( 57,720 ) ​ $ ( 1,243 ) ​ $ 391 ​ $ ( 36,912 ) Share based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 16,487 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 16,487 Issue of Series B shares, net of issuance costs ​ ​ ​ ​ ​ ​ 28,957 ​ ​ 121,837 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — Series B Shares issued on conversion of convertible notes ​ ​ ​ ​ ​ ​ 12,421 ​ ​ 53,721 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — Issue of Deferred A shares ​ ​ ​ ​ ( 29 ) ​ ​ ​ ​ ( 57 ) ​ ​ ​ ​ ​ ​ ​ 63,443 ​ ​ 86 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 86 Issue of ordinary shares ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 960,691 ​ ​ 0 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 263,886 ​ ​ 0 1 ​ 9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 9 Initial public offering, net of underwriting discounts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 6,500,000 ​ ​ 0 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 102,765 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 102,765 Offering Cost ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 2,165 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 2,165 ) Conversion of Series A shares ​ ( 22,065 ) ​ ​ ( 33,736 ) ​ ​ ​ ​ ​ ​ ​ 6,818,085 ​ ​ 0 1 ​ ​ ​ ​ ​ 198,585 ​ ​ 3 ​ 6,818,085 ​ ​ 0 1 ​ 33,733 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 33,736 Conversion of Series B shares ​ ​ ​ ​ ​ ​ ( 41,378 ) ​ ​ ( 175,501 ) ​ ​ 12,785,802 ​ ​ 0 1 ​ ​ ​ ​ ​ 372,402 ​ ​ 5 ​ 12,785,802 ​ ​ 0 1 ​ 175,496 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 175,501 Issue of shares to Non-controlling interest ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 296 ​ ​ 296 Issue of shares on acquisition of subsidiary ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,163,694 ​ ​ 0 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 21,118 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 21,118 Foreign currency translation adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 7,245 ) ​ ​ ( 3 ) ​ ​ ( 7,248 ) Net loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 50,865 ) ​ ​ ​ ​ ​ ( 247 ) ​ ( 51,112 ) Balance, December 31, 2021 — ​ $ — — ​ $ — ​ 37,188,730 ​ 1 ​ 63,433 ​ 86 570,987 ​ 8 27,828,231 ​ 0 1 ​ 369,103 ​ ​ ( 108,585 ) ​ ​ ( 8,488 ) ​ ​ 437 ​ 252,562 1 Indicates amount less than thousand The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents VACCITECH PLC CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ EQUITY (DEFICIT) (IN THOUSANDS, EXCEPT NUMBER OF SHARES) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2021 ​ ​ ​ Series A ​ Series B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable ​ Redeemable ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ Convertible ​ Convertible ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ Total ​ ​ ​ Preferred Shares ​ Preferred Shares ​ ​ Ordinary Shares ​ Deferred A Shares ​ Deferred B Shares ​ Deferred C Shares Paid-in- Accumulated ​ Comprehensive ​ Noncontrolling ​ Shareholders’ ​ ​ Shares ​ Amount Shares ​ Amount ​ Shares ​ Amount Shares ​ Amount Shares ​ Amount Shares ​ Amount capital Deficit Loss Interest Deficit ​ Balance, January 1, 2020, as previously reported ​ 22,065 ​ $ 33,765 ​ — ​ $ — ​ ​ 7,276,332 ​ $ 0 1 — ​ $ — ​ — ​ $ — ​ 7,276,332 ​ $ 0 1 $ 15,906 ​ $ ( 37,885 ) ​ $ ( 467 ) ​ $ 367 ​ $ ( 22,079 ) ​ Share based compensation – restatement (see note 1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,129 ​ ( 2,129 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ Balance, January 1, 2020, as restated ​ 22,065 ​ $ 33,765 ​ — ​ $ — ​ ​ 7,276,332 ​ $ 0 1 — ​ $ — ​ — ​ $ — ​ 7,276,332 ​ $ 0 1 $ 18,035 ​ $ ( 40,014 ) ​ $ ( 467 ) ​ $ 367 ​ $ ( 22,079 ) ​ Share based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,625 ​ ​ ​ ​ 3,625 ​ Issue of ordinary shares ​ ​ ​ ​ ​ ​ ​ ​ ​ 479,568 ​ ​ 0 1 ​ ​ ​ ​ ​ ​ 479,568 ​ ​ 0 1 0 1 ​ ​ ​ 0 1 Exercise of stock options ​ ​ ​ ​ ​ ​ ​ ​ ​ 204,558 ​ ​ 0 1 ​ ​ ​ ​ ​ ​ 204,558 ​ ​ 0 1 0 1 ​ ​ ​ 0 1 Contribution from non controlling interest ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 251 251 ​ Foreign currency translation adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 776 ) 0 1 ( 776 ) ​ Net loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 17,706 ) ​ ( 227 ) ( 17,933 ) ​ Balance December 31, 2020 ​ 22,065 ​ $ 33,765 — ​ $ — ​ 7,960,458 ​ $ 0 1 — $ — ​ — $ — ​ 7,960,458 ​ $ 0 1 $ 21,660 ​ $ ( 57,720 ) ​ $ ( 1,243 ) ​ $ 391 ​ $ ( 36,912 ) ​ 1 Indicates amount less than thousand The accompanying notes are an integral part of these consolidated financial statements. ​ F-4 Table of Contents VACCITECH PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, ​ December 31, ​ ​ 2021 ​ 2020 CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 51,112 ) ​ $ ( 17,933 ) ​ Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ Share based compensation ​ 16,487 ​ 3,625 ​ Depreciation and amortization ​ 602 ​ 208 ​ ROU asset and liability ​ 338 ​ 41 ​ Fair valuation gain on embedded derivatives ​ ( 5,994 ) ​ ( 2,039 ) ​ Unrealized foreign exchange gain on convertible loan notes ​ ( 209 ) ​ ( 448 ) ​ Non cash interest expense ​ 813 ​ 3,598 ​ Loss on conversion of convertible loans ​ 13,789 ​ — ​ Deferred tax benefit ​ ( 119 ) ​ — ​ Changes in operating assets and liabilities: ​ ​ ​ Accounts receivable ​ 559 ​ 479 ​ Prepaid expenses and other current assets ​ ( 4,221 ) ​ ( 435 ) ​ Research and development incentives receivable ​ ( 3,607 ) ​ 295 ​ Accounts payable ​ ( 3,528 ) ​ 586 ​ Accrued expenses and other current liabilities ​ 4,417 ​ 1,029 ​ Deferred revenue ​ ( 63 ) ​ ( 32 ) ​ Other assets ​ ( 735 ) ​ — ​ Net cash used in operating activities ​ ( 32,583 ) ​ ( 11,028 ) ​ CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ ​ Acquisition of subsidiary, net of cash acquired ​ ( 11,766 ) ​ — ​ Purchases of property and equipment ​ ( 1,146 ) ​ ( 293 ) ​ Net cash used in investing activities ​ ( 12,912 ) ​ ( 293 ) ​ CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ ​ Issue of shares and exercise of stock options ​ 9 ​ 0 1 Contributions from noncontrolling interest ​ 296 ​ 251 ​ Transaction costs for convertible loan notes ​ — ​ ( 57 ) ​ Transaction costs for Series B shares ​ ( 3,402 ) ​ — ​ Proceeds from issue of Series B shares ​ 125,239 ​ — ​ Proceeds from issuance of common stock ​ ​ 102,765 ​ ​ — ​ Initial public offering costs ​ ( 2,165 ) ​ — ​ Proceeds from convertible loan notes ​ — ​ 41,241 ​ Net cash provided by financing activities ​ 222,742 ​ 41,435 ​ EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS ​ ( 6,459 ) ​ 1,720 ​ Net increase in cash and cash equivalents ​ 170,788 ​ 31,834 ​ Cash and cash equivalents, beginning of the year ​ 43,266 ​ 11,432 ​ Cash and cash equivalents, end of the year ​ $ 214,054 ​ $ 43,266 ​ Supplemental cash flow disclosures: ​ ​ ​ Cash paid for interest ​ $ 1,844 ​ $ 2 ​ Cash paid for income taxes ​ $ 152 ​ $ — ​ Non-Cash investing and financing activities ​ ​ ​ Issue of ordinary shares ​ $ 21,118 ​ $ — ​ Issue of deferred A shares ​ $ 86 ​ $ — ​ Issue of deferred B shares ​ $ 8 ​ $ — ​ Issue of deferred C shares ​ $ 0 1 $ — ​ Issue of Series B shares ​ $ 53,721 ​ $ — ​ Conversion of Series A and B to ordinary shares ​ $ 209,229 ​ $ — ​ Cash consideration on acquisition of subsidiary payable ​ $ 400 ​ $ — ​ Purchases of property and equipment included in accounts payable and accrued liabilities ​ $ 168 ​ $ — ​ ROU assets obtained in exchange for operating lease liabilities ​ $ 6,819 ​ $ — ​ 1 Indicates amount less than thousand The accompanying notes are an integral part of these consolidated financial statements. ​ ​ F-5 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of Business and Basis of Presentation Nature of business Vaccitech plc (Vaccitech) is a public limited company incorporated pursuant to the laws of England and Wales in March 2021. Vaccitech is engaged in the discovery and development of novel immunotherapeutics and vaccines for the treatment and prevention of infectious disease and cancer. Vaccitech is headquartered in Oxford, United Kingdom. Vaccitech and its direct and indirect subsidiaries, Vaccitech (UK) Limited, Vaccitech Australia Pty Limited, Vaccitech Oncology Limited (“VOLT”), Vaccitech USA Inc ., Vaccitech North America, Inc. and Vaccitech Italia S.R.L, are collectively referred to as the “Company”. In connection with the initial public offering of American Depositary Shares (“ADSs”), in March 2021, Vaccitech completed a corporate reorganization wherein the shareholders of Vaccitech (UK) Limited (formerly Vaccitech Limited) exchanged each of their ordinary shares, Series A Shares and Series B Shares of the Company for the same quantity of ordinary shares, series A shares (“Vaccitech plc Series A Shares”) and series B shares (“Vaccitech plc Series B Shares”) in Vaccitech resulting in the shareholders of the Company holding the same percentage and class of shares in Vaccitech ( formerly Vaccitech Rx Limited) as they had in Vaccitech (UK) Limited.The group reorganization under common control constitutes a change in reporting entity and has been given retrospective effect reflecting the net assets of Vaccitech (UK) Limited and its subsidiaries and Vaccitech at their historical carrying amounts. As a result of the reorganization these financial statements have been presented for all periods as if Vaccitech was the holding company of the group. The Company operates in an environment of rapid technological change and substantial competition from pharmaceutical and biotechnology companies. The Company is subject to risks common to companies in the biopharmaceutical industry in similar stage of its life cycle including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its vaccine product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of any of its products that are approved, and protection of proprietary technology. 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, that any products developed will obtain required regulatory approval or that any approved products will be commercially viable. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will generate significant product sales. If the Company does not successfully commercialize any of its products or mitigate any of these other risks, it will be unable to generate revenue or achieve profitability. Basis of presentation The accompanying consolidated financial statements are prepared in conformity with accounting principles general accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding annual financial reporting. The Company’s reporting currency is the U.S. dollar. On May 4, 2021, the Company effected a 309 -for-1 stock split of ordinary shares. Each resultant ordinary share from the stock split was redesignated as one ordinary share and one deferred C share. Accordingly, all ordinary shares and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the stock split. The consolidated balance sheet and statement of changes in redeemable convertible preferred shares and shareholders’ equity include the correction of an error related to the Company’s consolidated financial statements for the period ended December 31, 2019. The error related to the omission of share-based compensation expense totaling $ 2,129 thousand in the period ended December 31, 2019. The correction of this error has been recorded as an adjustment to previously reported additional paid-in-capital and accumulated deficit as of January 1, 2020 and consequently as of December 31, 2020. There is no impact on net loss or cash flows, and no material impact on financial position for the periods presented. The consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Guarantees and indemnifications As permitted under the laws of England and Wales, the Company indemnifies its officers, directors, consultants and employees for certain events or occurrences that happen by reason of the relationship with, or position held at, the Company. Through the years ended F-6 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 and 2020, the Company had not experienced any losses related to these indemnification obligations, and no claims were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, and the disclosure of contingent assets and liabilities as of and during the reporting periods. