What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-24 compared with 2022-03-25 · 470 added, 446 removed, 704 unchanged (57% of the section changed)

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.

Evaluation of Disclosure Controls and Procedures

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 13a15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2022.

The term “disclosure controls and procedures”, means controls and other procedures of a company that are designed to provide reasonable assurance that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Notwithstanding the ineffective disclosure controls and procedures as a result of the identified material weaknesses, management has concluded that the consolidated financial statements included elsewhere in this Annual Report on Form 10-K present fairly, in all material respects, the Company’s financial position, results of operations and cash flows in accordance with generally accepted accounting principles in the United States of America (“U.S.

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.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, and for the assessment of the effectiveness of internal control over financial reporting.

The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with U.S.

GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In making its assessment of the Company’s internal control over financial reporting as of December 31, 2022, management used the criteria set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and evaluated the internal control over financial reporting.

As a result of the material weaknesses described below, management concluded our internal control over financial reporting was not effective as of December 31, 2022 based on criteria in Internal Control-Integrated Framework (2013) issued by the COSO.

Management previously reported, in our Annual Report on Form 10-K for the year ended December 31, 2021, material weaknesses in our internal control over financial reporting related to:

(i) our IT general control environment has not been sufficiently designed to include appropriate user access rights and (ii) 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.

As of the year ended December 31, 2022, in addition to the above material weakness on IT general control user access rights, we also identified additional deficiencies related to the design and implementation of controls over program development, program changes, and computer operations.

Remediation Efforts

During fiscal year 2022, we undertook efforts to remediate previously disclosed material weaknesses, including assessing and identifying risks to financial reporting over all business processes impacting financial reporting and implementation of controls over critical accounting policies and estimates.

Although we made substantial progress throughout the year, the design and operation of SOX-level controls remained ongoing as of December 31, 2022, due to a significant amount of progress occurring in the second half of the year, and therefore being unable to determine if a control had been formalized, operated and tested with enough instances to be embedded within the control environment for fiscal year 2022.

In implementing SOX in 2022, management applied a risk based approach, focusing on establishing and testing controls over the critical accounting policies and estimates such as going concern, revenue, contingent consideration, impairment and leases, as a priority.

Some business process controls over critical accounting policies and estimates established in the fiscal year that were dependent on systems without effective IT general controls were deemed ineffective because they could be adversely impacted by the lack of system controls.

Our internal control remediation efforts will continue into fiscal year 2023 and focus on the areas detailed below.

Planned Remediation Activities

IT general controls

We are taking measures to address the IT environment through the implementation of a new enterprise resource planning (“ERP”) system and controls over program development, program changes, computer operations and access rights.

We have implemented the new ERP system for the U.K.

Company in the first quarter of 2023, and plan to rollout implementation of the new ERP system to the U.S.

Company later in 2023.

For the new ERP system and all other IT systems deemed significant to financial reporting, we plan to implement:

(i) program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized, and implemented appropriately;

(ii) user access controls to ensure appropriate segregation of duties exist, to adequately restrict user and privileged access to certain financial applications, programs and data to appropriate company personnel;

(iii) computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored, (iv) testing and approval controls for program development to ensure that changes are aligned with business and IT requirements, and (v) identification and testing of system-generated information and calculations used in the execution of manual controls.

policies and procedures with respect to the review, supervision and monitoring of our accounting and reporting functions

We are taking measures to address this material weakness, which includes hiring appropriate personnel whose roles are to enhance policies and procedures with respect to the review, supervision, formalization and monitoring of our accounting and reporting functions.

Additionally, we plan to enhance business process controls through the following activities:

● continue to evaluate and refine the design, implementation, and documentation of the internal controls to ensure controls address the relevant risks, are properly designed, and provide appropriate evidence of the Company’s performance;

● enhance the design of controls that address the completeness and accuracy of reports being utilized in the execution of internal controls;

● continue to evaluate the assignment of responsibilities associated with the performance of control activities and consider hiring additional resources, obtaining third party assistance, or providing additional training to existing resources;

● further develop and execute a testing protocol that allows the Company to validate the operating effectiveness of certain controls over financial reporting to gain assurance that such controls are presented and functioning as designed;

As we monitor and evaluate our ICFR, we will continue to assess the effectiveness of our remediation plan and prioritize our resources.

Attestation Report of the Registered Public Accounting Firm

1 unchanged sentence

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.

Other than the changes related to the ongoing remediation activities related to 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, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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.

Not applicable.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

4 unchanged sentences

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.

The information required under this item is incorporated herein by reference to our definitive proxy statement for our 2023 Annual General Meeting to be filed with the United States Securities and Exchange Commission.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

2 unchanged sentences

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.

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.

The information required under this item is incorporated herein by reference to our definitive proxy statement for our 2023 Annual General Meeting to be filed with the United States.

Securities and Exchange Commission.

11 unchanged sentences

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.

1 to Agreement and Plan of Merger and Reorganization, dated March 11, 2022, by and between Vaccitech plc and Benjamin Eisler, as Securityholder Agent (Incorporated by reference to Exhibit 2.2 to our Annual Report on Form 10-K (File No.

001-40367) filed on March 25, 2022).

Amendment No.

2 to Agreement and Plan of Merger and Reorganization, dated May 9, 2022, by and between Vaccitech plc and Benjamin Eisler, as the Securityholder Agent (Incorporated herein by reference to Exhibit 2.1 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-40367), filed with the Securities and Exchange Commission on August 9, 2022).

Articles of Association of the Registrant (Incorporated by reference to Exhibit 3.1 to our Form 8-K (File No.

