What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-12 · 269 added, 159 removed, 600 unchanged (42% of the section changed)

57 unchanged sentences

Three months ended

March 31, 2023

March 31, 2022

Six months ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

License revenue (1)

10 unchanged sentences

Research and development incentives

Total other income/(expense)

Total other (expense) income

(Loss)/profit before income tax

11 unchanged sentences

Comprehensive loss attributable to Vaccitech plc shareholders

1 Includes license revenue from related parties for the three month periods ended March 31, 2023 and 2022, of $ 0.5 million and $ 15.0 million, respectively.

1 Includes license revenue from related parties for the three and six month periods ended June 30, 2023 of $ 0.3 million and $ 0.8 million, respectively and for the three and six month periods ended June 30, 2022 of $ 17.1 million and $ 32.1 million, respectively.

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

3 unchanged sentences

(IN THOUSANDS, EXCEPT NUMBER OF SHARES)

Three months ended March 31, 2023

Three and Six months ended June 30, 2023

Ordinary Shares

7 unchanged sentences

Share based compensation

Issue of ordinary shares

Issue of ordinary shares, net of issuance costs

Foreign currency translation adjustments

2 unchanged sentences

Balance, March 31, 2023

Three months ended March 31, 2022

Share based compensation

Issue of ordinary shares, net of issuance cost

Foreign currency translation adjustments

Balance, June 30, 2023

Three and Six months ended June 30, 2022

Ordinary Shares

10 unchanged sentences

Balance, March 31, 2022

Share based compensation

Issue of ordinary shares, net of issuance cost

Foreign currency translation adjustments

Balance, June 30, 2022

1 Indicates amount less than thousand

3 unchanged sentences

(IN THOUSANDS)

Three months ended

March 31, 2023

March 31, 2022

Six months ended

June 30, 2023

June 30, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income / (loss)

Adjustments to reconcile net income / (loss) to net cash used in operating activities:

Net (loss)/income

Adjustments to reconcile net (loss)/income to net cash used in operating activities:

Share based compensation

1 unchanged sentence

Non-cash lease expenses

Unrealized foreign exchange gain

Non-cash interest expense

Change in contingent consideration

Deferred tax benefit

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

Other non-cash expenses

Changes in operating assets and liabilities:

8 unchanged sentences

Purchases of property and equipment

Investment in subsidiary

Net cash used in investing activities

1 unchanged sentence

Issue of shares from the exercise of stock options

Proceeds from issue of ordinary shares

Proceeds from issue of ordinary shares, net of issuance costs

Payment of contingent consideration

6 unchanged sentences

Supplemental cash flow disclosures:

Cash paid for interest

Cash paid for income taxes

Non-Cash investing and financing activities

Issue of ordinary shares

Capital expenditures included in accounts payable and accrued expenses

ROU assets obtained in exchange for operating lease liabilities

Asset retirement obligation

6 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, cancer and immune tolerance.

Vaccitech is a clinical-stage biopharmaceutical company engaged in the discovery and development of novel T cell immunotherapeutics designed to harness the power of the immune system to treat chronic infectious diseases, cancer and autoimmunity.

Vaccitech is headquartered in Harwell, Oxfordshire, United Kingdom.

18 unchanged sentences

The condensed consolidated balance sheet as of December 31, 2022, was derived from the audited financial statements but does not contain all of the footnote disclosures from the annual financial statements.

As of March 31, 2023, the Company had cash and cash equivalents of $ 191.3 million and an accumulated deficit of $ 121.4 million, the Company expects to incur losses for the foreseeable future.

As of June 30, 2023, the Company had cash and cash equivalents of $173.0 million and an accumulated deficit of $ 145.2 million, and 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 expects to seek additional funding through equity financing, 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.

7 unchanged sentences

Unaudited Condensed Financial Information

The accompanying Condensed Consolidated Balance Sheets as of March 31, 2023, and December 31, 2022, the Condensed Consolidated Statements of Operations and Comprehensive Loss, Condensed Consolidated Statements of Changes in Shareholders’ Equity and the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 are unaudited.

The accompanying Condensed Consolidated Balance Sheets as of June 30, 2023, and December 31, 2022, the Condensed Consolidated Statements of Operations and Comprehensive Loss, Condensed Consolidated Statements of Changes in Shareholders’ Equity and the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 are unaudited.

These unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities Exchange Commission (the “Annual Report”) on March 24, 2023.

In our opinion, the unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of our financial position as of March 31, 2023, our results of operations for the three months ended March 31, 2023, and 2022, and our cash flows for the three months ended March 31, 2023, and 2022.

The results of operations for the three months ended March 31, 2023, are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or any other interim periods.

In our opinion, the unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of our financial position as of June 30, 2023, our results of operations for the three and six months ended June 30, 2023, and 2022, and our cash flows for the six months ended June 30, 2023, and 2022.

The results of operations for the three and six months ended June 30, 2023, are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or any other interim periods.

Summary of Significant Accounting Policies

15 unchanged sentences

Foreign currency translation in General and Administrative Expenses

The aggregate, net foreign exchange gain or loss included in determining net (loss)/income recognized in general and administrative expenses for the three months ended March 31, 2023, was a loss of $ 3.5 million (three months ended March 31, 2022:

$ 5.3 million gain).

The aggregate, net foreign exchange gain or loss included in determining net (loss)/income recognized in general and administrative expenses for the three and six months ended June 30, 2023, was a loss of $ 4.2 million and a loss of $ 7.7 million, respectively.

The aggregate net foreign exchange gain or loss included in determining net income recognized in general and administrative expenses for the three and six months ended June 30, 2022, was a gain of $ 15.2 million and a gain of $ 20.5 million, respectively.

Net (Loss)/Income Per Share

The following table sets forth the computation of basic and diluted net (loss)/income per share for the three months ended March 31, 2023, and 2022 (in thousands, except number of shares):

Three months ended March 31,

The following table sets forth the computation of basic and diluted net (loss)/income per share for the three months and six months ended June 30, 2023, and 2022 (in thousands, except number of shares):

Three months ended June 30,

Six months ended June 30,

Net (loss)/income

6 unchanged sentences

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

For the three month period ended March 31, 2023 and 2022, 4,134,286 and 2,014,204 potential ordinary shares issuable for stock options, respectively, were excluded from the computation of diluted weighted-average shares outstanding because including them would have had an anti-dilutive effect.

For the three and six month period ended June 30, 2023, 5,671,825 and 5,551,286 potential ordinary shares issuable for stock options, respectively, were excluded from the computation of diluted weighted-average shares outstanding because including them would have had an anti-dilutive effect.

For the three and six month period ended June 30, 2022, 3,245,537 and 2,646,562 potential ordinary shares issuable for stock options, respectively, were excluded from the computation of diluted weighted-average shares outstanding because including them would have had an anti-dilutive effect.