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates relied upon in preparing the accompanying financial statements related to accounting for the business combination, share based compensation, right of use asset, lease liability, income taxes, useful lives of long-lived assets, and convertible loan notes. The Company assesses the above estimates on an ongoing basis.The Company has experienced disruption as a result of the COVID-19 pandemic that could severely impact the Company’s clinical and pre-clinical development timelines for the Company’s clinical and pre-clinical programs. Whilst there have been recent positive developments with lockdown restrictions easing, the future remains unknown. Estimates and assumptions about future events specific to the COVID-19 pandemic, and their effects, cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s financial statements. 2. Summary of Significant Accounting Policies Principles of consolidation The accompanying consolidated financial statements include the accounts of Vaccitech and those entities in which it has a controlling interest. Intercompany amounts are eliminated in consolidation. Amounts attributable to the noncontrolling interest are presented as a separate element of equity in the accompanying consolidated financial statements. Comprehensive loss Comprehensive loss for all periods presented is comprised primarily of net loss and other comprehensive loss, which solely relates to foreign currency translation adjustments. Foreign currency translation The Company’s reporting currency is the U.S. dollar. The functional currency of the parent and each subsidiary is the currency of the country and economic environment in which it is located. Assets and liabilities of each legal entity are first translated into British pounds and consolidated. The consolidated balances are then converted into U.S. dollars at period-end exchange rates. Revenues and expenses are translated into British pounds, then into U.S. dollars at average exchange rates for each reporting period. Translation adjustments are reflected as accumulated other comprehensive income within shareholders’ equity (deficit). Gains and losses on foreign currency transactions are included in the consolidated statement of operations and comprehensive loss. The aggregate, net foreign exchange gain or loss included in determining net loss was a gain of $ 325 thousand and gain of $ 462 thousand for the year ended December 31, 2021 and 2020, respectively. Segment information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, the Company’s Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment, the research and development of immunotherapies and vaccines. F-7 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Noncontrolling interest Vaccitech established VOLT with a related party. As of December 31, 2021, Vaccitech contributed cash and intellectual property with an aggregate value of $ 11,900 thousand for a 76 % controlling interest. The related party contributed cash and intellectual property with an aggregate value of $ 3,754 thousand for a 24 % noncontrolling interest. The contributed intellectual properties were initially recorded at investment date fair value by VOLT and immediately expensed as research and development costs. The Company accounts for the noncontrolling interest in the accompanying consolidated financial statements initially at fair value with the subsequent carrying value adjusted for the noncontrolling shares of VOLT’s comprehensive loss. Business Combinations The Company accounts for business combinations using the acquisition method of accounting, which requires the recognition of tangible and identifiable intangible assets acquired and liabilities assumed at their estimated fair values as of the business combination date. The Company allocates any excess purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets acquired and liabilities assumed to goodwill. Contingent consideration is included within the acquisition cost and is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved and changes in fair value are recognized in earnings. Transaction costs are expensed as incurred in general and administrative expenses. Results of operations and cash flows of acquired companies are included in the Company's operating results from the date of acquisition. Cash and cash equivalents The Company considers all highly liquid investments purchased with remaining maturities of three months or less on the purchase date to be cash and cash equivalents. Cash and cash equivalents include bank demand deposits and money market funds that are actively traded (a Level 1 input). As of December 31, 2021, and 2020 there were no cash equivalents. Revenue The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for an arrangement, the Company performs the following five step analysis: - Identify the contract with a customer, - Identify the performance obligations in the contract, - Determine the transaction price, - Allocate the transaction price to the performance obligations in the contract, and - Recognize revenue when or as the Company satisfies a performance obligation. The Company has entered into collaboration and license agreements, which are within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers , to discover, develop, manufacture and commercialize product candidates. The terms of these agreements typically contain multiple promises or obligations, which may include: (i) licenses, or options to obtain licenses, to product candidates or future product candidates and (ii) research and development activities to be performed on behalf of the collaboration partner related to the licensed targets. The Company also derives revenue from government grants. As part of the accounting for these arrangements, the Company must use judgment to determine: - The number of performance obligations and whether those performance obligations are distinct from other performance obligations in the contract, - The transaction price, and - The standalone selling price for each performance obligation identified in the contract for the allocation of transaction price. F-8 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company uses judgment to determine whether milestones or other variable consideration, except for sales-based royalties, should be included in the transaction price. The transaction price is allocated to each performance obligation on a relative standalone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. In validating its estimated standalone selling price, the Company evaluates whether changes in the key assumptions used to determine its estimated standalone selling price will have a significant effect on the allocation of arrangement consideration between performance obligations. Amounts received prior to revenue recognition are recorded as deferred revenue. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current portion of deferred revenue in the accompanying consolidated balance sheet. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as long-term deferred revenue, net of current portion. Amounts recognized as revenue, but not yet received or invoiced are generally recognized as accounts receivable. License revenue If the license to the Company’s intellectual property is determined to be distinct from the other promises or performance obligations identified in the arrangement, which generally include research and development services, the Company recognizes revenue from nonrefundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. In assessing whether a license is distinct from the other promises, the Company considers relevant facts and circumstances of each arrangement, including the rights and obligations set out in the contract, the research and development capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. In addition, the Company considers whether the collaboration partner can benefit from the license for its intended purpose without the receipt of the remaining promises, whether the value of the license is dependent on the unsatisfied promises, whether there are other vendors that could provide the remaining promises, and whether it is separately identifiable from the remaining promises. For licenses that are combined with other promises, the Company utilizes judgment 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. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The measure of progress, and thereby periods over which revenue should be recognized, are subject to estimates by management and may change over the course of the research and development and licensing agreement. The Company’s arrangements may provide the collaboration partner with the right to select a target for licensing either at the inception of the arrangement or in the future. Under these arrangements, fees may be due to the Company (i) at the inception of the arrangement as an upfront fee or payment, (ii) upon the exercise of an option to acquire a license or (iii) upon extending the selection period as an extension fee or payment. If an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services, the goods and services underlying the customer options are not considered to be performance obligations at the outset of the arrangement, as they are contingent upon option exercise. The Company evaluates the customer options for material rights, or options to acquire additional goods or services for free or at a discount. If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the inception of the arrangement. The Company allocates the transaction price to material rights based on the relative standalone selling price, which is determined based on the identified discount and the probability that the customer will exercise the option. Amounts allocated to a material right are not recognized as revenue until, at the earliest, the option is exercised or expires. For arrangements that include sales-based milestones and royalties, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any sales-based milestones or royalty revenue resulting from any of its arrangements. F-9 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Research and development services The promises under the Company’s collaboration and license agreements generally include research and development services to be performed by the Company on behalf of the collaboration partner. For performance obligations that include research and development services, the Company recognizes revenue allocated to such performance obligations based on an appropriate measure of progress. The Company utilizes judgment to determine the appropriate method of measuring progress for purposes of recognizing revenue, which may include input measure such as costs incurred during the reporting period or ratably over the service period. Reimbursements from the partner are evaluated as to whether the Company acts as a principal or an agent in such relationships. The Company evaluates whether control over the underlying goods or services were obtained prior to transferring these goods or services to the collaboration partner. Where