3 unchanged sentences

Form of American Depositary Receipt (included in Exhibit 4.1).

Description of Registrant’s Securities.

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

001-40367) filed on March 25, 2022).

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.

31 unchanged sentences

333-255158) filed on April 27, 2021).

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).

Registration Rights Agreement, dated March 28, 2022, by and among the Registrant and Benjamin Eisler, as the Securityholder Agent (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No.

001-40367) filed on May 11, 2022).

Service Agreement with Gemma Brown, effective September 15, 2022 (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No.

001-40367) filed on November 10, 2022).

Form of Indemnification Agreement between the Registrant and each of its directors and officers (Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q (File No.

001-40367) filed on November 10, 2022).

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.

1 unchanged sentence

Subsidiaries of the Registrant.

Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.

Consent of BDO LLP, independent registered public accounting firm.

18 unchanged sentences

Form 10-K Summary

Not Applicable.

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.

5 unchanged sentences

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.

Each person whose signature appears below constitutes and appoints William Enright and Gemma Brown, and each of them, as his or her 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:

4 unchanged sentences

(Principal Executive Officer)

/s/ GEORGY EGOROV

/s/ GEMMA BROWN

Chief Financial Officer

March 24, 2023

Georgy Egorov

(Principal Financial and Accounting Officer)

12 unchanged sentences

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP (PCAOB ID 876 )

Report of Independent Registered Public Accounting Firm (BDO LLP:

3 unchanged sentences

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Changes in Redeemable Convertible Preferred Shares and Shareholders’ Equity (Deficit)

Consolidated Statements of Changes in Redeemable Convertible Preferred Shares and Shareholders’ Equity

Consolidated Statements of Cash Flows

1 unchanged sentence

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Vaccitech plc

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Vaccitech plc and its subsidiaries (the “Company’) as of December 31, 2022, and the related consolidated statement of operations and comprehensive loss, of changes in redeemable convertible preferred shares and shareholders’ equity, and of cash flows for the year then ended, including 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 as of December 31, 2022, and the results of its operations and its cash flows for the year then ended 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 audit.

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 audit of these consolidated financial statements 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.

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

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

Accordingly, we express no such opinion.

Our audit 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 audit 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 audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Reading, United Kingdom

March 24, 2023

We have served as the Company’s auditor since 2022.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

2 unchanged sentences

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.

We have audited the accompanying consolidated balance sheet of Vaccitech plc (the “Company”) as of December 31, 2021, the related consolidated statements of operations and comprehensive loss, changes in redeemable convertible preferred shares and shareholders’ equity (deficit), and cash flows for the year 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 the results of its operations and its cash flows for the year 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.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

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.

We conducted our audit in accordance with the standards of the PCAOB.

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.

We have served as the Company's auditor since 2017.

We believe that our audit provides a reasonable basis for our opinion.

We have served as the Company’s auditor from 2017 through 2022.

London, United Kingdom

3 unchanged sentences

(IN THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS)

Current assets:

Cash and cash equivalents

Accounts receivable

Accounts receivable – related parties

Research and development incentives receivable

4 unchanged sentences

Right of use assets, net

Liabilities, Redeemable Convertible Preferred Shares And Shareholders’ Equity (Deficit)

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

2 unchanged sentences

Deferred revenue

Current portion of lease liability

Operating lease liability - current

Total current liabilities

Convertible loan notes – non current

Lease liability – non current

Non-Current liabilities:

Operating lease liability

Contingent consideration

Other non-current liabilities

Deferred tax liability, net

1 unchanged sentence

Commitments and contingencies (Note 17)

Series A redeemable convertible preferred shares;

£ 0.10 nominal value;

no shares issued and outstanding ;

(December 31,2020:

issued and outstanding:

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):

Shareholders’ equity:

Ordinary shares, £ 0.000025 nominal value;

3 unchanged sentences

63,443 shares authorized, issued and outstanding (December 31, 2021:

no shares issued or outstanding )

authorized, issued and outstanding :

Deferred B shares, £ 0.01 nominal value;

570,987 shares authorized, issued and outstanding (December 31, 2021:

no shares issued or outstanding )

authorized, issued and outstanding :

Deferred C shares, £ 0.000007 nominal value, 27,828,231 shares authorized , issued and outstanding (December 31, 2021:

3 unchanged sentences

Accumulated other comprehensive loss – foreign currency translation adjustments

Total shareholders’ equity attributable to Vaccitech plc shareholders’

Noncontrolling interest

Total shareholders’ equity/(deficit)

Total liabilities, redeemable convertible preferred shares and shareholders’ equity

1 Indicates amount less than thousand

Total shareholders’ equity

Total liabilities and shareholders’ equity

1 Indicates amount less than one thousand

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

12 unchanged sentences

Other income (expense):

Change in fair value of derivatives

Change in fair value of derivatives embedded in convertible loan notes

Unrealized foreign exchange gain on convertible loan notes

Loss on extinguishment of convertible loan notes

Interest expense

Interest income

Interest expense

Research and development incentives

Other income, net

Total other (expense) income

Tax benefit (expense)

Total other income/(expense)

Profit/(loss) before income tax

Net income/(loss)

Net loss attributable to noncontrolling interest

Net loss attributable to Vaccitech shareholders

Weighted-average ordinary shares outstanding, basic and diluted

Net loss per share attributable to ordinary shareholders, basic and diluted

Net income/(loss) attributable to Vaccitech plc shareholders

Weighted-average ordinary shares outstanding, basic

Weighted-average ordinary shares outstanding, diluted

Net income/(loss) per share attributable to ordinary shareholders, basic

Net income/(loss) per share attributable to ordinary shareholders, diluted

Net income/(loss)