Property and equipment, net

During the three months ended March 31, 2023, the Company’s additions to property and equipment, net were $ 4.8 million, which primarily related to an increase in leasehold improvements from the Company’s U.S.

office in Germantown, Maryland (three months ended March 31, 2022:

During the six months ended June 30, 2023, the Company’s additions to property and equipment, net were $ 6.4 million which primarily related to an increase in leasehold improvements from the Company’s U.S.

office in Germantown, Maryland (six months ended June 30, 2022:

$ 6.0 million, related to leasehold improvements of the Company’s corporate headquarters).

Depreciation expense for the three months ended March 31, 2023 was $ 0.4 million (March 31, 2022:

$ 0.2 million).

Intangible assets, net

The gross amount of amortizable intangible assets, consisting of developed technology, was $ 31.6 million and $ 31.6 million as of March 31, 2023 and December 31 2022, respectively, and accumulated amortization was $ 4.1 million and $ 3.3 million as of March 31, 2023 and December 31, 2022, respectively.

The amortization expense for the three months ended March 31, 2023 was $ 0.8 million (three months ended March 31, 2022:

$ 0.8 million).

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

Depreciation expense for the three and six months ended June 30, 2023 was $ 0.5 million and $ 0.9 million, respectively.

(June 30, 2022:

three and six months was $ 0.2 million and $ 0.4 million, respectively).

VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Intangible assets, net

The gross amount of amortizable intangible assets, consisting of developed technology, was $ 31.6 million and $ 31.6 million as of June 30, 2023 and December 31 2022, respectively, and accumulated amortization was $ 4.9 million and $ 3.3 million as of June 30, 2023 and December 31, 2022, respectively.

The amortization expense for the three and six months ended June 30, 2023 was $ 0.8 million and $ 1.6 million, respectively (three and six months ended June 30, 2022:

$ 0.8 million and $ 1.6 million, respectively).

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

Prepaid expenses and other current assets (in thousands):

2 unchanged sentences

Lease incentive receivable

Accrued expenses and other current liabilities

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

Accrued expenses and other current liabilities (in thousands):

Accrued manufacturing and clinical expenses

3 unchanged sentences

Accrued professional fees

Accrued leasehold improvements

Accrued other

1 unchanged sentence

All ordinary shares rank pari passu as a single class.

The following is a summary of the rights and privileges of the holders of ordinary shares as of March 31, 2023:

The following is a summary of the rights and privileges of the holders of ordinary shares as of June 30, 2023:

Liquidation preference:

8 unchanged sentences

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 by passing a special resolution.

Such a disapplication of preemption rights may be for a maximum period of up to five years from the date on which the shareholder resolution was passed.

Such a disapplication of preemption rights may be for a maximum period of up to five years from the date

VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

on which the shareholder resolution was passed.

In either case, this disapplication would need to be renewed by our shareholders upon its expiration ( i.e.

1 unchanged sentence

On April 21, 2021, our shareholders approved the disapplication of preemptive rights for a period of five years from the date of approval by way of a special resolution of our shareholders.

This included the disapplication of preemption rights in relation to the

VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

allotment of our ordinary shares in connection with the IPO.

This included the disapplication of preemption rights in relation to the allotment of our ordinary shares in connection with the IPO.

This disapplication will need to be renewed upon expiration ( i.e.

11 unchanged sentences

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximated their respective fair value due to the short-term nature and maturity of these instruments.

As of March 31, 2023, the Company had a contingent consideration liability of $ 1.7 million related to the acquisition of Avidea Technologies, Inc.

The fair value of the contingent consideration is a Level 3 valuation with the significant unobservable inputs being the probability of success of achievement of the milestone and the expected date of the milestone achievement.

As of June 30, 2023, the Company had a contingent consideration liability of $ 2.1 million related to the acquisition of Avidea Technologies, Inc.

The fair value of the contingent consideration is a Level 3 valuation with the significant unobservable inputs being the probability of success of achievement of the milestones and the expected date of the milestone achievement.

Significant judgment is employed in determining the appropriateness of certain of these inputs.

VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes changes to our financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy (in thousands):

Three months ended

Six months ended

Beginning balance

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

Foreign exchange loss

Change in fair value recognized in net income/(loss) 1

Foreign exchange translation recognized in other comprehensive loss

Ending balance

The Company identified qualitative indicators of impairment in 2022 due to a sustained decline in the price of the Company’s American Depositary Shares, whereby the market capitalization continues to be below the value of the net assets of the Company.

Therefore, the Company performed an interim qualitative assessment as of March 31, 2023 to determine whether it was more likely than not that the fair value of the reporting unit is less than its carrying amount.

Based on this assessment, management determined it

VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

is not more likely than not that the fair value of the reporting unit is less than its carrying amount.

No additional qualitative indicators of impairment were identified during the three month period ended March 31, 2023.

1 During the fourth quarter of 2022, the Company reclassified the change in fair value of Contingent Consideration from Other income and expense to General and Administrative operating expense.

For the three and six month periods ending June 30, 2022, an expense of $ 0.6 million and $ 0.6 million, respectively, has been reclassified to conform the presentation for comparator periods.

The Company identified qualitative indicators of impairment due to a sustained decline in the price of the Company’s American Depositary Shares, whereby the market capitalization continues to be below the value of the net assets of the Company.

Therefore, the Company performed an interim qualitative assessment as of June 30, 2023 to determine whether it was more likely than not that the fair value of the reporting unit is less than its carrying amount.

Based on this assessment, management determined it is not more likely than not that the fair value of the reporting unit is less than its carrying amount.

Share-Based Compensation

During the three month period ended March 31, 2023, in accordance with the terms of the Annual Increase of the Vaccitech plc Share Award Plan 2021 (the “Plan”), 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.

For the three months ended March 31, 2023, the Company granted 1,987,289 options to employees and directors with a weighted average grant date fair value of $ 2.01 and a weighted average exercise price of $ 2.53 per share.

For the three months ended March 31, 2022, the Company granted 1,632,922 options to employees and directors with a weighted average grant date fair value of $ 3.75 and a weighted average exercise price of $ 11.24 per share.

For the three months ended March 31, 2023, the Company canceled 57,970 options to employees and directors for forfeitures on unvested options when leaving the Company (March 31 2022:

During the six month period ended June 30, 2023, in accordance with the terms of the Annual Increase of the Vaccitech plc Share Award Plan 2021 (the “Plan”), 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.

For the six months ended June 30, 2023, the Company granted 2,142,905 options to employees and directors with a weighted average grant date fair value of $ 2.00 and a weighted average exercise price of $ 2.51 per share.

For the six months ended June 30, 2022, the Company granted 1,807,703 options to employees and directors with a weighted average grant date fair value of $ 3.72 and a weighted average exercise price of $ 10.59 per share.

For the six months ended June 30, 2023, the Company canceled 217,860 options to employees and directors for forfeitures on unvested options when leaving the Company (June 30, 2022:

cancelled 22,683 options).

The fair value of each stock option issued to employees was estimated at the date of grant using the Black-Scholes model with the following weighted-average assumptions:

Three months ended

Six months ended

Expected volatility

2 unchanged sentences

Expected dividend yield

As of March 31, 2023, 6,807,859 options with a weighted average exercise price of $ 9.69 were outstanding.