the Company does not control the goods or services prior to transferring these goods or services to the collaboration partner, such reimbursements are presented net of costs. At the inception of each arrangement that includes development milestone payments in respect of development efforts, the Company evaluates whether the development milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated development milestone value is included in the transaction price. Development milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular development milestone in making this assessment. There is judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each reporting period, the Company reevaluates the probability of achievement of all development milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. If a milestone or other variable consideration relates specifically to the Company’s efforts to satisfy a single performance obligation or to a specific outcome from satisfying the performance obligation, the Company generally allocates the milestone amount entirely to that performance obligation once it is probable that a significant revenue reversal would not occur. To date, the Company has not recognized any development milestone revenue resulting from any of its arrangements. Research grants The Company receives certain government grants which support its research efforts in defined projects and include contributions towards the research and development costs. When there is reasonable assurance that the Company will comply with the conditions attached to a received grant, and when there is reasonable assurance that the grant will be received, government grants are recognized as revenue on a gross basis in the consolidated statement of operations and comprehensive loss on a systematic basis over the periods in which the Company recognizes expenses for the related costs for which the grants are intended to compensate. Government grant revenue may be subject to review by a government authority in periods subsequent to its recognition and may result in the reversal of grant revenue previously recognized. Payments received in advance of incurring reimbursable expenses are recorded as deferred revenue. Concentrations of credit risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. Periodically, the Company maintains deposits in financial institutions in excess of government insured limits. Management believes that the Company is not exposed to significant credit risk as the Company’s deposits are held at financial institutions that management believes to be of high credit quality and the Company has not experienced any losses in these deposits. The Company recognizes revenue earned in connection with the license and services provided to customers and grantors. The Company provides credit to the grantors in the normal course of providing such services based on evaluations of their financial condition and generally does not require collateral. To manage accounts receivable credit risk, the Company monitors the creditworthiness of its grantors. Historically, the Company has not experienced any credit losses related to accounts receivable and does not maintain allowances for uncollectible amounts. F-10 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Licensees and grantors that represented 10% of more of the Company’s revenue and accounted for 10% or more of accounts receivable are presented below: ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, ​ December 31, Revenue ​ 2021 ​ 2020 Oxford University Innovation — % 51 % U.S. Biomedical Advanced Research and Development Authority (“BARDA”) 69 % 34 % Enara Bio 31 % 10 % ​ ​ ​ ​ ​ ​ ​ ​ As of As of ​ ​ December 31, ​ December 31, ​ Accounts Receivable ​ 2021 ​ 2020 ​ U.S. Biomedical Advanced Research and Development Authority (“BARDA”) — % 51 % Department of Health and Social Care — % 49 % Scancell Ltd 100 % — % ​ Allowance for credit losses The Company evaluates its cash equivalents and accounts receivable for expected credit losses. Expected credit losses represent the portion of the amortized cost basis of a financial asset that an entity does not expect to collect. An allowance for expected credit losses is meant to reflect a risk of loss even if remote, irrespective of the expectation of collection from a particular issuer or debt security. The Company has not historically experienced any credit losses on any of its financial assets. With respect to cash equivalents and accounts receivable, given consideration of their short maturity, historical losses and the current market environment, the Company concluded there are no expected credit losses for these financial assets. Property and equipment Property and equipment are stated at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are charged to operating expenses as incurred, whereas major betterments are capitalized as additions to property and equipment. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets as follows: ​ ​ ​ ​ Asset Category Estimated Useful Life Office furniture and equipment 3 years Laboratory equipment 4 years Leasehold improvements Lesser of lease term or estimated useful lives ​ Intangible Assets Intangible assets consist of developed technology. Intangible assets are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of the respective assets, which is 10 years . Impairment of long-lived assets The Company reviews long-lived assets to be held and used, including property and equipment , intangible assets and operating lease right-of-use asset, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. Evaluation of recoverability is first based on an estimate of undiscounted future cash flows resulting from the use of the asset or asset group and its eventual disposition. In the event such cash flows are not expected to be sufficient to recover the carrying amount of the asset or asset group, the assets are written down to their estimated fair values. No such impairments were recorded during the year ended December 31, 2021 and 2020. F-11 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Goodwill Goodwill represents the excess of cost over the fair value of the net tangible and intangible assets of businesses acquired in a business combination. Goodwill is not amortized but rather is tested for impairment at least annually starting on November 30, 2022 or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. The Company has elected to first assess the qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis of determining whether it is necessary to perform the quantitative goodwill impairment test. If the Company determines that it is more likely than not that its fair value is less than its carrying amount, then the quantitative goodwill impairment test will be performed. The quantitative goodwill impairment test identifies goodwill impairment and measures the amount of goodwill impairment loss to be recognized by comparing the fair value of a reporting unit with its carrying amount. If the fair value exceeds the carrying amount, no further analysis is required; otherwise, any excess of the goodwill carrying amount over the implied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value. No such impairments were recorded during the year ended December 31, 2021 and 2020. Financial instruments The Company’s financial instruments consist of cash, accounts receivable, security deposit, accounts payable, certain accrued expenses, contingent consideration and short-term debt. The carrying amounts of cash, cash equivalents, accounts receivable, security deposit, accounts payable, accrued expenses and short-term debt approximate their fair value due to the short-term nature of those financial instruments. Fair value measurements The Company follows the guidance in ASC 820, Fair Value Measurements and Disclosures , which defines fair value and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: - Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. - Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. - Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may change for many instruments. This condition could cause an instrument to be reclassified within levels in the fair value hierarchy. There were no transfers within the fair value hierarchy during the year ended December 31, 2021 and 2020. Leases Leases are accounted for under ASC 842, Leases (“ASC 842”) resulting in the recognition of lease liabilities and right-of-use assets. The Company only has operating leases. The Company has elected the practical expedient allowed under ASC 842 to account for each lease component (e.g., the right to use office space) and the associated non-lease components (e.g., maintenance services) as a single lease component. The Company also elected the short-term lease accounting policy for all asset classes; therefore, the Company is not recognizing a lease liability or right-of-use asset for any lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. F-12 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Variable lease payments such as the Company’s share of real estate taxes, utilities, and common area maintenance, are reported as non-lease operating expenses. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases typically do not provide an implicit rate, the Company uses an estimate of its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Right-of-use assets also include the effect of any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized as part of total operating expenses on a straight-line basis over the lease term. The difference between the value of the right of use asset and lease liability is due to the reclassification of prepaid rent and unamortized lease incentives. Research and development Research and development costs are expensed as incurred. Research and development costs include payroll and personnel expense, consulting costs, external contract research and development expenses, raw materials, drug product manufacturing costs, and allocated overhead including depreciation and amortization, facility costs, and utilities. Research and development costs that are paid in advance of performance are capitalized as a prepaid expense and amortized over the service period as the services are provided. Clinical trial costs Clinical trial costs are a component of research and development expenses. The Company accrues and expenses clinical trial activities performed by third parties based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activation, and other information provided to the Company by its vendors. Patent and licensing costs Patent and licensing costs are expensed as incurred because their realization is uncertain. These costs are classified as research and development expenses in the accompanying consolidated statement of operations and comprehensive loss. Embedded derivatives The Company reviews the terms of convertible loan notes and other financing arrangements to determine whether there are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Derivative financial instruments are initially measured at fair value, and then re-valued at each reporting date, with changes in the fair value reported as charges or credits to consolidated statement of operations and comprehensive loss. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument exceed the total proceeds received an immediate charge to consolidated statement of operations and comprehensive loss is recognized to initially record the derivative instrument at fair value. The discount from the face value of the convertible loan notes resulting from allocating some or all of the proceeds to the derivative instruments, together with the stated rate of interest on the instrument, is amortized over the life of the instrument through periodic charges to consolidated statement of operations and comprehensive loss, using the effective interest method. Embedded derivatives bifurcated are presented along with the host contract on the balance sheet. Ordinary shares Ordinary shares are classified in shareholders’ deficit and represent issued share capital. F-13 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Additional paid-in capital Additional paid-in capital is classified in shareholders’ deficit and represents the share premium account, where the difference between the price paid per share and the nominal value is recognized. Share based compensation The Company grants options over ordinary shares and restricted shares units to employees and accounts for share based compensation using the grant date fair value. Share based compensation awards are measured at the grant date fair value. For service-based awards, compensation expense is generally recognized over the requisite service period of the awards, usually the vesting period. The Company applies the “multiple option” method of allocating expense. In applying this method, each vesting tranche of an award is treated as a separate grant and recognized on a straight-line basis over that tranche’s vesting period. For performance-based awards where the vesting of the awards may be accelerated upon the achievement of certain milestones, vesting and the related share-based compensation is recognized as an expense when it is probable the milestone will be met. When awards are modified, the Company compares the fair value of the affected award measured immediately prior to modification to its value after modification. To the extent that the fair value of the modified award exceeds the original award, the incremental fair value of the modified award is recognized as compensation on the date of modification for vested awards, and over the remaining vesting period for unvested awards. The Company has elected to recognize the effect of forfeitures on share-based compensation when they occur. Any differences in compensation recognized at the time of forfeiture are recorded as a cumulative adjustment in the period where the forfeiture occurs. Income taxes The financial statements reflect provisions for income taxes in the United Kingdom and foreign jurisdictions. Deferred tax assets and liabilities represent future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities and for loss carryforwards using enacted tax rates expected to be in effect in the years in which the differences reverse. A valuation allowance is recorded when it is more likely than not that some or all of the deferred tax assets will not be realized. The Company determines whether it is more likely than not that a tax position will be sustained upon examination. If it is not more likely than not that a position will be sustained, none of the benefit attributable to the position is recognized. The tax benefit to be recognized for any tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes. To date, the Company has not incurred interest and penalties related to uncertain tax positions nor has it recorded any unrecognized tax benefits. Research and development incentives In the United Kingdom, the Company is entitled to a research and development tax relief for small and medium-sized enterprises which allows for an enhanced deduction rate of 230% on qualifying research and development expenditure (the tax relief). If the Company incurs tax losses, the Company is entitled to surrender the lesser of unrelieved tax loss sustained and the tax relief. As the realization of the tax relief does not depend on our generation of future taxable income or the Company’s ongoing tax status or tax position, the Company does not consider the tax relief as an element of income tax accounting under ASC 740, Income taxes and records the tax relief as a form of government grant or assistance. For the year ended December 31, 2021 and 2020, the Company recognized research and development incentives of $ 4,001 thousand and $ 3,279 thousand respectively. Net loss per share Basic net loss per share is computed by dividing the net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the reporting period without consideration for potentially dilutive securities. Net loss attributable to ordinary shareholders as if all of the net loss for the period had been distributed. During periods in which the Company incurred a net loss, the Company allocates no net loss to participating securities because they do not have a contractual obligation to share in the net loss of the Company. F-14 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company computes diluted net loss per ordinary share after giving consideration to all potentially dilutive ordinary equivalents, including stock options outstanding during the period except where the effect of such non-participating securities would be antidilutive. Diluted net loss per share is computed by dividing the net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares and dilutive ordinary share equivalents outstanding for the period, determined using the treasury-stock and if-converted methods. Contingent liabilities A provision for contingent liabilities is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. The Company is a party to certain litigation and disputes arising in the normal course of business. As of December 31, 2021, the Company does not expect that such matters will have a material adverse effect on the Company’s business, financial position, results of operations, or cash flows. Recently issued accounting pronouncements In November 2021, the FASB issued ASU No. 2021-10 —Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance. The amendments improve financial reporting by requiring disclosures that increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The amendments are effective for annual periods beginning after December 15, 2021. Early application of the amendments is permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. In October 2021, the FASB issued ASU No. 2021-08 —Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customer. The amendments require acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability by specifying for all acquired revenue contracts regardless of their timing of payment (1) the circumstances in which the acquirer should recognize contract assets and contract liabilities that are acquired in a business combination and (2) how to measure those contract assets and contract liabilities. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is currently evaluating the impact of adoption on its consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU No. 2020-06”). The new guidance eliminates two of the three models in ASC 470-20 that require separating embedded conversion features from convertible instruments. As a result, only conversion features accounted for under the substantial premium model in ASC 470-20 and those that require bifurcation in accordance with ASC 815-15 will be accounted for separately. For contracts in an entity’s own equity, the new guidance eliminates some of the requirements in ASC 815-40 for equity classification. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. ASU 2020-06 is effective for the Company after December 15, 2023. Early adoption is permitted for fiscal periods beginning after December 15, 2020. The Company is currently evaluating the effect of adopting ASU 2020-06 on its financial statements. In December 2019, the FASB issued amended guidance on the accounting and reporting of income taxes. The guidance is intended to simplify the accounting for income taxes by removing exceptions related to certain intraperiod tax allocations and deferred tax liabilities; clarifying guidance primarily related to evaluating the step-up tax basis for goodwill in a business combination; and reflecting enacted changes in tax laws or rates in the annual effective tax rate. The amended guidance is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The application of the amendments in the new guidance are to be applied on a retrospective basis, on a modified retrospective basis through a cumulative-effect adjustment to retained earnings or prospectively, depending on the amendment. The Company is currently evaluating the impact of adoption on its consolidated financial statements. F-15 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Business combination On December 9, 2021, the Company executed an Agreement and Plan of Merger and Reorganization (the “Agreement”) by and among the Company, VA Merger Sub 1 Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub 1”), VA Merger Sub 2, a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub 2”), Avidea Technologies, Inc., a Delaware corporation (“Avidea”), and Benjamin Eisler, solely in his capacity as security holder representative, pursuant to which the Company acquired 100 % of the fully diluted equity of Avidea. On December 10, 2021, the parties closed the transactions contemplated by the Agreement. Merger Sub 1 merged with and into Avidea, with Avidea surviving as a wholly owned subsidiary of the Company the (“First Merger”). Promptly following the First Merger, and as part of the same overall transaction, Avidea merged with and into Merger Sub 2, with Merger Sub 2 surviving as a wholly owned direct subsidiary of the Company the “Second Merger”, and together with the First Merger, (the “Mergers”). Pursuant to the terms of the Agreement, the Company acquired Avidea for an up-front amount of $ 33,322 thousand, of which $ 12,204 thousand was payable in cash and $ 21,118 thousand in 2,163,694 of the Company’s American Depositary Shares, each representing one ordinary share of the Company (the “ADSs”). In addition, Avidea’s stockholders may be entitled to receive an aggregate of up to $ 40,000 thousand in additional payments payable in a combination of cash and ADSs upon the achievement of certain milestones (the “Milestones”). The consideration payable pursuant to each Milestone is referred to herein as the “Contingent Consideration”. The following table summarizes the estimated purchase consideration of $ 35,676 thousand, as of December 10, 2021 which consisted of: ​ ​ ​ ​ Cash consideration $ 12,204 Equity consideration 1 ​ 21,118 Estimated fair value of Contingent Consideration ​ 2,354 ​ ​ $ 35,676 1 Represents the fair value of equity consideration issued to Avidea shareholders, consisting of 2,163,694 ADSs, at $ 9.76 per ADS the closing price of shares of the Company’s ADS on December 10, 2021. Contingent Consideration represents additional payments that the Company may be required to make in the future, which totals up to $ 40,000 thousand of which $ 15,000 thousand is dependent on upon the earlier of either: i) availability of patient data showing that ChAdOx used in combination with SNAPvax results in non-inferior T cell responses as compared with ChAdOx used in combination with MVA in at least 8 patients, or ii) upon initiation of the first Phase 2b clinical study for any SNAPvax product candidate. $ 25,000 thousand is dependent on a license or sale of any Avidea technology or product candidates i) developed wholly or in part by an Avidea employee or ii) covered by a claim of an issued patent or a patent application owned or controlled by Avidea at the time of closing. The fair value of Contingent Consideration is considered a Level 3 fair value measurement and was determined based on the probability of pursuit, the probability of success of the achievement of the milestone, the expected date of milestone achievement and applying the relevant discount rate. The liability