Other comprehensive loss – foreign currency translation adjustments

1 unchanged sentence

Comprehensive loss attributable to noncontrolling interest

Comprehensive loss attributable to Vaccitech shareholders

Comprehensive loss attributable to Vaccitech plc shareholders

1 Includes license revenue from related parties for the year ended December 31, 2022 totaling $ 43.7 million (December 31, 2021:

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES

AND SHAREHOLDERS’ EQUITY (DEFICIT)

AND SHAREHOLDERS’ EQUITY

(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

7 unchanged sentences

Comprehensive Loss

(Deficit)/Equity

Balance, January 1, 2021, as previously reported

Share based compensation – restatement (see note 1)

Balance, January 1, 2021, as restated

Balance, January 1, 2022

Share based compensation

Issue of Series B shares, net of issuance costs

Series B Shares issued on conversion of convertible notes

Issue of Deferred A shares

Issue of ordinary shares

Initial public offering, net of underwriting discounts

Offering Cost

Conversion of Series A shares

Conversion of Series B shares

Issue of shares to Non-controlling interest

Issue of shares on acquisition of subsidiary

Foreign currency translation adjustments

Measurement period and contingent consideration adjustments

Net income/(loss)

Balance, December 31, 2022

1 Indicates amount less than thousand

1 Indicates amount less than one thousand

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES

AND SHAREHOLDERS’ EQUITY (DEFICIT)

AND SHAREHOLDERS’ EQUITY

(IN THOUSANDS, EXCEPT NUMBER OF SHARES)

Year ended December 31, 2021

Series B Redeemable

Preferred Shares

7 unchanged sentences

Shareholders’

Balance, January 1, 2020, as previously reported

Share based compensation – restatement (see note 1)

Balance, January 1, 2020, as restated

Balance, January 1, 2021

Share based compensation

Issue of ordinary shares

Exercise of stock options

Contribution from non controlling interest

Issue of Series B shares, net of issuance costs

Series B Shares issued on conversion of convertible notes

Issue of Deferred A shares

Issue of ordinary and Deferred C shares

Initial public offering, net of underwriting discounts

Offering Costs

Conversion of Series A shares

Conversion of Series B shares

Issue of shares to Non-controlling interest

Issue of shares on acquisition of subsidiary

Foreign currency translation adjustments

Balance, December 31, 2021

1 Indicates amount less than thousand

1 Indicates amount less than one thousand

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

2 unchanged sentences

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income/ (loss)

Adjustments to reconcile net loss to net cash used in operating activities:

1 unchanged sentence

Depreciation and amortization

ROU asset and liability

Fair valuation gain on embedded derivatives

Non-cash lease expenses

Change in fair value of derivatives embedded in convertible loan notes

Unrealized foreign exchange gain on convertible loan notes

Non-cash gain on foreign currency remeasurement and other non-cash adjustments

Change in contingent consideration

Non cash interest expense

Loss on conversion of convertible loans

Deferred tax benefit

Loss on extinguishment of convertible loan notes

Deferred tax expense

Profit on sale of property and equipment

Changes in operating assets and liabilities:

Accounts receivable

Accounts receivable (including related parties)

Prepaid expenses and other current assets

6 unchanged sentences

Acquisition of subsidiary, net of cash acquired

Proceeds from sale of property and equipment

Purchases of property and equipment

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Issue of shares and exercise of stock options

Issue of shares from the exercise of stock options

Contributions from noncontrolling interest

Transaction costs for convertible loan notes

Repayment of debt

Transaction costs for Series B shares

Proceeds from issue of Series B shares

Proceeds from issuance of common stock

Initial public offering costs

Proceeds from convertible loan notes

Initial public offering cost

Proceeds from initial public offering

Proceeds from issue of ordinary shares

Net cash provided by financing activities

EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS

Net increase in cash and cash equivalents

Net (decrease)/ increase in cash and cash equivalents

Cash and cash equivalents, beginning of the year

13 unchanged sentences

ROU assets obtained in exchange for operating lease liabilities

1 Indicates amount less than thousand

Asset retirement obligation

Changes to right-of-use asset resulting from lease reassessment event

Measurement period adjustments

Contingent Consideration settled in equity

1 Indicates amount less than one thousand

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

4 unchanged sentences

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.

Vaccitech is engaged in the discovery and development of novel immunotherapeutics and vaccines for the treatment and prevention of infectious disease, cancer and immune tolerance.

Vaccitech is headquartered in Harwell, Oxfordshire, United Kingdom.

Vaccitech and its direct and indirect subsidiaries, Vaccitech (UK) Limited, Vaccitech Australia Pty Limited, Vaccitech Oncology Limited (“VOLT”), 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.

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 plc (resulting in the shareholders of the company holding the same percentage and class of shares in Vaccitech plc (formerly Vaccitech Rx Limited) as they had in Vaccitech (UK) Limited (formerly Vaccitech Limited).The group reorganization under common control constituted a change in reporting entity and has been given retrospective effect reflecting the net assets of Vaccitech (UK) Limited and its subsidiaries and Vaccitech plc at their historical carrying amounts.

As a result of the reorganization these consolidated financial statements have been presented for all periods as if Vaccitech plc was the holding company of the group.

In addition, on April 4, 2022, a merger was effected between subsidiary Vaccitech USA, Inc.

and Vaccitech North America, Inc., with Vaccitech North America, Inc.

being the surviving entity.

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.

The Company is subject to risks common to companies in the biopharmaceutical industry in a 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.

