What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-08-09 compared with 2022-05-11 · 61 added, 20 removed, 31 unchanged (72% of the section changed)

Item 1A Risk Factors.

Except as set forth below, there have been no material changes from the risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K as filed with the SEC on March 25, 2022.

Actual payments we may receive in connection with certain milestones or royalties on net sales under the AstraZeneca License Agreement may differ materially from those described in this report, and there can be no assurance that we will receive any such payments at all.

While we expect to receive a share of certain milestones and royalties on net sales of certain vaccines under the research collaboration and exclusive worldwide license agreement, or the AstraZeneca License Agreement, between Oxford University Innovation Limited, or OUI, and AstraZeneca UK Limited, or AstraZeneca, there can be no assurance as to the timing or amount of any such milestones or royalties on net sales.

In particular, we are not party to the AstraZeneca License Agreement, and we do not have any direct claim against AstraZeneca to receive a share of any milestones or net sales, or any other payments under the AstraZeneca License Agreement.

Instead, we are party to the amendment, assignment and revenue share agreement, or the OUI License Agreement Amendment, with OUI, to the license agreement we entered into with OUI in March 2016, pursuant to which OUI agreed to pay us approximately 24% of payments, including royalties and milestones, received by OUI in connection with the commercialization of any ChAdOx1 vector-based or ChAdOx2 vector-based vaccine in the field of SARS-CoV2 covered by or disclosed in the assigned patent application.

As a result, we will only receive a share of any milestones or royalties paid on net sales of any such vaccine under the AstraZeneca License Agreement if, and to the extent that, OUI receives a share of any such milestones or royalties pursuant to that agreement.

Moreover, our understanding is that, under the AstraZeneca License Agreement, OUI agreed to forego its share of any royalties from the commercialization of AZD1222 until after the pandemic period, which will end on July 1, 2021 (or such later date when AstraZeneca, in good faith, determines that the COVID-19 pandemic is over).

In April 2022, we were notified of the commencement of royalty payments relating to commercial sales of Vaxzevria (formerly AZD1222).

Our understanding of the terms of the AstraZeneca License Agreement is based solely on an extract of the agreement provided by the parties to that agreement.

We are not a party to the AstraZeneca License Agreement and do not have access to a copy of that agreement to verify such extract.

In addition, no party to the AstraZeneca License Agreement has confirmed that there are no material terms in that agreement that could adversely impact the economic and other terms of the AstraZeneca License Agreement.

Moreover, there can be no assurance that the AstraZeneca License Agreement is an enforceable agreement, that the parties thereto will comply with their obligations under the agreement (including any obligations of AstraZeneca to make milestone or royalty payments to OUI), that the agreement will not be terminated pursuant to its terms or otherwise, or that the terms of the agreement (including royalty rates and other economic terms) will not be modified by the parties in the future.

Accordingly, these and other factors could cause amounts received by OUI pursuant to the AstraZeneca License Agreement, and accordingly any share of the revenue under that agreement that we may receive, to fluctuate.

Any such fluctuations could be material.

Additionally, our understanding of the terms of the AstraZeneca License Agreement is that AstraZeneca is required to notify OUI of OUI’s shares of milestone and royalty payments within 30 days following the close of a fiscal quarter.

OUI is then required to notify us of our share of the payments within 30 days after the end of a quarter when OUI received such milestone or royalty payments from AstraZeneca.

If the required notifications are not made in accordance with the terms of the agreements, we may not be able to recognize revenue in the period in which it is earned.

In addition, the announcement of adverse events observed in individuals who receive Vaxzevria and any negative impact on the perceptions of Vaxzevria safety may reduce sales of the vaccine and therefore the potential payments that we would receive from royalties paid on net sales of Vaxzevria.

Further, if Vaxzevria is found to be less effective against certain variants of COVID-19, then that may also reduce sales of the vaccine.

Any association of Vaxzevria with adverse events, or the perception of such association, or any findings that Vaxzevria is less effective against certain variants of COVID-19, may prevent or reduce sales of Vaxzevria and therefore the potential payments that we may receive from net sales of the vaccine, and may otherwise adversely impact the development of, and our ability to commercialize, any of our product candidates.

Recent volatility in capital markets and lower market prices for many securities may affect our ability to access new capital through sales of shares of our ordinary shares or issuance of indebtedness, which may harm our liquidity, limit our ability to grow our business, pursue acquisitions or improve our operating infrastructure and restrict our ability to compete in our markets.

Our operations consume substantial amounts of cash, and we intend to continue to make significant investments to support our business growth, respond to business challenges or opportunities, develop new product candidates, retain or expand our current levels of personnel, enhance our operating infrastructure, and potentially acquire complementary businesses and technologies.

Our future capital requirements may be significantly different from our current estimates and will depend on many factors, including the need to:

● finance unanticipated working capital requirements;

● develop or enhance our technological infrastructure and our existing solutions;

● pursue acquisitions or other strategic relationships;

● respond to competitive pressures.

Accordingly, we may need to pursue equity or debt financings to meet our capital needs.

With uncertainty in the capital markets and other factors, such financing may not be available on terms favorable to us or at all.

If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our ordinary shares.

Any debt financing secured by us in the future could involve additional restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.