for Contingent Consideration will be remeasured at each reporting period until the contingency is resolved. $ 17 thousand of interest expense for the unwinding of discount and $ 47 thousand of foreign exchange gain was recognized for the year ended December 31, 2021 in the statement of operations and comprehensive loss. $ 47 thousand of foreign exchange translation loss was recognized in other comprehensive income. The fair value of the Contingent Consideration as of December 31, 2021 is $ 2,371 thousand. The Company incurred approximately $ 898 thousand in transaction costs related to the Avidea acquisition. The transaction costs are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. The estimate of fair value as of the acquisition date required the use of significant assumptions and estimates. Critical estimates included, but were not limited to developer margins, mark up on costs, opportunity costs and the applicable discount rates. These estimates were based on assumptions that the Company believes to be reasonable, however, actual results may differ from these estimates. F-16 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The allocation of purchase price to the identifiable assets acquired and liabilities assumed was based on estimates of fair value as of December 10, 2021, and is as follows: ​ ​ ​ ​ Recognized identifiable assets acquired and liabilities assumed (in thousands): ​ Cash and cash equivalents ​ $ 38 Accounts receivable ​ 56 Prepaid, other current assets and non-current assets ​ 332 Property and equipment, net ​ 327 Developed technology ​ 31,612 Accounts payable, accrued expenses, other current liabilities, and debt ​ ( 1,116 ) Deferred tax liabilities, net ​ ( 8,203 ) Net assets acquired ​ 23,046 Goodwill ​ 12,630 Estimated total purchase consideration ​ $ 35,676 ​ The purchase consideration was allocated on a preliminary basis to the net tangible and intangible assets and liabilities based on their estimated fair values as of the acquisition date, with the excess recorded as goodwill. The Company will continue to evaluate certain assets, liabilities and tax estimates that are subject to change within the measurement period (up to one year from the acquisition date). The recognized goodwill is attributable to the assembled workforce of Avidea and the anticipated synergies. None of the goodwill resulting from the acquisition is deductible for tax purposes. The acquisition of Avidea did not result in any changes to the Company’s operating or reportable segment structure and the Company continues to operate as one operating segment. Developed technology was valued using the cost approach, which involved significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The assumptions used in developing the valuation included the estimated market rate for salary, bonus and benefits for staff involved in the development of technology, a developer’s margin which reflects the profit margin a third party would earn on development activities and an opportunity cost which represents the foregone cashflows during the period of development. The fair value of developed technology will be amortized over a useful life of 10 years. For the year ended December 31, 2021, Avidea contributed a net loss from operations of $ 320 thousand. No revenue has been earned during the year ended December 31, 2021 from the acquisition of Avidea. Supplemental Pro Forma Information The following supplemental unaudited pro forma financial information presents the combined results of operations for each of the periods presented, as if the Avidea acquisition occurred on January 1, 2020. The pro forma financial information is presented for illustrative purposes only, based on currently available information and certain estimates and assumptions we believe are reasonable under the circumstances, and is not necessarily indicative of future results of operations or the results that would have been reported if the Avidea Acquisition had been completed on January 1, 2020. These results are adjusted to present (1) acquisition related cost as if they were incurred as of January 1, 2020 and (2) the amortization of developed technology and the unwinding of the discount on the consideration as if the fair value adjustment and the contingent consideration was recognized as January 1, 2020. These results do not include any anticipated synergies or other expected benefits of the acquisition. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, ​ December 31, ​ ​ 2021 ​ 2020 Revenue ​ $ 1,003 ​ $ 7,015 Net Loss ​ $ ( 55,336 ) ​ $ ( 21,962 ) ​ ​ ​ F-17 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Net Loss Per Share Because the Company has reported a net loss attributable to ordinary shareholders for the period presented, basic and diluted net loss per share attributable to ordinary shareholders are the same for the period presented. The following table sets forth the computation of basic and diluted net loss per share for the year ended December 31, 2021 and 2020 (in thousands, except number of shares and per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, ​ December 31, Numerator: ​ 2021 ​ 2020 Net loss ​ $ ( 51,112 ) ​ $ ( 17,933 ) Net loss attributable to noncontrolling interest ​ 247 ​ 227 Net loss attributable to Vaccitech shareholders ​ $ ( 50,865 ) ​ $ ( 17,706 ) Denominator: ​ ​ Weighted-average ordinary shares outstanding, basic and diluted ​ 25,894,375 ​ 7,904,529 Net loss per share attributable to ordinary shareholders, basic and diluted ​ $ ( 1.96 ) ​ $ ( 2.24 ) ​ Potential ordinary shares issuable for stock options that are excluded from the computation of diluted weighted-average shares outstanding because such securities would have an antidilutive impact are as follows: ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, ​ December 31, ​ ​ 2021 ​ 2020 Series A shares — 22,065 Stock options 2,604,969 1,156,278 ​ ​ ​ 5. Property and Equipment, Net Property and equipment, net consists of the following as of (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 Office furniture and equipment ​ $ 232 ​ $ 168 Laboratory equipment ​ 1,855 ​ 890 Leasehold improvements ​ 628 ​ 50 Property and equipment, at cost ​ 2,715 ​ 1,108 Less: accumulated depreciation ​ ( 886 ) ​ ( 479 ) Property and equipment, net ​ $ 1,829 ​ $ 629 ​ Depreciation expense for the year ended December 31, 2021 was $ 420 thousand (December 31, 2020: $ 208 thousand). 6. Intangible assets, net The gross amount of amortizable intangible assets, consisting of developed technology, was $ 31,612 thousand and $ Nil thousand as of December 31, 2021 and 2020, respectively, and accumulated amortization was $ 182 thousand and $ Nil thousand as of December 31, 2021 and 2020, respectively. The amortization expense for intangible assets recorded as of December 31, 2021 was $ 182 thousand (December 31, 2020: $ Nil thousand). The estimated annual amortization expense is $ 3,161 thousand for the years 2022 through to 2026. F-18 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Prepaid and other current assets Prepaid and other current assets consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 Prepayments and accrued income ​ $ 4,612 ​ $ 1,075 Value Added Tax receivable ​ 705 ​ 305 Employee retention and payroll tax credit ​ 150 ​ — Others ​ 995 ​ 29 Total ​ $ 6,462 ​ $ 1,409 ​ ​ ​ 8. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 Accrued manufacturing and clinical expenses ​ $ 1,789 ​ $ 462 Accrued board of director compensation ​ 91 ​ 4 Accrued bonus ​ 1,333 ​ 749 Accrued payroll and employee benefits ​ 1,072 ​ 250 Accrued professional fees ​ 2,338 ​ 806 Accrued other ​ 1,252 ​ 266 Total ​ $ 7,875 ​ $ 2,537 ​ ​ ​ 9. Out-licenses and Grants Enara research collaboration and license agreement In 2017, the Company entered into a research collaboration and license agreement with Enara Bio (the “Enara Agreement”) to provide research services and granted a nonexclusive license to Enara to produce and characterize potential product candidates using the Company’s viral vector technology. In June 2019, the Enara Agreement was amended to grant Enara additional license rights. Under the Enara Agreement, as amended, the Company is to provide enhanced research services to Enara during the research term which commenced on June 2019 through the end of 66 months and for up to six vaccine products based on antigens discovered via Enara’s proprietary platform. The Enara Agreement, as amended, is effective until the later of termination by either party; expiry of relevant patents covering a product generated under the enhanced research services; or ten years following first commercial sale of the product on a country-by-country basis generated under the enhanced research services. Under the Enara Agreement, as amended, the Company received non-refundable upfront payments of $ 317,062 (£ 250,000 ) which is recognized as revenue over the research term. The Company may receive up to $ 30,000,000 (£ 22,500,000 ) in additional milestone payments and tiered 1.5 - 4.0 % royalties on net sales of each product candidate selected for further development by Enara. The Enara Agreement, as amended, also provides for the Company to receive prespecified payments in return for the provision of research services to Enara. During the year ended December 31, 2021, the Company recognized service revenue totaling $ 21 thousand (December 31, 2020: $ 386 thousand) and license revenue totaling $ 63 thousand (December 31, 2020: $ 70 thousand). BARDA contract BARDA is a division of the U.S. Department of Health and Human Services in the Office of the Assistant Secretary for Preparedness and Response that supports the advanced research and development, manufacturing, acquisition and stockpiling of medical countermeasures. Our contracts with BARDA, like those awarded by other U.S. government agencies, contain provisions not typically found in commercial contracts. Most notably, BARDA, or the U.S. government acting through BARDA, may terminate, modify or amend our contract, in whole or in part, for nearly any reason or no reason. F-19 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In February 2019, the Company entered into an agreement with BARDA to fund its clinical development of an influenza vaccine known as VTP-100. Under the contract, BARDA will reimburse the Company up to $ 8,593 thousand over two years for the research and development of VTP-100 through Investigational New Drug application, regulatory review, and development and execution of a Phase 2b human challenge protocol to assess safety, immunogenicity and efficacy as compared to placebo. The Company owns the intellectual property rights to inventions made in the performance of work under the BARDA contract, provided that the Company discloses such inventions to the U.S. government and notifies the U.S. government of the Company’s election to retain title. The U.S. government will have a nonexclusive, nontransferable, irrevocable, paid-up license to practice, or have practiced for or on its behalf, such inventions throughout the world, in addition to other rights customarily reserved by the U.S. government for intellectual property generated using government funds. During the year ended December 31, 2021, the Company recognized $ 184 thousand (December 31, 2020: $ 1,651 thousand) in revenue under the BARDA contract and had outstanding payable of $ 18 thousand as of December 31, 2021 (2020: $ 263 thousand receivable). OUI license In April 2020, the Company entered into an Amendment, Assignment and Revenue Sharing Agreement (“License Agreement Amendment”) with Oxford University Innovation, or OUI, which vested and assigned all intellectual property rights in relation to any ChAdOx1 