If the Company does not successfully commercialize any of its products or mitigate any of these other risks, it will be unable to further 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 accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission for annual financial reporting.

The Company’s reporting currency is the U.S.

1 unchanged sentence

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.

Accordingly, all ordinary share 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.

As of December 31, 2022, the Company had cash and cash equivalents of $ 194.4 million and an accumulated deficit of $ 103.2 million.

Although the Company has recorded net income for the year ended December 31, 2022, the Company expects to incur losses for the foreseeable future.

The Company expects that its cash and cash equivalents will be sufficient to fund current operations for at least the next twelve months from the issuance of the financial statements.

The Company expects to seek additional funding through equity financings, government or private-party grants, debt financings or other capital sources, including collaborations with other companies or other strategic transactions.

The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborations or other arrangements.

The terms of any financing may adversely affect the holdings or rights of the Company’s stockholders.

If the Company is unable to obtain sufficient capital, the Company will be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations.

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

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

1 unchanged sentence

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

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.

Through the years ended December 31, 2022 and 2021, 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 preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue, costs and expenses during the reporting period.

On an ongoing basis, management evaluates its estimates, including those related to revenue, expenses, leases, accruals and prepayments for external manufacturing of clinical trial material as well as clinical study conduct, fair value of contingent consideration, impairment of goodwill and intangible assets, and the fair value of ordinary shares and share-based compensation.

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.

The Company evaluates its estimates and assumptions on an ongoing basis.

The Company’s actual results may differ from these estimates under different assumptions or conditions.

COVID-19 continues to have an impact, both directly and indirectly, on our business and operations, including continuing disruption to our clinical trial activities and pre-clinical development timelines for the Company’s clinical and pre-clinical programs.

Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment.

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 consequently no additional risk or negative impact on the consolidated financial statements.

We have no operations or suppliers based in Turkey, and therefore the Company is not impacted by the potential hyperinflationary environment in that country.

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.

4 unchanged sentences

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.

Intercompany amounts are eliminated on 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.

Comprehensive loss for all periods presented is comprised primarily of net income (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.

The Company’s reporting currency is the United States 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.

Assets and liabilities of each legal entity denominated or measured in a currency other than British Pounds are first translated into British pounds and consolidated.

The consolidated balances are then converted into United States 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.

Translation adjustments are reflected as accumulated other

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

comprehensive loss within shareholders’ equity.

Gains and losses on foreign currency transactions are included in the consolidated statements of operations and comprehensive loss.

The aggregate net foreign exchange gain or loss included in determining net loss was a gain of $ 26.4 million and gain of $ 0.3 million for the years ended December 31, 2022 and 2021, respectively.

Segment information

1 unchanged sentence

The Company views its operations and manages its business in one operating segment, the research and development of immunotherapies and vaccines.

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.

As of December 31, 2021, Vaccitech contributed cash and intellectual property with an aggregate value of $ 11.9 million for a 76 % controlling interest.

The related party contributed cash and intellectual property with an aggregate value of $ 3.8 million for a 24 % noncontrolling interest.

There were no further contributions in the year ended December 31, 2022.

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

10 unchanged sentences

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 terms of these agreements typically contain multiple promises or obligations, which may include licenses, or options to obtain licenses, to product candidates or future product candidates.

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.

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.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

1 unchanged sentence

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.

The Company evaluates the customer options for material rights, or options to acquire additional goods or services for fee 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.

2 unchanged sentences

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.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

This could require management to estimate the amount of revenue to recognize in the period if the actual data for the period has not been provided.

Research and development services

1 unchanged sentence

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.

Reimbursements from the partner are evaluated as to whether the Company acts as a principal or an agent in such relationships.

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.

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.

1 unchanged sentence

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.

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.

3 unchanged sentences

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.

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 statements 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.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concentrations of credit risk

2 unchanged sentences

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’s standard payment terms are 30 days’.

The Company recognizes revenue earned in connection with the license and services provided to customers and grantors.

2 unchanged sentences

Historically, the Company has not experienced any credit losses related to accounts receivable and does not maintain allowances for uncollectible amounts.

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:

2 unchanged sentences

Accounts Receivable

Biomedical Advanced Research and Development Authority (“BARDA”)

Department of Health and Social Care

Oxford University Innovation

Allowance for credit losses

14 unchanged sentences

Lesser of lease term or estimated useful lives

Intangible Assets

Intangible assets consist of developed technology.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible assets acquired through business combinations

Intangible assets consist of acquired developed technology.

Intangible assets are stated at cost less accumulated amortization.

1 unchanged sentence

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.

The Company reviews long-lived assets to be held and used, including property and equipment , intangible assets and operating lease right-of-use assets, 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.

1 unchanged sentence

No such impairments were recorded during the year ended December 31, 2022 and 2021.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

Goodwill is not amortized but rather is tested for impairment at least annually, 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.

3 unchanged sentences

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.

For the years ended December 31, 2022 and 2021, goodwill has been tested and there is no impairments.

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 Company’s financial instruments consist of cash, accounts receivable, 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.

10 unchanged sentences

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.

Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

1 unchanged sentence

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.

There were no transfers within the fair value hierarchy during the years ended December 31, 2022 and 2021.

Leases are accounted for under ASC 842, Leases (“ASC 842”) resulting in the recognition of lease liabilities and right-of-use assets.

3 unchanged sentences

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.

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.

2 unchanged sentences

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.

Right-of-use assets also include the effect of any lease payments made and exclude 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.

2 unchanged sentences

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 are expensed as incurred on an accruals basis.

Research and development costs include payroll and personnel expense (including share-based compensation), consulting costs, external contract research and development expenses, raw materials, drug product manufacturing costs, and allocated overheads 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.