As of March 31, 2023, there was $ 9.0 million unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted average period of 2.1 years.

As of March 31, 2022, 4,814,173 options with a weighted average exercise price of $ 9.52 were outstanding.

As of March 31, 2022, there was $ 14.8 million unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 2.36 years.

As of June 30, 2023, 6,781,099 options with a weighted average exercise price of $ 9.51 were outstanding.

As of June 30, 2023, there was $ 6.5 million unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted average period of 2.0 years.

As of June 30, 2022, 4,944,406 options with a weighted average exercise price of $ 9.37 were outstanding.

As of June 30, 2022, there was $ 11.5 million unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 2.24 years.

VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Research and development

7 unchanged sentences

The Company’s obligations for future payments under these arrangements are dependent on its ability to develop promising drug candidates, the potential market for these candidates and potential competing products, and the payment mechanisms in place in countries where the Company retains the right to sell.

Each agreement provides for

VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

specific milestone payments, typically triggered by achievement of certain testing phases in human candidates, and future royalties ranging from 1 to 5 % for direct sales of a covered product to 3 to 7 % of net payments received for allowable sublicenses of technology developed by the Company.

Each agreement provides for specific milestone payments, typically triggered by achievement of certain testing phases in human candidates, and future royalties ranging from 1 to 5 % for direct sales of a covered product to 3 to 7 % of net payments received for allowable sublicenses of technology developed by the Company.

The obligation to make these payments is contingent upon the Company’s ability to develop candidates for submission for phased testing and approvals, and for the development of markets for the products developed by the Company.

The Company has not made or accrued any material payments under these license agreements during the three months ended March 31, 2023, and March 31, 2022.

The Company has not made or accrued any material payments under these license agreements during the six month periods ended June 30, 2023 and 2022.

The Company leases certain laboratory and office space under operating leases, which are described below.

10 unchanged sentences

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

VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company recorded a right-of-use asset and a lease liability on the effective date of the lease term.

8 unchanged sentences

Operating cash flows operating leases

VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Future annual minimum lease payments under operating leases as of March 31, 2023, were as follows (in thousands):

Future annual minimum lease payments under operating leases as of June 30, 2023, were as follows (in thousands):

Remainder of 2023

3 unchanged sentences

Other contingencies

As of the date of this Quarterly Report on Form 10-Q, we do not believe we are party to any claim or litigation the outcome of which, if determined adversely to us, would individually or in the aggreagate be reasonably expected to have a material adverse effect on our business.

As of the date of this Quarterly Report on Form 10-Q, we do not believe we are party to any claim or litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business.

However, from time to time, we could be subject to various legal proceedings and claims that arise in the ordinary course of our business activities.

Regardless of the outcome, legal proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Related Party Transactions

During the three months ended March 31, 2023, the Company incurred $ Nil expenses from its shareholder, Oxford Science Enterprises plc.

During the three months ended March 31, 2022, the Company recognized net income of $ 55 thousand after offsetting lease costs for laboratory and office space in Oxford of $ 74 thousand, against a refund of $ 129 thousand from its shareholder, Oxford Science Enterprises plc.

During the three months ended March 31, 2023, the Company incurred expenses of $ Nil (three months ended March 31, 2022:

$ 1 thousand) to its shareholder, the University of Oxford, related to clinical study costs.

As of March 31, 2023, the Company owed $ Nil (December 31, 2022:

During the three and six months ended June 30, 2023, the Company incurred expenses of $ Nil and $ Nil respectively from its shareholder, Oxford Science Enterprises plc.

During the three months and six months ended June 30, 2022, the Company paid $ 0.1 million and $ 0.05 million (after offsetting lease costs for laboratory and office space in Oxford of $ 0.07 million against a refund of $ 0.1 million) respectively to its shareholder, Oxford Science Enterprises plc, mostly related to the lease of a laboratory and office space in Oxford.

As of June 30, 2023 the Company received Nil proceeds (December 31, 2022:

the Company received proceeds of $ 0.4 million from the sale of property plant and equipment and earned a profit of $ 0.3 million).

As of June 30, 2023 the Company owed Nil (December 31, 2022:

$ 0.007 million) to Oxford Science Enterprises plc.

During the three and six months ended June 30, 2023, the Company incurred expenses of $ Nil and $ Nil respectively (three and six months ended June 30, 2022:

$ 0.2 million and $ 0.2 million respectively) to its shareholder, the University of Oxford, related to clinical study costs.

As of June 30, 2023, the Company owed $ Nil (December 31, 2022:

$ Nil ) to the University of Oxford.

During the three months ended March 31, 2023, the Company incurred expenses of $ 98 thousand (three months ended March 31, 2022:

$ 193 thousand) and recognized license revenue of $ 0.5 million (three months ended March 31, 2022:

$ 15.0 million) from Oxford University Innovation Limited which is a wholly owned subsidiary of the Company’s shareholder, the University of Oxford.

As of March 31, 2023, the Company was owed $ 0.8 million (December 31, 2022:

During the three and six months ended June 30, 2023, the Company incurred expenses mainly related to the patent portfolio of $ 0.3 million and $ 0.4 million respectively (three and six months ended June 30, 2022:

$ 0.07 and $ 0.3 million, respectively) from Oxford University Innovation Limited which is a wholly owned subsidiary of the Company’s shareholder, the University of Oxford.

As of June 30, 2023, the Company owed $ 0.1 million (December 31, 2022:

$ Nil ) to Oxford University Innovation Limited.

During the three and six months ended June 30, 2023, the company recognized license revenue of $ 0.3 million and $ 0.8 million respectively (three and six months ended June 30, 2022:

$ 17.1 million and $ 32.1 million respectively), from Oxford University Innovation Limited.

As of June 30, 2023, the Company was owed $ 0.3 million (December 31, 2022:

$ 5.5 million) from Oxford University Innovation Limited.

During the three months and six months ended June 30, 2023, the Company incurred expenses of $ Nil and $ Nil , respectively (three months and six months ended June 30, 2022:

$ Nil and $ 0.001 million, respectively) to its shareholder, the Oxford University Hospitals, related to clinical study costs.

As of June 2023, the Company owed $ Nil (December 31, 2022:

$ Nil ) to Oxford University Hospitals.

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

2 unchanged sentences

Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those set forth in our Annual Report on Form 10-K and in other filings with the SEC.

We are a clinical-stage biopharmaceutical company engaged in the discovery and development of novel immunotherapeutics and vaccines for the treatment and prevention of infectious diseases, cancer, and autoimmunity.

We are a clinical-stage biopharmaceutical company engaged in the discovery and development of novel T cell immunotherapeutics designed to harness the power of the immune system to treat chronic infectious diseases, cancer and autoimmunity.

We aim to treat and prevent infectious diseases and cancer by using our proprietary platforms to develop product candidates that stimulate powerful, targeted immune responses against pathogens, infected cells, and tumor cells.