or ChAdOx2 vector-based vaccine jointly owned by the Company and OUI in OUI in order to facilitate the license of vaccines based on the ChAdOx1 by OUI to AstraZeneca plc (“AstraZeneca”). Under this agreement, the Company is entitled to receive from OUI a share of all payments received by OUI from AstraZeneca in respect of the vaccine based on the ChAdOx1. On December 30, 2020, AstraZeneca announced that vaccine based on the ChAdOx1 which we refer to as AZD1222 had been approved for emergency supply in the United Kingdom by the United Kingdom Medicines and Healthcare products Regulatory Agency (MHRA). The Company determined that the intellectual property vested and assigned under the License Agreement Amendment is a functional intellectual property (that is, it has significant standalone functionality in the form of its ability to treat a disease or condition) and there is no expectation under the License Agreement Amendment that the Company will undertake activities to change the functionality. Consequently, the Company concluded that the nature of the Company’s promise in transferring the intellectual property is to provide a right to use the Company’s functional intellectual property. Accordingly, the Company recognizes revenue in manner that depicts, the Company’s progress toward satisfying its performance obligation of providing access to its intellectual property throughout the license period based on the terms of OUI’s agreement with AstraZeneca. During the year ended December 31, 2021, the Company recognized revenue amounting to $Nil thousand (December 31, 2020: $ 2,483 thousand). Contract assets and liabilities The Company discloses Accounts receivable separately in the Consolidated Balance Sheets at the net amount expected to be collected. Contract assets primarily relate to the Company’s conditional right to consideration for work completed but not billed at the reporting date. As of December 31, 2021 and 2020 the Company did not have any contract assets. Contract liabilities primarily relate to payments received from customers in advance of performance under the contract and are disclosed as deferred revenue separately in the Consolidated Balance Sheets. The Company’s contract liabilities arise when payment is received upfront for various multi-period extended license and service arrangements. Changes in the contract liabilities during the year ended December 31, 2021 are as follows: ​ ​ ​ ​ ​ ​ Balance as of January 1, 2021 $ 245 ​ Revenue recognized related to contract liability balance ​ ( 63 ) ​ Foreign exchange translation ​ 0 1 Balance as of December 31, 2021 ​ $ 182 ​ 1 Indicates amount less than thousand F-20 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. Convertible loan notes In 2020, the Company entered into a series of unsecured convertible loan notes arrangements on various dates between July through November 2020 for a total amount of $ 41,184 thousand, net of transaction costs of $ 57 thousand. The convertible loan notes accrue interest daily at 8 % per annum, which is payable in (a) cash upon an event of default or (b) cash or shares at the Board’s discretion upon conversion. The convertible loan notes will mature on June 6, 2023. On maturity, the lenders can elect cash redemption in lieu of conversion, in an amount that equals all outstanding principal plus a redemption premium. The convertible loan notes may not be prepaid without the consent of the lenders. The convertible loan notes are automatically converted (a) upon an equity financing occurring after the issuance date and before maturity raising at least £ 10 million (“qualified equity financing”); or (b) upon an exit event, including a change of control or an initial public offering, if the cash value to be received for the converted shares is greater than the redemption value or if the lenders do not elect cash redemption for an exit event that settles in noncash consideration. The convertible loan notes are also convertible at the lenders’ option upon a nonqualified equity financing. If an exit occurs within six months of a nonqualified financing event where the lenders had elected to convert, the lenders will receive consideration in cash or other assets so that the aggregate value they receive equals the greater of: ● The as-converted value of the convertible loan notes that the lenders would have received if the convertible loan notes were converted upon the exit event, or ● The amount of outstanding principal plus the redemption premium. All conversion features, the cash redemption feature on maturity and the cash redemption feature upon an exit event that settles in noncash consideration; meet the characteristics of embedded derivatives in accordance with ASC 815 Derivatives and Hedging, that are required to be bifurcated and accounted for as separate derivative liabilities. The derivative liabilities are originally recorded at its estimated fair value and are required to be revalued at each conversion event and reporting period. Changes in the derivative liabilities’ fair value are reported in consolidated statement of operations and comprehensive loss at each reporting period. On initial recognition of the convertible loan notes, the Company fair valued the conversion and redemptions features resulting in an initial fair value of $ 20,944 thousand. The proceeds, net of financing costs from convertible loan notes of $ 41,184 thousand was first allocated to the compound embedded derivatives at its initial fair values, the residual amount of $ 20,240 thousand was recorded as the initial net carrying value of the convertible loan notes. The Company valued the cash redemption features based on the difference of the present value of cash flows with and without the redemption features. The conversion features upon a nonqualified equity financing and qualified equity financing were valued based on the conversion formula stated in the convertible agreement, present valued at the risk-free rate for the expected period until the nonqualified equity financing and qualified equity financing (assumed and adjusted for the present value of cash flows of debt without the feature. The conversion features upon an exit event or maturity were valued using a Monte Carlo simulation model to fair value the convertible loan notes upon an exit event and maturity adjusted for the cash redemption value discounted at the risk-free rate. The probability of exercise of conversion feature or the cash redemption upon an exit event, nonqualified equity financing, qualified equity financing and maturity ranged from 5 % - 75 %, the risk-free rate was 0.22 % and the market cost of debt without the features was 11.80 %. The fair value of the embedded derivatives is a Level 3 valuation with the significant unobservable inputs being the probability of exercise of conversion and cash redemption features. Significant judgment is employed in determining the appropriateness of certain of these inputs. Changes to the inputs described above could have a material impact on the Company’s financial position and results of operations in any given period. The Company recognized interest expense of $ 2,650 thousand and a change in fair value gain of $ 5,994 thousand in relation to the conversion and redemption features embedded in the convertible loan notes in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021. For the period ended December 31, 2020, interest expense was $ 3,600 thousand and change in fair value in relation to the conversion and redemption features embedded in the convertible loan notes was a gain $ 2,039 thousand. The Series B funding on March 15, 2021 constituted a qualified equity financing in accordance with the terms of the convertible loan notes. As a result, the convertible loan notes were converted on March 15, 2021 into 12,421 Series B Shares with the conversion price being 0.8 times the Series B Shares issue price. F-21 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The conversion was accounted for as an extinguishment of the convertible loan notes. As a result, the 12,421 Series B preferred shares issued on conversion was recognized at the settlement-date fair value of the Series B shares ($ 53,721 thousand) and a loss of $ 13,789 thousand for the year ended December 31, 2021 was recognized in earnings for the difference between (1) the fair value of those shares and (2) the sum of the carrying amounts of the convertible loan notes ($ 25,557 thousand) and the bifurcated conversion and redemption feature liability ($ 14,375 thousand). The changes in the fair value of the embedded derivatives were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December ​ December 31, ​ ​ 31, 2021 ​ 2020 Beginning balance ​ $ 20,109 ​ $ — Additions ​ — ​ 20,944 Change in fair value recognized in the net loss ​ ( 5,994 ) ​ ( 2,039 ) Settlement via conversion ​ ( 14,375 ) ​ — Foreign exchange translation ​ 260 ​ 1,205 Ending balance ​ $ — ​ $ 20,109 ​ ​ ​ 11. Series A and Series B Shares On November 10, 2017, January 10, 2018 and December 21, 2018, the Company issued 13,790 , 4,597 , and 3,678 shares, respectively, for total gross proceeds of £ 15,000 thousand ($ 19,754 thousand), £ 5,000 thousand ($ 6,533 thousand) and £ 6,000 thousand ($ 7,592 thousand), respectively. On March 15, 2021, the Company issued 28,957 Series B preferred shares (“Series B Shares”) amounting to $ 125,239 thousand and incurred transaction costs of $ 3,402 thousand. On March 31, 2021, the Company subdivided each of the Series A shares and Series B shares (including the Series B shares issued on conversion of the convertible loan notes) into one share of the same class and one deferred A share with a nominal value of £ 1.00 per share. On May 4, 2021 prior to the closing of the Company’s initial public offering and pursuant to the terms of its articles of association, all of the Series A Shares and Series B Shares were converted into 19,603,887 ordinary shares, 570,987 deferred B shares and 19,603,887 deferred C shares. 