4 unchanged sentences

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.

To the extent that the initial fair

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

values of the freestanding and/or bifurcated derivative instrument exceed the total proceeds received an immediate charge to the consolidated statements 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 statements of operations and comprehensive loss, using the effective interest method.

Embedded derivatives bifurcated are presented along with the host contract on the balance sheets.

Ordinary shares

Ordinary shares are classified in shareholders’ equity and represent issued share capital.

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.

Additional paid-in capital is classified in shareholders’ equity deficit and represents the share premium account, where the difference between the price paid per share and the nominal value is recognized.

The equity element of share based compensation is also recognized in additional paid in capital.

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.

The Company grants options over ordinary shares and restricted shares units to employees or Non-Executive Directors and accounts for share based compensation using the grant date fair value.

Share based compensation awards are classified in the accompanying statements of operations based on the function to which the related services are provided.

For service-based awards, compensation expense is generally recognized over the requisite service period of the awards, usually the vesting period.

2 unchanged sentences

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.

Assumptions used in the option pricing model include the following:

Expected volatility.

The Company lacks sufficient company-specific historical and implied volatility information for its ordinary shares.

Therefore, it estimates its expected share volatility based on the available historical volatility of the Company since IPO, and publicly traded peer companies.

The Company expects to transition to its own volatility when it has adequate historical data of its own traded share price.

Expected term .

The expected term of the Company’s share options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options.

The “simplified” method was determined to be appropriate as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded.

Risk-free interest rate .

The risk-free interest rate is determined by reference to the U.S.

Treasury yield curve in effect at the time of grant of the award for time periods that are approximately equal to the expected term of the award.

Expected dividend.

Expected dividend yield of zero is based on the fact that the Company has never paid cash dividends on ordinary shares and does not expect to pay any cash dividends in the foreseeable future.

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.

When awards are modified, the Company compares the fair value of the affected award measured immediately prior to modification to its value after modification.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The financial statements reflect provisions for income taxes in the United Kingdom and foreign jurisdictions.

10 unchanged sentences

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.

For the years ended December 31, 2022 and 2021, the Company recognized research and development incentives of $ 1.2 million and $ 4.0 million respectively.

For the year ended December 31, 2022, the recognized research and development incentives was restricted by the available tax losses in the UK for the period.

Net income/ (loss) per share

Basic net income/ (loss) per share is computed by dividing the net income/(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 income/ (loss) attributable to ordinary shareholders is computed as if all net income/ (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.

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.

The Company computes diluted net income/ (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 income/ (loss) per share is computed by dividing the net income/ (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

3 unchanged sentences

As of December 31, 2022, 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.

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.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by FASB or other standard setting bodies that the Company adopts as of the specified effective date.

The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected not to “opt out” of the extended transition related to complying with new or revised accounting standards,

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

which means that when a standard is issued or revised and it has different applications dates for public and nonpublic companies, the Company can adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and can do so until such time the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes (“ASU 2019-12”).

The ASU simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes, related to the approach for allocating income tax expense or benefit for the year to continuing operations, discontinued operations, other comprehensive income, and other charges or credits recorded directly to shareholders’ equity;

the methodology for calculating income taxes in an interim period;

and the recognition of deferred tax liabilities for outside basis differences.

On January 1, 2022, the Company adopted ASU 2019-12 on a prospective basis, with no material impact on its consolidated financial statements and related disclosures.

In November 2021, the FASB issued ASU No.

2021-10, Government Assistance (Topic 832) — Disclosures by Business Entities about Government Assistance (“ASU 2021-10”), which increases the transparency of government assistance including the disclosure of the types of assistance, an entity’s accounting for assistance, and the effect of the assistance on an entity’s financial statements.

The adoption of ASU 2021-10 on January 1, 2022 did not have a material impact on the Company’s consolidated financial position, results of operations, cash flows, or disclosures.

Recently Issued Accounting Pronouncements

We have reviewed all recently issued standards and have determined that such standards will not have a material impact on our consolidated financial statements or do not otherwise apply to our current operations.

Business Combination

3 unchanged sentences

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”).

In the fourth quarter of 2022, the Company completed the accounting for the acquisition and recorded measurement period adjustments of $ 0.44 million attributable to working capital that existed as of the acquisition date by adjusting the consideration transferred.

The effect of these measurement period adjustments resulted in a decrease of goodwill by $ 0.42 million and other current assets by $ 0.02 million.

The adjustment to general and administrative expense relating to the income effects that would have been recognized in 2021 if the adjustment to provisional amounts was recognized as of the acquisition date was not material.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes changes in goodwill (in thousands):

Beginning balance

Measurement period adjustments

Ending balance

Pursuant to the terms of the Agreement, the Company acquired Avidea for an up-front amount of $ 32.8 million (after working capital adjustments), of which $ 11.8 million was payable in cash and $ 21.0 million in 2,151,831 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 $ 40.0 million 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:

The following table summarizes the estimated purchase consideration of $ 35.2 million (after measurement period adjustments), which consisted of:

Cash consideration

1 unchanged sentence

Estimated fair value of Contingent Consideration

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:

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 the Company’s ADS on December 10, 2021 adjusted by the return of 11,863 ADSs at $ 3.20 per ADS, the closing price of the Company’s ADS on the date of determination of the working capital shortfall.

The shares were not returned to the Company, but utilized in part, to settle the milestone liability that arose on the signing of the Scancell agreement discussed below.

Contingent Consideration represents additional payments that the Company may be required to make in the future, which totals up to $ 40.0 million of which $ 15.0 million is dependent 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.