15 unchanged sentences

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 three months ended March 31, 2023, we recognized $0.5 million as revenue (three months ended March 31, 2022:

$15.0 million).

For the three and six months ended June 30, 2023, we recognized $0.3 million and $0.8 million respectively as revenue (three and six months ended June 30, 2022:

$17.1 million and $32.1 million).

There is, however, no guarantee that such payments will continue in the future and, if they do, that we will be notified of such payments in a timely manner.

2 unchanged sentences

We also simultaneously entered into a sales agreement with Jefferies LLC, as sales agent, providing for the offering, issuance and sale by us of up to an aggregate of $75.0 million of our ordinary shares represented by ADSs from time to time in “at-the-market” offerings under the Shelf.

As of March 31, 2023, we have sold 945,835 ordinary shares represented by ADSs under the sales agreement, amounting to net proceeds of $2.5 million.

We have incurred net losses each year since inception through to December 31, 2021.

As of June 30, 2023, we have sold 1,063,683 ordinary shares represented by ADSs under the sales agreement, amounting to net proceeds of $2.7 million.

We incurred net losses each year since inception through to December 31, 2021.

For the year ended December 31, 2022, we generated net income of $5.3 million, primarily as a result of revenues arising from AstraZeneca sales of Vaxzevria and our agreement with OUI.

For the three months ended March 31, 2023, we incurred a net loss of $18.2 million.

As of March 31, 2023, we had an accumulated deficit of $121.4 million and we do not currently expect positive cash flows from operations in the foreseeable future.

For the six months ended June 30, 2023, we incurred a net loss of $42.0 million.

As of June 30, 2023, we had an accumulated deficit of $145.2 million and we do not currently expect positive cash flows from operations in the foreseeable future.

We expect to incur net operating losses for at least the next several years as we advance our product candidates through clinical development, seek regulatory approval, prepare for approval, and in some cases proceed to commercialization of our product candidates, as well as continue our research and development efforts and invest to establish a commercial manufacturing facility, as and when appropriate.

21 unchanged sentences

In some circumstances, such as the emergence of a significantly more effective therapy from a competitor, it may be appropriate to discontinue a product candidate program.

We expect that our cash balance as of March 31, 2023 will enable us to fund our operating expenses and capital requirements into the first quarter of 2025.

We expect that our cash balance as of June 30, 2023 will enable us to fund our operating expenses and capital requirements into the second quarter of 2025.

Recent Developments

An Immunotherapeutic Targeting Chronic HBV Infection

On March 28, 2023, we announced positive topline final data from the HBV002 phase 2 clinical trial.

The completed trial, which included 55 patients with chronic hepatitis B, supported the generally favorable tolerability profile previously reported with VTP-300, with no incidents of VTP-300-related Grade 3 adverse events or product-related serious adverse events, or SAEs, following study dosing.

VTP-300 was observed to induce meaningful, sustained reductions of Hepatitis B surface antigen (HBsAg) in patients with chronic HBV.

Declines were most prominent in patients with lower baseline HbsAg.

The final results of the immunology assays are currently being analyzed and the full data, including tolerability results and immunology pharmacodynamic biomarker readouts, will be presented at the upcoming European Association for the Study of the Liver (EASL) Congress, June 21-24, 2023.

Developing a Non-Invasive Treatment for Persistent High-Risk HPV

On April 20, 2023, our Chief Medical Officer, Dr.

Meg Marshall, presented topline data from the VTP-200 HPV001 phase 1b/2 clinical trial at the 35 th Annual International Papillomavirus Conference (IPVC).

On April 20, 2023, the company presented topline data from the VTP-200 HPV001 phase 1b/2 clinical trial at the 35th Annual International Papillomavirus Conference (IPVC).

The poster showed data for 42 women at Day 35, 7 days after the last dose of VTP-200, split by active treatment versus placebo.

VTP-200 was generally well-tolerated and was administered with no product-related grade 3 unsolicited adverse events and no product-related SAEs.

While the placebo group

showed no antigen-specific T cell responses as measured by IFNg ELISpot, 26 of 29 women receiving varying doses of VTP-200 showed a response.

While the placebo group showed no antigen-specific T cell responses as measured by IFNg ELISpot, 26 of 29 women receiving varying doses of VTP-200 showed a response.

The pooled active groups showed meaningful responses, with the average being greater than 1,000 spot-forming units per million peripheral blood mononuclear cells.

2 unchanged sentences

The final dataset, including data on clearance of infection and cervical lesions at 12 months post-treatment, is expected in the second quarter of 2024.

An Immunotherapeutic Targeting Prostate Cancer

On June 12, 2023, Vaccitech announced the dosing of the first patient in the PCA001 clinical trial (NCT05617040).

PCA001 is a multi-center, Phase 1/2 clinical trial designed to determine the recommended Phase 2 regimen and evaluate the safety, efficacy, as measured by prostate-specific antigen (PSA) response, and T cell response of VTP-850 monotherapy in men with rising PSA after definitive local therapy for their disease (i.e., biochemical recurrence).

VTP-850 is a next-generation prostate cancer immunotherapeutic candidate which utilizes Vaccitech’s sequential dosing approach of two proprietary nonreplicating viral vectors, ChAdOx and MVA.

PCA001 builds on the previous promising data from the University of Oxford VANCE01 (NCT02390063) and ADVANCE (NCT03815942) trials, Phase 1 and Phase 1/2 clinical trials respectively, of VTP-800, the first-generation product candidate which encoded 5T4, an antigen expressed by most prostate cancers.

VTP-850 is a multi-antigen immunotherapeutic candidate containing four prostate-associated antigens:

PSA, PAP, STEAP1 and 5T4.

The first phase of the trial is enrolling participants in the US, with plans to open further sites in Italy and Spain.

An Immunotherapeutic Targeting Chronic HBV Infection

On June 21, 2023, Eleanor Barnes, Professor of Hepatology and Experimental Medicine at Oxford University, presented positive final data from the HBV002 clinical trial at the European Association for the Study of the Liver Congress 2023 – The International Liver Congress TM .

HBV002 (NCT04778904) is a Phase 1b/2a clinical trial of VTP-300 in adults with chronic Hepatitis B (“CHB”).

Meaningful, durable reductions of Hepatitis B Surface Antigen (HBsAg) were seen in all participants with a >0.5 log10 reduction in HBsAg who received VTP-300 alone (Group 2) or in combination with a single administration of low-dose PD-1 inhibitor, nivolumab (Group 3).

Two of five patients with baseline HBsAg below 100 IU/mL in Group 3, developed a non-detectable HBsAg level, which continued eight months after last dose.

Reductions in HBsAg were most prominent in those with lower baseline HBsAg.

Importantly, all participants who received VTP-300 and experienced a >0.5 log10 reduction in HBsAg had durable responses with reductions in HBsAg persisting through to the last measurement eight months post-final dose.

VTP-300, encoding Hepatitis B virus (“HBV”) genotype C antigens, led to a decline in HBsAg in the majority of participants infected with genotypes B and C viruses.