12. Ordinary Shares On May 4, 2021, the Company closed its initial public offering (“IPO”) of 6,500,000 ADS representing 6,500,000 ordinary shares having a nominal value of £ 0.000025 per share, at a public offering price of $ 17.00 per share, for aggregate net proceeds of $ 102,765 thousand after deducting underwriting commissions of $ 7,735 thousand and incurred offering costs of $ 2,165 thousand. All ordinary shares rank pari passu as a single class. The following is a summary of the rights and privileges of the holders of ordinary shares as of December 31, 2021: Liquidation preference: in the event of the liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to holders of the ordinary shares shall be distributed amongst all holders of the ordinary shares in proportion to the number of shares held irrespective of the amount paid or credited as paid on any share. Dividends: holders of the ordinary shares are entitled to dividend, as may be recommended from time to time by the Board and declared by the ordinary shareholders out of legally available funds. Voting Rights: each holder of ordinary shares is entitled to one vote for each share on all matters to be voted on by ordinary shareholders. Preemption rights: pursuant to section 561 of the Companies Act 2006, shareholders are granted preemptive rights when new shares are issued for cash. However, it is possible for our Articles, or shareholders at a general meeting representing at least 75 % of our ordinary F-22 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS shares present (in person or by proxy) and eligible to vote at that general meeting, to disapply these preemptive rights. Such a disapplication of preemption rights may be for a maximum period of up to five years from the date of the shareholder special resolution. In either case, this disapplication would need to be renewed by our shareholders upon its expiration (i.e., at least every five years ) to remain effective. On April 21, 2021, our shareholders approved the disapplication of preemptive rights for a period of five years from the date of approval by way of a special resolution of our shareholders. This included the disapplication of preemption rights in relation to the allotment of our ordinary shares in connection with the IPO. This disapplication will need to be renewed upon expiration (i.e., at least every five years ) to remain effective, but may be sought more frequently for additional five-year terms (or any shorter period). As of December 31, 2021, the Company has reserved the following ordinary shares for future issuance: ​ ​ ​ Exercise of stock options 3,186,818 Shares available for future stock incentive plan awards 2,127,920 Total 5,314,738 ​ ​ ​ 13. Deferred shares All deferred shares rank pari passu as a single class. The deferred shares do not have rights to dividends or to participate in profits on a return of assets on liquidation, the deferred shares confer on the holders thereof an entitlement to receive out of the assets of the Company available for distribution amongst the shareholders (subject to the rights of any new class of shares with preferred rights) the amount credited as paid up on the deferred shares held by them respectively after (but only after) payment shall have been made to the holders of the ordinary shares of the amounts paid up or credited as paid up on such shares and the sum of £ 1,000 thousand ($ 1,373 thousand) in respect of each ordinary share held by them respectively. The deferred shares shall confer on the holders thereof no further right to participate in the assets of the Company. 14. Share-Based Compensation On April 8, 2021, the Board of the Company adopted the Vaccitech plc Share Award Plan 2021 (“the Plan”) and the Vaccitech plc Non-Employee Sub-Plan which is a sub-plan of the Plan. Under the terms of the Plan, the Board is permitted to grant awards to employees as restricted share units, options, share appreciation rights, restricted shares. The aggregate number of shares initially available for issuance under the Plan and the Vaccitech plc Non-Employee Sub-Plan cannot exceed 3,675,680 ordinary shares (the “Initial Limit”). Beginning calendar year 2022, the total number of ordinary shares available for issuance under the Plan shall be increased on January 1 of each year in an amount equal to the lesser of (i) 4 % of the Company’s issued and outstanding ordinary shares (which 4 % limit shall be measured as of January 1 of such year) and (ii) such number of ordinary shares as determined by the Board in its discretion (the “Annual Increase”). The awards generally vest based on the grantee’s continued service with the Company during a specified period following grant as determined by the Board and generally expire ten years from the grant date. Option awards generally vest over one to four years , but vesting conditions can vary at the discretion of the Company’s Board. As of December 31, 2021, 2,127,920 ordinary shares are available for future grants. In 2018, the Company’s board of directors adopted the Enterprise Management Incentive Share Option Scheme the “EMI Plan”) which provided for the grant of incentive stock options and nonqualified stock options to non-director employees of the Company. The Company also has a nonqualified stock option plan for officers and directors. The awards generally vest based on the grantee’s continued service with the Company during a specified period following grant as determined by the board of directors and generally expire ten years from the grant date. Option awards generally vest over four years , but vesting conditions can vary at the discretion of the Company’s board of directors. A total of 3,530,634 ordinary shares were reserved for issuance in accordance with the provisions of the EMI Plan and restricted stock unit (“RSUs”) plan. Upon adoption of the Plan, no further awards are to be made under the EMI Plan. F-23 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The fair value of each stock option issued to employees was estimated at the date of grant using Black-Scholes with the following weighted-average assumptions: ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, ​ December 31, ​ ​ ​ 2021 ​ 2020 Expected volatility 110.6 % 117.73 % Expected term (years) 6.3 6.40 ​ Risk-free interest rate 1.1 % 1.10 % Expected dividend yield — % 0.00 % ​ The fair value of RSUs issued to employees was estimated at the date of grant using Black-Scholes with the following assumptions. No RSUs were issued for the year ended December 31, 2021. ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, ​ December 31, ​ ​ ​ 2021 ​ 2020 Expected volatility N/A % 110.8 % Expected term (years) N/A 2.75 ​ Risk-free interest rate N/A % 1.6 % Expected dividend yield N/A % 0.00 % ​ Prior to the IPO, the Company applied a discount for lack of marketability calculated using the Finnerty model. Expected volatility: Since there is insufficient trading history for the Company’s ordinary shares, the expected price volatility for our ordinary shares was estimated using the average historical volatility of industry peers’ shares as of the grant date of our options over a period of history commensurate with the expected life of the options. To the extent that volatility of our share price increases in the future, our estimates of the fair value of options to be granted in the future could increase, thereby increasing share-based payment expense in future periods. When selecting industry peers to be used in measuring implied volatility, the Company considered the similarity of their products and business lines, as well as their stage of development, size and financial leverage. The Company intends to continue to consistently apply this process using the same or similar public companies until sufficient historical information on volatility of its share price becomes available. Expected term (years): Expected term represents the period that the Company’s option grants are expected to be outstanding. There is not sufficient historical share exercise data to calculate the expected term of the stock options. Therefore, the Company elected to utilize the simplified method to value option grants. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option. Risk-free interest rate: The Company determined the risk-free interest rate by using a weighted-average equivalent to the expected term based on the daily U.S. Treasury yield curve rate in effect as of the date of grant. Expected dividend yield: The Company does not anticipate paying any dividends in the foreseeable future. F-24 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A summary of stock option activity is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- Weighted- ​ ​ ​ ​ ​ ​ average ​ average ​ ​ ​ ​ ​ ​ ​ Exercise ​ Remaining ​ Aggregate ​ ​ Number of ​ Price Per ​ Contractual ​ Intrinsic Value ​ ​ Stock Options ​ Option ​ Term (Years) ​ (in thousand) Outstanding, January 1, 2021 1,544,382 ​ $ 0.0004 8.85 ​ $ 11,021 Granted 1,947,402 ​ 13.79 ​ Exercised ( 181,882 ) ​ 0.05 ​ Forfeited/expired ( 123,084 ) ​ 4.84 ​ Outstanding, December 31, 2021 3,186,818 ​ $ 8.63 8.78 ​ $ 16,952 Exercisable, December 31, 2021 795,650 ​ $ 0.85 8.01 ​ $ 8,194 ​ On April 22, 2021, the exercise price of 267,903 options was changed from $ 0.0004 (£ 0.0003 ) to $ 4.84 (£ 3.49 ) in order to enable employees to benefit from tax advantages under the Enterprise Management Incentive Scheme. This modification did not result in an incremental compensation cost and the Company continues to recognize compensation cost on these options equal to the grant date fair value of the original award. The weighted-average grant date per-share fair value of stock options granted during the year ended December 31, 2021 was $ 10.98 (December 31, 2020: $ 5.66 per share). The aggregate intrinsic value of stock options exercised during the year ended December 31, 2021 was $ 1,823 thousand (December 31, 2020: $ 1,000 thousand). As of December 31, 2021, there was $ 12,524 thousand (2020: $ 3,089 thousand) of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.29 years. On January 9, 2020, the Company granted 479,568 restricted stock units (“RSUs”) to an employee, which vest in two equal tranches of 239,784 each . The grant date fair value of the RSUs was $ 5.23 . The first tranche vests on IPO Filing Date which is defined as the date on which the Company makes a confidential submission to the U.S. Securities and Exchange Commission or its equivalent under the listing rules of the relevant comparable exchange and the second tranche vests on the IPO Resolution Date which is defined as the date on which the board of the Company resolves to initiate an initial public offering on any recognized exchange after (x) completion of all registration and other listing formalities and (y) agreement on pricing and quantum of the offer. The grant contains a nondiscretionary antidilution provision which entitles the grantee to additional RSUs to ensure that the aggregate RSUs granted equal 1.5 % of the total fully diluted share capital of the Company. During the year ended December 31, 2020 a further 48,513 RSUs were granted as a result of this antidilution provision. The grant of additional RSUs was treated as a modification as it results in changes in the fair-value-based measure of the award. The incremental compensation cost as a result of the modification was $ 147 thousand. During the year ended December 31, 2021, 514,923 restricted stock units (including with 275,139 restricted stock units as a result of the antidilution provision) vested on occurrence of the IPO resulting in $ 5,760 thousand recognized as compensation cost. The incremental compensation cost as a result of the anti dilution provision was $ 4,420 thousand. Share based compensation expense is classified in the consolidated statement of operations and comprehensive loss as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, ​ December 31, ​ ​ 2021 ​ 2020 Research and development ​ $ 2,281 ​ $ 614 General and administrative ​ 14,206 ​ 3,011 Total ​ $ 16,487 ​ $ 3,625 ​ ​ ​ F-25 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 15. Income Taxes The components of income tax benefit (expense) are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, ​ December 31, ​ ​ 2021 ​ 2020 Current income tax benefit (expense): ​ ​ ​ ​ ​ ​ United Kingdom ​ $ — ​ $ — Foreign ​ ( 91 ) ​ ( 95 ) Deferred income tax benefit (expense) ​ ​ ​ ​ ​ ​ United Kingdom ​ ​ — ​ ​ — Foreign ​ ​ 119 ​ ​ — Total income tax benefit (expense), current ​ $ 28 ​ $ ( 95 ) ​ A reconciliation of income tax benefit (expense) computed at the UK statutory income tax rate to income tax benefit (expense) as reflected in the consolidated financial statements is as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended ​ ​ December 31, ​ December 31, ​ ​ ​ 2021 ​ 2020 Statutory tax rate 19.00 % 19.00 % Increase (decreases) resulting from: ​ Permanent differences 3.16 10.57 ​ Provision to return adjustments 0.85 1.24 ​ Research and development credits ( 10.30 ) ( 18.73 ) ​ Foreign rate differential 0.07 0.20 ​ Change in valuation allowance ( 7.60 ) ( 11.37 ) ​ Other ( 5.12 ) ( 1.44 ) ​ Effective tax rate 0.06 % ( 0.53 ) % ​ Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income and for tax carryforwards. Significant components of the Company’s deferred tax assets and liabilities are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ 2021 ​ ​ 2020 