If we are unable to obtain adequate financing or financing on terms satisfactory to us, we could face significant limitations on our ability to invest in our operations and otherwise suffer harm to our business.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Our trademarks or trade names may be challenged, infringed or diluted, lapsed, abandoned, circumvented or declared generic or determined to be infringing on or become dilutive of other marks, or otherwise invalidated through administrative process or litigation.

We intend to rely on both registration and common law protection for our trademarks.

We may not be able to protect our rights to these trademarks and trade names or may be forced to stop using these names, which we need for name recognition by potential partners or customers in our markets of interest.

Third parties may use trademarks similar to our trademarks and any potential confusion as to the source of goods or services could have an adverse effect on our business.

For example, in April 2022, we received a letter asserting that our use of our “Vaccitech” trademark infringes a United Kingdom trademark held by a third party.

We timely responded rejecting the claims and we believe that such claims are without merit.

However, if such third party continues to assert its claims, we cannot provide any assurance whether we could reach a settlement relating to such claims or whether we would prevail in any litigation or action related to such claims.

Regardless of its outcome, any litigation related to such claims may subject us to damages, impair our ability to use our “Vaccitech” trademark, and otherwise adversely affect our business, results of operations and financial condition.

Moreover, during the trademark registration process, we may receive Office Actions from the USPTO objecting to the registration of our trademarks.

Although we would be given an opportunity to respond to those objections, we may be unable to overcome such rejections.

In addition, at the USPTO and at comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and/or to seek the cancellation of registered trademarks through opposition or cancellation proceedings against our trademarks, and if such third parties are successful, our trademarks may not survive such proceedings.

In some cases, there may be third-party trademark owners who have prior rights to our trademarks or third parties who have prior rights to similar trademarks, and we may not be able to prevent such third parties from using and marketing any such trademarks.

Litigation brought to protect and enforce our intellectual property rights could be costly, unpredictable, time-consuming and distracting to management, regardless of whether we are successful in such litigation.If we are unable to obtain a registered trademark or establish name recognition based on our trademarks and trade names, we may not be able to compete effectively and our business, results of operations and financial condition may be adversely affected.

If we were classified as a passive foreign investment company, it would result in adverse U.S.

federal income tax consequences to U.S.

Under the Internal Revenue Code, or Code, we will be a passive foreign investment company, or PFIC, for any taxable year in which (i) 75% or more of our gross income consists of passive income or (ii) 50% or more of the average quarterly value of our assets consists of assets that produce, or are held for the production of, passive income.

For purposes of these tests, passive income includes dividends, interest, gains from the sale or exchange of investment property and certain rents and royalties.

In addition, for purposes of the above calculations, a non-U.S.

corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as holding and receiving directly its proportionate share of assets and income of such corporation.

If we are a PFIC for any taxable year during which a U.S.

Holder holds our ordinary shares or ADSs, the U.S.

Holder may be subject to adverse tax consequences regardless of whether we continue to qualify as a PFIC, including ineligibility for any preferred tax rates on capital gains or on actual or deemed

dividends, interest charges on certain taxes treated as deferred and additional reporting requirements.

Holder” is a holder who, for U.S.

federal income tax purposes, is a beneficial owner of ordinary shares or ADSs and is:

(i) an individual who is a citizen or individual resident of the United States;

(ii) a corporation, or other entity taxable as a corporation for U.S.

federal income tax purposes, created or organized in or under the laws of the United States, any state therein or the District of Columbia;

(iii) an estate the income of which is subject to U.S.

federal income taxation regardless of its source;

or (iv) a trust if (1) a U.S.

court is able to exercise primary supervision over the administration of the trust and one or more U.S.

persons have authority to control all substantial decisions of the trust or (2) the trust has a valid election to be treated as a U.S.

person under applicable U.S.

Treasury Regulations.

Based on the current and expected composition of our income and the value of our assets, we believe we were not a PFIC for 2021.

However, based on current projections of our income and volatility in the price of our shares, it is possible we may be a PFIC for our current taxable year.

No assurances regarding our PFIC status can be provided for the current taxable year or any future taxable years.

The determination of whether we are a PFIC is a fact-intensive determination made on an annual basis applying principles and methodologies that in some circumstances are unclear and subject to varying interpretation.

Under the income test, our status as a PFIC depends on the composition of our income which will depend on the transactions we enter into in the future and our corporate structure.

The composition of our income and assets is also affected by the spending of the cash we raise in any offering.

Holder should consult its tax advisors with respect to the potential adverse U.S.

tax consequences to it if we are or were to become a PFIC.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

21 unchanged sentences

● our expectations about market trends;

● the impact of global economic and political developments on our business, including rising inflation and capital market disruptions, the current conflict in Ukraine, economic sanctions and economic slowdowns or recessions that may result from such developments which could harm our research and development efforts as well as the value of our common stock and our ability to access capital markets;

● our ability to overcome the challenges posed by the COVID-19 pandemic to the conduct of our business;

5 unchanged sentences

We qualify all of our forward-looking statements in this Quarterly Report by these cautionary statements.

This Quarterly Report contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information.

All of the summaries are qualified in their entirety by the actual documents.

Unless the context otherwise requires, reference in this Quarterly Report to the terms “Vaccitech,” “the Company,” “we,” “us,” “our,” and similar designations refer to Vaccitech plc and, where appropriate, our wholly-owned subsidiaries.

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

What changed 10-Q

Item 1A. Risk Factors