$ 25.0 million 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 using a probability weighted model based on the probability of pursuit, the probability of success of the achievement of the milestone, and the expected date of milestone achievement.

The liability for Contingent Consideration is remeasured at each reporting period until the contingency is resolved.

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 following table summarizes changes in the fair value of Contingent Consideration (in thousands):

Beginning balance

Change in fair value recognized in net income/(loss)

Settlement of contingency

Foreign exchange translation recognized in other comprehensive loss

Ending balance

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On November 2, 2022, the Company entered into an agreement with Scancell to out-license the SNAPvax which resulted in additional amount $ 0.3 million becoming payable in connection with the acquisition of Avidea.

The Company settled the liability in February 2023 by issuing a further 28,618 ADSs at $ 2.74 per ADS with the balance of $ 0.1 million paid in cash.

The shares issuable as of December 31, 2022, are included in outstanding shares in the calculation of basic earnings per share beginning on the date the contingency was resolved.

The Company incurred approximately $ 0.9 million 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.

2 unchanged sentences

These estimates were based on assumptions that the Company believes to be reasonable, however, actual results may differ from these estimates.

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:

The allocation of purchase price to the identifiable assets acquired and liabilities assumed was as follows:

Recognized identifiable assets acquired and liabilities assumed (in thousands):

8 unchanged sentences

Estimated total purchase consideration

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 purchase consideration was allocated 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 recognized goodwill is attributable to the assembled workforce of Avidea and the anticipated synergies.

3 unchanged sentences

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.

The fair value of developed technology is amortized over a useful life of 10 years .

For the year ended December 31, 2021, Avidea contributed a net loss from operations of $ 0.3 million.

No revenue was earned during the year ended December 31, 2021, from the acquisition of Avidea.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental Pro Forma Information

3 unchanged sentences

These results do not include any anticipated synergies or other expected benefits of the acquisition.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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):

Foreign Currency Translation in General and Administrative Expenses

The aggregate, net foreign exchange gain or loss included in determining net income/ (loss) recognized in general and administrative expenses for the year ended December 31, 2022, and 2021, was a gain of $ 26.4 million and a gain of $ 0.3 million, respectively.

Net Income/(Loss) Per Share

The following table sets forth the computation of basic and diluted net income/ (loss) per share for the years ended December 31, 2022 and 2021 (in thousands, except number of shares and per share amounts):

Net income/ (loss)

Net loss attributable to noncontrolling interest

Net loss attributable to Vaccitech shareholders

Weighted-average ordinary shares outstanding, basic and diluted

Net loss per share attributable to ordinary shareholders, basic and diluted

Net income/ (loss) attributable to Vaccitech shareholders

Weighted-average ordinary shares outstanding, basic

Effect of dilutive stock options

Weighted-average ordinary shares outstanding, diluted

Net income/ (loss) per share attributable to ordinary shareholders, basic

Net income/ (loss) per share attributable to ordinary shareholders, diluted

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:

Series A shares

Stock options

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and Equipment, Net

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

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

Office furniture and equipment

4 unchanged sentences

Property and equipment, net

Depreciation expense for the year ended December 31, 2021 was $ 420 thousand (December 31, 2020:

$ 208 thousand).

Depreciation expense for the year ended December 31, 2022 was $ 1.1 million (December 31, 2021:

$ 0.4 million).

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.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The gross amount of amortizable intangible assets, consisting of developed technology, was $ 31.6 million as of December 31, 2022 and 2021, respectively, and accumulated amortization was $ 3.3 million and $ 0.2 million as of December 31, 2022 and 2021, respectively.

The amortization expense for the year ended December 31, 2022 was $ 3.2 million (December 31, 2021:

$ 0.2 million).

The estimated annual amortization expense is $ 3.1 million for the years 2023 through to 2031.

Prepaid and other current assets

3 unchanged sentences

Employee retention and payroll tax credit

Lease incentives receivable

Accrued Expenses and Other Current Liabilities

6 unchanged sentences

Accrued other

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

5 unchanged sentences

government acting through BARDA, may terminate, modify or amend our contract, in whole or in part, for nearly any reason or no reason.

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.

Under the contract, BARDA will reimburse the Company up to $ 8.6 million 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.

4 unchanged sentences

During the year ended December 31, 2022, the Company recognized $ 9 thousand (December 31, 2021:

$ 1,651 thousand) in revenue under the BARDA contract and had outstanding payable of $ 18 thousand as of December 31, 2021 (2020:

$ 184 thousand) in revenue under the BARDA contract and had outstanding receivable of $nil as of December 31, 2022 (2021:

$ 18 thousand receivable).

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”).

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 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).

On December 30, 2020, AstraZeneca announced that vaccine based on the ChAdOx1 which we refer to as Vaxzevria 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.

1 unchanged sentence

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).

On March 28, 2022, pursuant to the OUI License Agreement Amendment, we were notified of the commencement of payments, arising from AstraZeneca’s commercial sales of Vaxzevria.

Under the terms of an exclusive worldwide license agreement between OUI and AstraZeneca, we understand OUI is entitled to milestone payments and royalties on commercial sales of Vaxzevria that began after the pandemic period.

As part of the assignment from us to OUI, we are entitled to receive approximately 24 % of payments received by OUI from AstraZeneca.

For the year ended December 31, 2022, we recognized approximately $ 43.7 million as revenue (year ended December 31, 2021:

$nil) and had an outstanding receivable of $ 5.5 million as of December 31, 2022 (2021;

Scancell contract

On November 2, 2022, the Company entered into an agreement with Scancell to grant a research and development license, consisting of upfront and development milestone and royalty payments, for the development and commercialization of the SNAPvax functional intellectual property.