In addition, VTP-300-induced T cells showed cross-reactivity to the core antigen from genotypes A to E in ELISpot assays using PBMC from VTP-300-treated healthy subjects and genotype-specific peptides A-E.

A robust T cell response was generated against all VTP-300 antigens and was highest in the VTP-300 alone group.

In that group, there was a relation between ELISpot responses and HBsAg decline.

HBV002 was an open-label Phase 1b/2 study to evaluate the safety, tolerability and immunology readout (T cell responses) of VTP-300, with or without low-dose nivolumab, in people with CHB who are virally suppressed with oral anti-viral therapies.

In the HBV002 study, 55 participants were randomized into four groups to receive combinations of VTP-300 and low-dose nivolumab, with follow-up for eight months post-final dose.

VTP-300 as monotherapy and in combination with low-dose nivolumab was administered with no treatment-related serious adverse events.

As reported previously, two out of 55 participants experienced transaminase flares.

Both incidents occurred in participants with HBsAg declines, but not in any of the participants who cleared HBsAg (<0.05 IU/mL).

Meaningful, durable reductions of HBsAg were seen in Group 2 (receiving VTP-300 monotherapy, N=18).

Three participants had 0.7, 0.7, and 1.4 log10 declines two months post-final dose, with durable responses continuing eight months post-final dose.

These participants all had baseline HBsAg <50 IU/mL.

A robust T cell response was generated and was highest in this group and there was a relation demonstrated between ELISpot response and HBsAg decline.

Those in Group 3 received VTP-300 followed by a single low dose of nivolumab together with Modified Vaccinia Ankara (“MVA”)-HBV (N=18).

Two months post-final dose, the mean reduction in HBsAg was 0.76 log10 (p<0.001).

This effect persisted with a mean decline of 0.98 log10 at eight months (p<0.001) after the last dose and was most prominent with starting values HBsAg <1,000 IU/mL.

Two participants developed non-detectable HBsAg levels, which continued eight months after last dose.

Pre-genomic RNA levels fell significantly in the majority of participants in this group only, consistent with the decline in HBsAg levels.

Groups 1 and 4

No meaningful reductions in HBsAg were observed in Group 1, in which participants received two doses of MVA-HBV without ChAdOx1-HBV, or in Group 4, in which participants received low-dose nivolumab with both doses of VTP-300.

These groups were discontinued following interim analysis, as previously announced in June 2022.

A Phase 2b clinical trial (HBV003;

NCT05343481) to evaluate timing of the low dose nivolumab, additional doses of the MVA component of VTP-300 and a nucleos(t)ide analogues discontinuation protocol, has been initiated in multiple countries across the Asia-Pacific region, with over 60% of the 120 participants enrolled to date (40 per group).

We are in the process of submitting a protocol amendment to modify the enrollment criteria in the ongoing HBV003 study to only enroll patients with starting HBV surface antigen levels of less than 200 IU/mL, which is the patient population where we have seen the majority of responses to date.

In addition, we intend to exclude patients with pre-existing thyroid antibodies and patients with abnormal Thyroid stimulating hormone levels as we have observed adverse drug reactions in such patients to nivolumab, which have been described in the nivolumab labelling.

Interim data from HBV003 is expected in the fourth quarter of 2023.

In addition, a Phase 2a clinical trial (ACTRN12622000317796), in collaboration with Arbutus Biopharma Corporation, is evaluating the safety, antiviral activity and T cell responses of VTP-300 administered after Arbutus’ AB-729 in 40 virologically-suppressed people with chronic HBV infection, with interim data expected in the fourth quarter of 2023.

Management Team

On April 28, 2023, we announced the that our Chief Operating Office, Chris Ellis has notified the Company that he intends to retire, effective October 31, 2023.

On July 20, 2023, Dr.

Margaret Marshall notified the Company of her intention to retire from her position as Chief Medical Officer, effective immediately.

In connection with her retirement, Dr.

Marshall and the Company will enter into a consulting agreement.

Impact of the Ukraine Crisis

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In March 2022, we were notified by OUI of the commencement of revenue relating to the commercial sales of Vaxzevria.

Our revenue for the three months ending March 31, 2023 was $0.5 million (three months ending March 31, 2022:

$15.0 million), representing the amounts we have been notified of as due by OUI to date and an estimate of future receipts, constrained to the extent that it is probable that a significant reversal of revenue would not occur.

Our revenue for the three and six months ending June 30, 2023 was $0.3 million and $0.8 million, respectively (three and six months ending June 30, 2022:

$17.1 million and $32.1 million, respectively), representing the amounts we have been notified of as due by

OUI to date and an estimate of future receipts, constrained to the extent that it is probable that a significant reversal of revenue would not occur.

We determined that we have no further performance obligations under the terms of the OUI License Agreement Amendment, which comprised the transfer of intellectual property rights only.

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Research and Development Expenses

Since our inception, we have focused significant resources on our research and development activities, including establishing and building on our adenovirus platform, further enhancing our in-licensed ChAdOx1, ChAdOx2 and MVA vectors, developing a new next-generation adenoviral vector, acquiring new technology platforms including SNAPvax, conducting preclinical studies, developing various manufacturing processes, and advancing clinical development of our programs including Phase 2 clinical trials for

VTP-100, which we subsequently discontinued development of, as well as initiating the clinical trials for VTP-200, VTP-300, VTP-600 and VTP-850 and readying VTP-500, VTP-1000 and VTP-1100 for clinical trials.

Research and development activities account for a large portion of our operating expenses, and we expect research and development expenses to increase in the future.

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Other general and administrative expenses include consulting fees and professional service fees for auditing, tax and legal services, rent expenses related to our offices, depreciation, foreign exchange gains and losses on our cash balances and other central non-research costs.

For the three month period ended March 31, 2023, we recognized a change in fair value in relation to the updated assumptions in the assessment of the contingent consideration fair value recognized from the acquisition of Avidea on December 10, 2021.

For the three and six month period ended June 30, 2023, we recognized a change in fair value in relation to the updated assumptions in the assessment of the contingent consideration fair value recognized from the acquisition of Avidea on December 10, 2021.

Significant judgment is used to determine the probability of success of achievement of the technology and clinical milestones and the date of the expected milestone.

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Interest Income

Interest income results primarily from the interest earned on our short-term cash deposits and cash balances held by Vaccitech (UK) Limited in United States dollars.

Interest income results primarily from the interest earned on our short-term cash deposits and cash balances held by Vaccitech (UK) Limited.

Research and Development Incentives

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If such an exception does not apply, this could restrict the amount of payable credit that we claim.

From April 2023 under the SME program the additional deduction will decrease from 130% to 86% and the SME credit rate will reduce from 14.5% to 10%.

From April 2023 under the SME program the additional deduction has decreased from 130% to 86%, the SME credit rate has reduced from 14.5% to 10% and the SME cash rebate for the Company has reduced from 33.35% to 18.6% and from 21.67% to 12.1% for subcontractors.