Deferred tax assets: ​ ​ ​ ​ ​ ​ Net operating loss carryforwards ​ $ 10,299 ​ $ 3,759 Research and development credit carryforwards ​ 3,340 ​ 3,533 Deferred revenue ​ 61 ​ 47 Share based compensation ​ 1,816 ​ 1,043 Lease liability ​ 1,752 ​ 350 Other ​ 235 ​ 133 Gross deferred tax asset ​ 17,503 ​ 8,865 Valuation allowance ​ ( 13,500 ) ​ ( 7,283 ) Net deferred tax assets ​ 4,003 ​ 1,582 Deferred tax liabilities: ​ ​ Depreciation ​ ( 283 ) ​ ( 102 ) Right-of-use lease asset ​ ( 1,747 ) ​ ( 448 ) Unrealized gain on investment ​ ( 1,346 ) ​ ( 1,033 ) Intangible assets ​ ( 8,711 ) ​ — Net deferred tax liabilities ​ ( 12,087 ) ​ ( 1,582 ) Total net deferred tax ​ $ ( 8,084 ) ​ $ — ​ F-26 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2021, the Company had a valuation allowance of $ 13,500 thousand (2020: $ 7,283 thousand) against its deferred tax assets, which consisted principally of net operating loss and research and development credit carryforwards. The Company considered the positive and negative evidence bearing upon its ability to realize the deferred tax assets. In addition to the Company’s history of cumulative losses, the Company cannot be certain that future taxable income will be sufficient to realize its deferred tax assets. Accordingly, a valuation allowance has been provided against its deferred tax assets. When the Company changes its determination as to the amount of its deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to the provision for income taxes in the period in which such determination is made. As of December 31, 2021, the Company had NOL carryforwards totaling approximately $ 40,863 thousand which have an unlimited carryforward period, of which $ 37,762 thousand originate in the United Kingdom. At December 31, 2021, the Company had $ 3,342 thousand of research and development tax credit carryforwards which also have an unlimited carryforward period. As of December 31, 2021, the Company does not have any material unrecognized tax benefit liabilities. The Company files income tax returns in the United Kingdom, Australia, and the United States. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. In the United Kingdom, tax years from 2019 remain subject to examination by Her Majesty’s Revenue and Customs. In all other jurisdictions, the tax years since inception remain subject to examination by the applicable taxing authorities as of December 31, 2021. 16. Commitments and Contingencies In-License Agreements The Company is party to a number of licensing agreements most of which are with related parties. These agreements serve to provide the Company with the right to develop and exploit the counterparties’ intellectual property for certain medical indications. As part of execution of these arrangements, the Company paid certain upfront fees, which have been expensed as incurred because the developing technology has not yet reached technical feasibility, the lack of alternative use, and the lack of proof of potential value. The agreements cover a variety of fields, including influenza, cancer, HPV, HBV and MERS. The Company’s obligations for future payments under these arrangements are dependent on its ability to develop promising drug candidates, the potential market for these candidates and potential competing products, and the payment mechanisms in place in countries where the Company retains the right to sell. Each agreement provides for specific milestone payments, typically triggered by achievement of certain testing phases in human candidates, and future royalties ranging from 1 to 5 % for direct sales of a covered product to 3 to 7 % of net payments received for allowable sublicenses of technology developed by the Company. The obligation to make these payments is contingent upon the Company’s ability to develop candidates for submission for phased testing and approvals, and for the development of markets for the products developed by the Company. The Company has not made any material payments under these license agreements during the year ended December 31, 2021, and 2020. Leases The Company leases certain laboratory and office space under operating leases, which are described below. The Oxford Science Park, Oxford The Company leases an office and laboratory space from a related party in Oxford, England under an operating lease with a contractual term expiring in 2028. The lease does not contain renewal terms. Variable payments include amounts due to the lessor for additional services and cost reimbursements. The Harwell Science and Innovation Campus, Oxfordshire On September 3, 2021, the Company entered into a lease agreement for the lease of approximately 31,000 square feet in Harwell, Oxfordshire which expires in September 2031. The Company intends to use the property as its corporate headquarters. As the Company's leases typically do not provide an implicit rate, the Company uses an estimate of its incremental borrowing rate based on the information available at the lease commencement date, being the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The Company has provided the lessor with a refundable security deposit of $ 723 thousand which is included in Other assets. F-27 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company recorded a right-of-use asset and a lease liability on the effective date of the lease term. The Company’s right-of-use assets and lease liabilities are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 Right-of-use asset ​ $ 7,257 ​ $ 2,136 Lease liability, current ​ $ 523 ​ $ 192 Lease liability, noncurrent ​ $ 6,540 ​ $ 1,472 Other information ​ ​ Short-term lease costs ​ $ 21 ​ $ — Operating cash flows from operating leases ​ $ 331 ​ $ 301 ​ During the year ended December 31, 2021, the Company recorded $ 737 thousand (December 31, 2020: $ 341 thousand) in operating lease costs (including short-term lease costs and variable lease costs). Maturities of the Company's minimum lease liabilities as of December 31, 2021 were as follows: ​ ​ ​ ​ ​ Maturity of lease liabilities: ​ 2022 ​ $ 599 2023 ​ 485 2024 ​ 1,205 2025 ​ 1,205 Thereafter ​ 6,834 Total minimum lease payments ​ 10,328 Less: imputed interest ​ ( 3,265 ) Total lease liability ​ $ 7,063 ​ The weighted-average remaining lease terms are 9.45 years, and the weighted-average discount rate is 7.91 % which approximates the Company’s incremental borrowing rate. Non-lease and other costs paid to the lessors are primarily related to services provided by the lessors in operating the premises that includes fees, operating costs, taxes, and insurance related to the leased premises. Other contingencies The Company is a party in various contractual disputes, litigation, and potential claims arising in the ordinary course of business. The Company does not believe that the resolution of these matters will have a material adverse effect on its financial position or results of operations. 17. Employee Benefit Plans In the United Kingdom, the Company has adopted a defined contribution plan (the U.K. Plan) which qualifies under the rules established by HM Revenue & Customs. The U.K. Plan allows all U.K. employees to contribute a minimum of 5 % of salary with no maximum limit. The contribution is matched by the Company, up to a maximum of 5 % of salary. Contributions to the U.K. Plan are charged to the consolidated statement of operations and comprehensive income in the year to which they relate. The Company has 401(k) defined contribution retirement plans in which all its employees located in the U.S. are eligible to participate. Eligible employees may elect to contribute up to the maximum limits, as set by the Internal Revenue Service, of their eligible compensation. Contributions to the plans are charged to the consolidated statement of operations and comprehensive income in the year to which they relate. During the year ended December 31, 2021, the Company provided a total of $ 248 thousand (December 31, 2020: $ 143 thousand) in matching contribution under both the U.K. Plan and the 401(k) plans. F-28 Table of Contents VACCITECH PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. Related Party Transactions During the year ended December 31, 2021, Company incurred expenses of $ 318 thousand (December 31, 2020: $ 281 thousand) to its shareholder, Oxford Science Enterprises plc (formerly, Oxford Sciences Innovation plc), mostly related to the lease of a laboratory and office space in Oxford. As of December 31, 2021, the Company owed $ 32 thousand (2020: $ Nil ) to Oxford Science Enterprises Plc. During the year ended December 31, 2021, the Company incurred expenses of $ 191 thousand (December 31, 2020: $ 478 thousand) to its shareholder, the University of Oxford, related to clinical study costs. As of December 31, 2021, the Company owed $Nil (2020: $ 300 thousand). During the year ended December 31, 2021, the Company incurred expenses of $ 379 thousand (December 31, 2020: $ 208 thousand) for services from Oxford University Innovation Limited which is a wholly owned subsidiary of the Company’s shareholder, the University of Oxford. As of December 31, 2020, the Company owed $Nil (2020: $ 25 thousand) to Oxford University Innovation Limited. During the year ended December 31, 2021, the interest on convertible loans issued to Oxford Science Enterprises plc and the University of Oxford, shareholders of the Company was $ 429 thousand (December 31, 2020: $ 655 thousand). As of December 31, 2021 these convertible loan notes including the embedded derivative was $ Nil (2020: $ 7,356 thousand). On March 15, 2021 Oxford Science Enterprises plc subscribed to 3,468 Series B Shares in an amount of $ 14,999 thousand. The Company also recognized a loss of $ 2,125 thousand on the conversion of the convertible loan notes into 2,008 Series B Shares. On May 4, 2021 prior to the closing of the Company’s initial public offering and pursuant to the terms of its articles of association, the Series B Shares were converted into 1,692,084 ordinary shares. 19. Subsequent Events In accordance with the terms of the Annual Increase of the Vaccitech plc Share Award Plan 2021, the total number of ordinary shares available for issuance under the Plan increased by 4 % of the Company's issued and outstanding ordinary shares as of January 1, 2022. In January 2022 and March 2022, the Company granted a total of 1,632,922 share options to employees and directors. On February 1, 2022 the Company gave notice to terminate The Oxford Science Park lease. The lease will be terminated on July 30, 2022, by which date the Company will have relocated its corporate headquarters from Oxford to The Harwell Science and Innovation Campus, Oxfordshire. On February 14, 2022 the Company repaid the debt outstanding of $ 159 thousand in full. During the first quarter of 2022 and through to the date of issue of these consolidated financial statements, the Company experienced a sustained decline in the price of its ADSs. A sustained decrease in the Company’s ADSs is a potential indicator that it is more likely than not that a goodwill impairment exists. The Company will perform an impairment assessment of the Company’s, assets including goodwill and intangible assets, in the first quarter of 2022 which could lead to an impairment charge for the first quarter of 2022. In respect of the international situation in Ukraine, we have assessed the impact on the company as minimal. We have no operations or suppliers based in Ukraine, Belarus, or Russia, and there is consequently no additional risk or negative impact on the financial statements. We have no operations or suppliers based in Turkey either, and therefore the company is not impacted by the potential hyperinflationary environment in that country. ​ F-29