The Company recognized non-refundable upfront revenue, amounting to $ 0.7 million for the year ended December 31, 2022.

As of December 31, 2022, $ 0.3 million was recorded as a receivable.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contract assets and liabilities

4 unchanged sentences

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

Changes in the contract liabilities during the years ended December 31, 2022 and 2021, are as follows (in thousands):

Beginning balance

Revenue recognized related to contract liability balance

Foreign exchange translation

Balance as of December 31, 2021

1 Indicates amount less than thousand

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Ending balance

1 Indicates amount less than one thousand

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 recognized interest expense $ 2.7 million and a change in fair value $ 6.0 million in relation to the conversion and redemption features embedded in the convertible loan notes in the condensed consolidated statements of operations and comprehensive loss for the year ended December 31, 2021.

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.

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 were recognized at the settlement-date fair value of the Series B shares ($ 53.7 million) and a loss of $ 13.8 million 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 ($ 25.6 million) and the bifurcated conversion and redemption feature liability ($ 14.4 million).

The Company valued the cash redemption features based on the difference of the present value of cash flows with and without the redemption features.

5 unchanged sentences

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.

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:

The changes in the fair value of the embedded derivatives in the convertible loan notes were as follows (in thousands):

Beginning balance

4 unchanged sentences

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 15, 2021, the Company issued 28,957 Series B preferred shares (“Series B Shares”) amounting to $ 125.2 million and incurred transaction costs of $ 3.4 million.

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.

1 unchanged sentence

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.

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 $ 102.8 million after deducting underwriting commissions of $ 7.7 million and incurred offering costs of $ 2.2 million.

All ordinary shares rank pari passu as a single class.

7 unchanged sentences

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

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.

However, it is possible for our Articles, or shareholders at a general meeting representing at least 75 % of our ordinary 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.

3 unchanged sentences

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).

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2022, the Company has reserved the following ordinary shares for future issuance:

3 unchanged sentences

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 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 £ 1.0 million ($ 1.4 million) 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.

1 unchanged sentence

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.

Under the terms of the Plan, the Board is permitted to grant awards to employees as restricted share units, options, share appreciation rights and 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”).

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 Compensation Committee of 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.

Option awards generally vest over three years , but vesting conditions can vary at the discretion of the Company’s Board.

As of December 31, 2022 and 2021, 1,670,268 and 2,127,920 ordinary shares are available for future grants, respectively.

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.

1 unchanged sentence

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.

Option awards generally vest over one to three 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.

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:

3 unchanged sentences

Expected dividend yield

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.

Expected volatility

Expected term (years)

Risk-free interest rate

Expected dividend yield

Prior to the IPO, the Company applied a discount for lack of marketability calculated using the Finnerty model.

1 unchanged sentence

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.

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

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

10 unchanged sentences

The Company does not anticipate paying any dividends in the foreseeable future.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of stock option activity is presented below:

1 unchanged sentence

Stock Options

(in thousand)

(in thousands)

Outstanding, January 1, 2022

4 unchanged sentences

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:

The weighted-average grant date per-share fair value of stock options granted during the year ended December 31, 2022 was $ 3.51 per share (December 31, 2021:

$ 10.98 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:

The aggregate intrinsic value of stock options exercised during the year ended December 31, 2022 was $ 0.8 million (December 31, 2021:

$ 1.8 million).

As of December 31, 2022, there was $ 7.1 million (2021:

$ 12.5 million) of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 1.89 years.

No Restricted Stock Units (“RSUs”) were issued or outstanding for the year ended December 31, 2022.

The incremental compensation cost as a result of the anti dilution provision was $ 4.4 million.

Share based compensation expense is classified in the consolidated statements of operations and comprehensive loss as follows (in thousands):

Research and development

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of income tax benefit (expense) are as follows:

Current income tax benefit (expense):

The components of income tax benefit are as follows (in thousands):

Current income tax benefit:

United Kingdom

Deferred income tax benefit (expense)

Deferred income tax benefit:

United Kingdom

Total income tax benefit (expense), current

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:

Total income tax benefit, current

A reconciliation of income tax benefit computed at the UK statutory income tax rate to income tax benefit (expense) as reflected in the consolidated financial statements is as follows:

Statutory tax rate

5 unchanged sentences

Change in valuation allowance

Share based compensation

Effective tax rate

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

Deferred tax assets:

4 unchanged sentences

Lease liability

Accruals and intangibles

Capitalized Research and Development expenditure

Gross deferred tax asset

6 unchanged sentences

Net deferred tax liabilities

Total net deferred tax

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.

Total deferred tax, net

Specified research and experimentation costs under Section 174 of the Internal Revenue Code are required to be capitalized and amortized ratably over five years for domestic expenditures and over 15 years for foreign expenditures.

This provision of Section 174 became effective for tax years beginning after December 31, 2021.

As a result of the capitalization of these costs in the current year, the Company has recorded a $2.5 million deferred tax asset.

As of December 31, 2022, the Company had a valuation allowance of $ 13.7 million (2021:

$ 13.5 million) 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.

2 unchanged sentences

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.

As of December 31, 2022, the Company had NOL carryforwards totaling approximately $ 39.6 million which have an unlimited carryforward period, of which $ 35.1 million originate in the United Kingdom.

As of December 31, 2022, the Company had $ 3.1 million of research and development tax credit carryforwards which also have an unlimited carryforward period.

As of December 31, 2021, the Company had NOL carryforwards totaling approximately $ 40.9 million which have an unlimited carryforward period, of which $ 37.8 million originate in the United Kingdom.