Unsurrendered UK losses may be carried forward indefinitely to be offset against future taxable profits, subject to numerous utilization criteria and restrictions.

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We use judgment to determine whether milestones or other variable consideration, except for sales-based royalties, should be included in the transaction price.

(ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

For sales-based and clinical development milestones and royalties, when the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of when the related sales or milestone achievement occurs or when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

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.

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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.

We have elected to recognize the effect of forfeitures on share-based compensation when they occur.

We have 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.

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The volatility assumption utilizes both the Company’s historical volatility and those of a portfolio of listed peer companies, weighted towards the Company as we build the historical records following IPO.

The assumptions used in the Black-Scholes model to determine fair value for the share option grants during the three months ended March 31, 2023 and 2022 were:

March 31, 2023

March 31, 2022

The assumptions used in the Black-Scholes model to determine fair value for the share option grants during the six months ended June 30, 2023 and 2022 were:

June 30, 2023

June 30, 2022

Expected volatility

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Expected dividend yield

For the three months ended March 31, 2023, 1,987,289 share options were granted and 1,632,922 share options were granted for the three months ended March 31, 2022.

For the six months ended June 30, 2023, 2,142,905 share options were granted and 1,807,703 share options were granted for the six months ended June 30, 2022.

Business Combinations

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Because there are inherent uncertainties involved in these factors, significant differences between these estimates and actual results could result in future impairment charges and could materially impact our future financial results.

The goodwill of $12.2 million recognized to March 31, 2023 wholly relates to the acquisition of Avidea on December 10, 2021.

During the year ended December 31, 2022, the Company identified qualitative indicators of impairment due to a sustained decline in the price of the Company’s American Depositary Shares, whereby the market capitalization fell below the value of the net assets of the Company, which continued through to the first quarter of 2023.

Therefore, the Company performed an interim assessment as of March 31, 2023 to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

Based off this assessment, the Company has not recognized any impairment losses related to goodwill or intangible assets for the three months ending March 31, 2023.

The goodwill of $12.2 million as of June 30, 2023 wholly relates to the acquisition of Avidea on December 10, 2021.

Therefore, the Company performed an interim assessment as of June 30, 2023 to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

Based off this assessment, the Company has not recognized any impairment losses related to goodwill or intangible assets for the three or six months ending June 30, 2023.

Results of Operations

Comparison of the Three Months Ended March 31, 2023 and 2022

Comparison of the Three Months Ended June 30, 2023 and 2022

The following table sets forth the significant components of our results of operations (in thousands):

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General and administrative

Total operating (income)/expenses

Total operating expenses

(Loss)/income from operations

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Net (loss)/income

For the three months ended March 31, 2023, and 2022, our revenue consisted of $0.5 million and $15.0 million respectively, primarily from the OUI License Agreement Amendment with respect to payments from OUI in connection with commercial sales of Vaxzevria, which reduced due to lower sales in the period.

For the three months ended June 30, 2023, and 2022, our revenue consisted of $0.3 million and $17.1 million respectively, from the OUI License Agreement Amendment with respect to payments from OUI in connection with commercial sales of Vaxzevria, which reduced due to lower sales in the period.

Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended March 31, 2023 and 2022 (in thousands):

The following table summarizes our research and development expenses for the three months ended June 30, 2023 and 2022 (in thousands):

Direct research and development expenses by program:

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VTP-850 Prostate cancer

VTP-1000/VTP-1100 (SNAPvax candidates)

VTP-1000/VTP-1100 Celiac/HPV Cancer

Other and earlier stage programs

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Total research and development expenses

Our research and development expenses for the three months ended March 31, 2023 and 2022 were $9.8 million and $10.7 million, respectively.

Direct expenses for the three months ended March 31, 2023 and 2022 were $5.8 million and $7.6 million, respectively, and consisted of outside services, consultants, laboratory materials, clinical trials, manufacturing of clinical trial materials, as well as costs for external preclinical services and sample testing.

Of the $1.8 million decrease, $2.1 million pertains to VTP-300, as a result of completing the HBV002 Phase 2 clinical trial with topline data announced in March 2023, and continuing enrollment in the HBV003 Phase 2 clinical and the AB-729-202 Phase 2a clinical collaboration with Arbutus.

$1.1 million of the decrease pertains to VTP-850, which progressed to FDA clearance of our IND for PCA001 in December 2022, and is screening patients currently.

These decreases were offset by a $1.5 million increase that pertains to the commencement of VTP-1000 Celiac disease and VTP-1100 HPV cancer programs in the second quarter of 2022.

Internal research and development expenses for the three months ended March 31, 2023 and 2022 were $4.0 million and $3.1 million, respectively.

Our research and development expenses for the three months ended June 30, 2023 and 2022 were $13.5 million and $9.7 million, respectively.

Direct expenses for the three months ended June 30, 2023 and 2022 were $9.6 million and $7.2 million, respectively, and consisted of outside services, consultants, laboratory materials, clinical trials, manufacturing of clinical trial materials, as well as costs for external preclinical services and sample testing.

Of the $2.4 million increase, $3.0 million pertains to the commencement of VTP-1000 Celiac disease and VTP-1100 HPV cancer programs in IND-enabling studies.

VTP-200 increased by $1.0 million due to topline HPV001 Phase 1b/2 clinical trial data that was presented at the 35 th Annual International Papillomavirus Conference in April 2023.

These increases were offset by a $0.8 million decrease in other and earlier stage programs, $0.6 million decrease in VTP-300 and $0.2 million decrease in VTP-850, reflective of the current status in the pipeline.

Internal research and development expenses for the three months ended June 30, 2023 and 2022 were $3.9 million and $2.5 million, respectively.

Of the $1.4 million increase, $1.2 million pertains to personnel-related expenses as a result of the relative increase in headcount across locations in the United Kingdom and United States.

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2023 were $12.1 million mainly attributable to personnel expense of $3.4 million, including share-based payment charge of $1.1 million, foreign exchange loss of $3.5 million, insurance cost of $1.6 million, legal and professional fees of $1.2 million and other expenses of $1.8 million.

General and administrative expenses for the three months ended March 31, 2022 were $3.7 million, which were mainly attributable to personnel expenses of $4.3 million, including the share-based payment charge of $3.1 million, insurance costs of $1.7 million and legal and professional fees of $1.3 million, netted by unrealized foreign exchange gain on cash balances of $5.3 million.

General and administrative expenses for the three months ended June 30, 2023 were $13.1 million mainly attributable to personnel expense of $2.7 million, including share-based payment charge of $1.0 million, foreign exchange loss of $4.2 million, insurance cost of $1.2 million, legal and professional fees of $1.5 million and other expenses of $3.5 million.

General and administrative expenses for the three months ended June 30, 2022 were a gain of $5.9 million.

General and administrative expenses for the three months ended June 30, 2022, excluding foreign exchange were $ 9.3 million, which were mainly attributable to personnel expenses of $4.3 million, including the share-based payment charge of $2.1 million, insurance costs of $1.6 million and legal and professional fees of $1.0 million, $0.6 million contingent consideration adjustment, netted by unrealized foreign exchange gain on cash balances of $15.2 million.

Interest Income

For the three months ended March 31, 2023, interest income was $1.6 million resulting from the interest earned on our short-term cash deposits held by Vaccitech (UK) Limited in United States dollars.

For the three months ended March 31, 2022, interest income was less than $0.1 million.

For the three months ended June 30, 2023 and 2022, interest income was $0.5 million and $0.7 million, respectively, resulting from the interest earned on our short-term cash deposits held by Vaccitech (UK) Limited.

Research and Development Incentives

For the three months ended March 31, 2023 and 2022 research and development incentives were $1.2 million and $1.0 million, respectively.

For the three months ended June 30, 2023 and 2022, research and development incentives were $0.6 million and $0.8 million, respectively.

Such research and development incentives relate to corporation tax relief on research and development projects incentive programs in the United Kingdom.

For the three months ended March 31, 2023 and 2022, the tax benefit was $0.5 million and $0.9 million respectively, which primarily relates to movements in deferred tax.

For the three months ended June 30, 2023 and 2022, the tax benefit was $1.1 million and $0.9 million respectively, which primarily relates to movements in deferred tax.

Comparison of the Six Months Ended June 30, 2023 and 2022

The following table sets forth the significant components of our results of operations (in thousands):

Revenue from Licenses, Grants & Services

Operating expenses:

Research & development

General and administrative

Total operating expenses

(Loss)/income from operations

Other income (expense)

Interest income

Interest expense

Research and development incentives

Total other income

(Loss)/profit before income tax

Net (loss)/income

For the six months ended June 30, 2023, and 2022, our revenue consisted of $0.8 million and $32.1 million respectively, primarily from the OUI License Agreement Amendment with respect to payments from OUI in connection with commercial sales of Vaxzevria, which reduced due to lower sales in the period.

Research and Development Expenses

The following table summarizes our research and development expenses for the six months ended June 30, 2023 and 2022 (in thousands):

Direct research and development expenses by program:

VTP-600 NSCLC

VTP-850 Prostate cancer

VTP-1000/VTP-1100 Celiac/HPV Cancer

Other and earlier stage programs

Total direct research and development expenses

Internal research and development expenses:

Personnel-related (including share-based compensation)

Facility related

Other internal costs

Total internal research and development expenses

Total research and development expenses

Our research and development expenses for the six months ended June 30, 2023 and 2022 were $23.4 million and $20.4 million, respectively.

Direct expenses for the six months ended June 30, 2023 and 2022 were $15.4 million and $14.8 million, respectively, and consisted of outside services, consultants, laboratory materials, clinical trials, manufacturing of clinical trial materials, as well as costs for external preclinical services and sample testing.

Of the $0.6 million increase, $4.6 million pertains to the commencement of VTP-1000 Celiac disease and VTP-1100 HPV cancer programs.

$1.2 million of the increase pertains to VTP-200 due to topline HPV001 phase 1b/2 clinical trial data presented at the 35 th Annual International Papillomavirus Conference in April 2023.

These increases were offset by $2.7 million decrease related to VTP-300, as a result of completing the HBV002 Phase 2 clinical trial with final data that was presented at the European Association for the Study of the Liver (EASL) Congress in June 2023, and continuing enrollment in the HBV003 Phase 2 clinical and the AB-729-202 Phase 2a clinical collaboration with Arbutus, and a $1.3 million decrease that pertains to VTP-850 which progressed to first patient dosed in PCA001, a phase 1/2 clinical, in June 2023.

A further $1.3 million of the decrease relates to reductions in other and earlier stage programs due to a decrease in earlier stage activity following the launch of the preclinical programs for VTP-1000 Celiac disease and VTP-1100 HPV cancer.

Internal research and development expenses for the six months ended June 30, 2023 and 2022 were $7.9 million and $5.6 million, respectively.

Of the $2.3 million increase, $2.1 million pertains to personnel-related expenses as a result of the relative increase in headcount across locations in the United Kingdom and United States.

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2023 were $25.3 million mainly attributable to personnel expense of $6.2 million, including share-based payment charge of $2.1 million, foreign exchange loss of $7.7 million, insurance cost of $2.7 million, legal and professional fees of $2.7 million and other expenses of $6.0 million.

General and administrative expenses for the six months ended June 30, 2022 were a gain of $2.2 million due to the foreign exchange gain of $20.4 million primarily on revaluation of cash balances due to the fluctuations between the United States dollar and pound sterling exchange rates.

General and administrative expenses for the six months ended June 30, 2022, excluding foreign exchange gain, were $18.2 million, which were mainly attributable to personnel expenses of $9.3 million, including the share-based payment charge of $5.2 million, insurance costs of $3.3 million, legal and professional fees of $2.3 million and $0.6 million in changes in fair value assumptions in respect of contingent consideration.

Interest Income

For the six months ended June 30, 2023 and 2022, interest income was $2.1 million and $0.8 million resulting from the interest earned on our short-term cash deposits held by Vaccitech (UK) Limited.

Research and Development Incentives

For the six months ended June 30, 2023 and 2022 research and development incentives were $1.7 million and $1.9 million, respectively.

Such research and development incentives relate to corporation tax relief on research and development projects incentive programs in the United Kingdom.

For the six months ended June 30, 2023 and 2022, the tax benefit was $1.7 million and $1.8 million respectively, which primarily relates to movements in deferred tax.

Liquidity and Capital Resources

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Since our inception, we have funded our operations primarily through private and public placements of our ordinary and preferred shares as well as from grants and research incentives, various agreements with public funding agencies, the issuance of convertible loan notes, and most recently from upfront, royalty and milestone payments from OUI in connection with the OUI License Agreement Amendment.

Through March 31, 2023, we had received gross proceeds of approximately $327.3 million from the issuance of our ordinary and preferred shares and convertible loan notes.

As of March 31, 2023, we had cash and cash equivalents of $191.3 million.

Through June 30, 2023, we had received gross proceeds of approximately $329.0 million from the issuance of our ordinary and preferred shares and convertible loan notes.

As of June 30, 2023, we had cash and cash equivalents of $173.0 million.

Key financing and corporate milestones include the following:

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● In May 2021, we raised gross proceeds of $110.5 million from the initial public offering of our ordinary shares on NASDAQ;

● Between April 2022 and March 2023, we received $43.4 million of cash from OUI for the commercial sales of Vaxzevria;

● Between December 2022 and March 2023, we raised net proceeds of $2.5 million from the issuance of shares represented by ADSs through “at-the-market” offerings under the sales agreement with Jefferies LLC.

● Between April 2022 and June 2023, we received $44.2 million of cash from OUI for the commercial sales of Vaxzevria;

● Between December 2022 and June 2023, we raised net proceeds of $2.7 million from the issuance of shares represented by ADSs through “at-the-market” offerings under the sales agreement with Jefferies LLC.