As of December 31, 2021, the Company had $ 3.3 million of research and development tax credit carryforwards which also have an unlimited carryforward period.

As of December 31, 2022 and 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.

1 unchanged sentence

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.

In all other jurisdictions, the tax years since inception remain subject to examination by the applicable taxing authorities as of December 31, 2022 and 2021.

VACCITECH PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

7 unchanged sentences

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.

The Company has not made any material payments under these license agreements during the years ended December 31, 2022, and 2021.

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 Company leased 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 was terminated on July 31, 2022, and the Company relocated its corporate headquarters to The Harwell Science and Innovation Campus, Oxfordshire, in the third quarter of 2022.

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.

The property is the Company’s 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.

The Company has provided the lessor with a refundable security deposit of $ 0.6 million which is included in Other assets.

Germantown, Maryland

On June 14, 2022, the Company entered into a lease agreement for the lease of approximately 19,700 square feet in Germantown, Maryland.

The site will house the Company’s state-of-the-art wet laboratory in the United States of America.

The lease expires on February 28, 2034, with the Company having a single right to extend for an additional five years on the same terms and conditions other than for the base rent.

The Company has a rent-free period up to February 29, 2024 and is entitled to up to $ 3.5 million for leasehold improvements to the premises desired by the Company.

The Company has provided the lessor with a refundable security deposit of $ 0.2 million which is included in Other assets.

VACCITECH PLC

1 unchanged sentence

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:

The Company’s right-of-use assets and lease liabilities are as follows (in thousands):

Right-of-use asset

1 unchanged sentence

Lease liability, noncurrent

Weighted average remaining lease term (years)

Weighted average discount rate

Other information

1 unchanged sentence

Operating cash flows from operating leases

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:

During the year ended December 31, 2022, the Company recorded $ 2.3 million (December 31, 2021:

$ 0.7 million) 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, 2022 were as follows (in thousands):

Maturity of lease liabilities:

2 unchanged sentences

Total lease liability

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.

5 unchanged sentences

Plan) which qualifies under the rules established by HM Revenue & Customs.

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.

Plan are charged to the consolidated statements of operations and comprehensive loss in the year to which they relate.

The Company has 401(k) defined contribution retirement plans in which all its employees located in the United States 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.

Contributions to the plans are charged to the consolidated statements of operations and comprehensive loss in the year to which they relate.

During the year ended December 31, 2022, the Company provided a total of $ 0.5 million (December 31, 2021:

$ 0.2 million) in contribution under both the U.K.

Plan and the 401(k) plans.

2 unchanged sentences

Related Party Transactions

During the year ended December 31, 2021, Company incurred expenses of $ 318 thousand (December 31, 2020:

During the year ended December 31, 2022, the Company incurred expenses of $ 126 thousand (December 31, 2021:

$ 318 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.

The Company also received proceeds of $ 368 thousand from the sale of property plant and equipment and earned a profit of $ 331 thousand for the year ended December 31, 2022.

As of December 31, 2022, the Company owed $ 7 thousand (2021:

$ Nil ) to Oxford Science Enterprises Plc.

$ 32 thousand) to Oxford Science Enterprises plc.

During the year ended December 31, 2022, the Company incurred expenses of $ 361 thousand (December 31, 2021:

1 unchanged sentence

As of December 31, 2022, the Company owed $nil (2021:

$ 300 thousand).

During the year ended December 31, 2022, the Company incurred expenses of $ 430 thousand (December 31, 2021:

$ 208 thousand) for services from Oxford University Innovation Limited which is a wholly owned subsidiary of the Company’s shareholder, the University of Oxford.

$ 379 thousand), and recognized license revenue of $ 43.7 million (December 31, 2021:

$ nil ) from Oxford University Innovation Limited which is a wholly owned subsidiary of the Company’s shareholder, the University of Oxford.

As of December 31, 2022, the Company was owed $ 5.5 million (2021:

$nil) from Oxford University Innovation Limited.

During the year ended December 31, 2022, the Company incurred expenses of $ 1 thousand (December 31, 2021:

$ 80 thousand), to its shareholder, the Oxford University Hospitals, related to clinical study costs.

As of December 31, 2022, the Company owed $ nil (2021:

$ 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.

There were no convertible loan notes outstanding during the year ended December 31, 2022.

During the year ended December 31, 2021, the interest on convertible loan notes issued to Oxford Science Enterprises plc and the University of Oxford, shareholders of the Company, was $ 429 thousand.

There were no convertible loan notes outstanding as of December 2022 and 2021.

There were no Series B shares issued for the year ended December 31, 2022.

On March 15, 2021 Oxford Science Enterprises plc subscribed to 3,468 Series B Shares in an amount of $ 15.0 million.

The Company also recognized a loss of $ 2.1 million 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.

As of December 31, 2022 and 2021, there were no Series B Shares outstanding.

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, 2023.

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.

In the period from January 1, 2023, to February 28, 2023, we raised gross proceeds of $ 1.4 million from the issuance of 506,478 ordinary shares represented by ADSs through “at-the-market” offerings under the sales agreement with Jefferies LLC.

In January and February 2023, the Company granted a total of 1,973,529 share options to employees and directors with a weighted average exercise price of $ 2.53 .

On January 18, 2023, we incorporated Vaccitech Switzerland GmbH, a wholly owned subsidiary of Vaccitech (UK) Limited.

In February 2023, we settled a portion of the technology milestone related to the acquisition of Avidea, through the payment of $ 0.1 million in cash and the issuance of 28,618 ordinary shares.

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

What changed 10-K

Item 9A. Controls and Procedures