On August 9, 2022, we filed a Registration Statement on Form S-3, as amended, or the Shelf, with the Securities and Exchange Commission in relation to the registration and potential future issuance of ordinary shares, including ordinary shares represented by ADSs, debt securities, warrants and/or units of any combination thereof in the aggregate amount of up to $200.0 million.

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As of March 31, 2023, we have sold 945,835 ordinary shares represented by ADSs under the sales agreement amounting to net proceeds of $2.5 million.

As of June 30, 2023, we have sold 1,063,683 ordinary shares represented by ADSs under the sales agreement amounting to net proceeds of $2.7 million.

We do not currently expect positive cash flows from operations in the foreseeable future, if at all.

Historically, we have incurred operating losses as a result of ongoing efforts to develop our heterologous ChAdOx1-MVA prime-boost immunotherapy platform and our product candidates, including conducting ongoing research and development, preclinical studies, clinical trials, providing general and administrative support for these operations and developing our intellectual property portfolio.

In most periods, we have incurred operating losses as a result of ongoing efforts to develop our heterologous ChAdOx1-MVA prime-boost immunotherapy platform and our product candidates, including conducting ongoing research and development, preclinical studies, clinical trials, providing general

and administrative support for these operations and developing our intellectual property portfolio.

We expect to continue to incur net negative cash flows from operations for at least the next few years as we progress clinical development, seek regulatory approval, prepare for and, if approved, proceed to manufacture and commercialization of our most advanced product candidates.

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Cash Used in Operating Activities

During the three months ended March 31, 2023, net cash used in operating activities was $3.2 million, primarily resulting from our net loss of $18.2 million adjusted by share based compensation of $2.2 million, depreciation and amortization of $1.2 million, foreign exchange gain of $3.5 million, and changes in our operating assets and liabilities, net of $8.3 million.

During the three months ended March 31, 2022, net cash used in operating activities was $6.6 million, primarily resulting from our net income of $2.6 million, adjusted by share based compensation of $3.9 million, depreciation of $1.0 million and changes in our operating assets and liabilities, net of $13.6 million.

During the six months ended June 30, 2023, net cash used in operating activities was $20.1 million, primarily resulting from our net loss of $42.0 million adjusted by share based compensation of $4.2 million, depreciation and amortization of $2.5 million, non-cash lease expenses of $0.6 million, foreign exchange gain of $7.1 million, contingent consideration adjustment of $0.3 million, deferred tax benefit of $1.7 million and changes in our operating assets and liabilities, net of $8.9 million primarily related to the receipt of lease incentives for Vaccitech NA and OUI receivable.

During the six months ended June 30, 2022, net cash used in operating activities was $15.0 million, primarily resulting from our net income of $18.3 million, adjusted by foreign exchange gain on translation of $18.7 million, share based compensation of $6.7 million, depreciation and amortization of $2.0 million, non-cash lease expenses of $0.5 million, and changes in our operating assets and liabilities, net of $22.6 million primarily resulting from the OUI receivable for the second quarter revenue, and an increase in prepaid expenses due to the payment of annual insurance premiums.

Net Cash Used in Investing Activities

During the three months ended March 31, 2023, cash used in investing activities was $2.5 million primarily resulting from capital expenditures related to leasehold improvements on our new office in Germantown, Maryland, United States.

During the three months ended March 31, 2022, cash used in investing activities was $1.1 million, primarily resulting from capital expenditure related to our corporate headquarters in Harwell, United Kingdom.

During the six months ended June 30, 2023, cash used in investing activities was $5.5 million primarily resulting from capital expenditures related to leasehold improvements on our new office in Germantown, Maryland, United States.

During the six months ended June 30, 2022, cash used in investing activities was $3.1 million primarily resulting from capital expenditures related to our new headquarters in Harwell, United Kingdom.

Net Cash Provided by/(Used in) Financing Activities

During the three months ended March 31, 2023, cash provided by financing activities was $1.7 million mainly as a result of net proceeds from the issuance of ordinary shares through the “at-the-market” sales agreement.

During the three months ended March 31, 2022, cash used in financing activities was $0.2 million from the repayment of debt incurred previously by the acquired company Avidea (acquired on December 10, 2021, and subsequently became Vaccitech North America, Inc.).

During the six months ended June 30, 2023, cash provided by financing activities was $1.7 million mainly as a result of net proceeds from the issuance of ordinary shares through the “at-the-market” sales agreement.

During the six months ended June 30, 2022, cash used in financing activities was $0.2 million resulting from the repayment of debt incurred previously by the acquired company Avidea (acquired on December 10, 2021, and subsequently became Vaccitech North America, Inc.).

Effect of exchange rates on cash and cash equivalents

During the three months ended March 31, 2023 and 2022, the effect of foreign exchange on cash and cash equivalents was gain of $1.0 million and loss of $5.6 million respectively, primarily as a result of fluctuations between the United States dollar and pound sterling exchange rates.

During the six months ended June 30, 2023 and 2022, the effect of foreign exchange on cash and cash equivalents was gain of $2.6 million and loss of $3.5 million respectively, primarily as a result of fluctuations between the United States dollar and pound sterling exchange rates.

Future Funding Requirements

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As a result, we have incurred losses in each year since our inception in 2016, through to December 31, 2021.

We were profitable in 2022, however we have negative operating cash flows as March 31, 2023.

As of March 31, 2023, we had an accumulated deficit of $121.4 million.

We were profitable in 2022, however we have negative operating cash flows as of June 30, 2023.

As of June 30, 2023, we had an accumulated deficit of $145.2 million.

We expect to continue to incur significant losses and negative cash flows from operations for the foreseeable future.

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In addition, other unanticipated costs may arise as outlined above.

Because the outcome of any preclinical study or clinical trial is uncertain and the rate of change of third-party costs is also unpredictable, we cannot reasonably estimate now the actual amounts which will be necessary to complete the development and commercialization of our current or future product candidates successfully.

Because the outcome of any preclinical study or clinical trial is uncertain and the rate of change of third-party costs is also

unpredictable, we cannot reasonably estimate now the actual amounts which will be necessary to complete the development and commercialization of our current or future product candidates successfully.

Our future capital requirements may depend on many factors, including:

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Unless and until we can generate a substantial amount of revenue from our product candidates, we expect to finance our future cash needs through public or private equity offerings, debt financings, collaborations, licensing arrangements or other sources, or any combination of the foregoing.

Based on our research and development plans, we expect that our existing cash and cash equivalents, will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2025.

These estimates are based on assumptions that may prove to be wrong, and we could use our available capital resources more quickly than we expect.

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We have contingent payment obligations that we may incur upon achievement of clinical, regulatory and commercial milestones, as applicable, or royalty payments that we may be required to make under our licenses;

however, the amount, timing and likelihood of such payments are not known as of March 31, 2023.

however, the amount, timing and likelihood of such payments are not known as of June 30, 2023.

Emerging Growth Company Status

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

What changed 10-Q

Item 1. Financial Statements