Immunocore Holdings plc 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes thereto appearing elsewhere in this Annual Report. Historically, we qualified as a foreign private issuer (as defined in Rule 405 of Regulation C under the Securities Act and Rule 3b-4 under the Exchange Act) and prepared our financial statements in accordance with IFRS. Effective January 1, 2024, we no longer qualified as a foreign private issuer. Therefore, we have now become a domestic filer and are required under current SEC rules to prepare our financial statements in accordance with U.S. GAAP, as opposed to IFRS. The following discussion is based on our financial information prepared in accordance with U.S. GAAP and regulations of the SEC. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the section titled “Risk Factors” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis, as well as the section titled “Special Note Regarding Forward-Looking Statements.” We have historically conducted our business through Immunocore Limited, and therefore our historical consolidated financial statements presented the consolidated results of operations of Immunocore Limited. Following the completion of our initial public offering in February 2021, our consolidated financial statements present the consolidated results of operations of Immunocore Holdings plc. Effective January 1, 2024, we transitioned from IFRS to U.S. GAAP. The accompanying MD&A, including all periods presented, have been prepared under U.S. GAAP. Overview We are a commercial stage biotechnology company pioneering the development of a novel class of TCR bispecific immunotherapies called ImmTAX – Immune mobilizing monoclonal TCRs Against X disease – designed to treat a broad range of diseases, including cancer, infectious and autoimmune diseases. Leveraging our proprietary, flexible, off-the-shelf ImmTAX platform, we are developing a deep pipeline in multiple therapeutic areas, including five clinical stage programs in oncology and infectious disease, advanced pre-clinical programs in autoimmune disease and earlier pre-clinical programs across three therapeutic areas. In 2022, we received approval for our lead product, KIMMTRAK, for the treatment of unresectable metastatic uveal melanoma from the FDA, the European Commission, and other health authorities. KIMMTRAK is now approved in 38 countries for the treatment of unresectable or mUM. In 2023, we launched KIMMTRAK in Austria, Israel, Italy, Finland, Switzerland and Belgium, and, reached price agreements with Canada and Australia with further commercial launches underway in additional territories. We plan to launch KIMMTRAK in additional countries, if approved in those countries, in 2024. 103 Table of Contents KIMMTRAK is the lead product from our ImmTAX platform and was the first approved new therapy in mUM in four decades. To date, we have treated over 2,000 cancer patients with KIMMTRAK, tebentafusp, and our other ImmTAX product candidates, which we believe is the largest clinical data set of any T cell engager bispecific in solid tumors and any TCR therapeutic. Our clinical programs are being conducted with patients with a broad range of cancers including melanoma, ovarian, endometrial, and colorectal, among others. We believe that these tumor types have large addressable patient populations and significant unmet need. We are progressing two late-stage clinical programs within our ImmTAC ( I mmune m obilizing m onoclonal T CRs A gainst C ancer) portfolio, including KIMMTRAK and the PRAME-targeted IMC-F106C. Since our inception, we have focused on organizing and staffing our company, raising capital and performing research and development activities to advance our research, development and technology, and commercializing KIMMTRAK. While we have successfully generated revenue from KIMMTRAK, which is our first marketed product, our ability to generate higher levels of product revenue from other marketed products, which may never be fully developed or commercialized, depends on the successful development and regulatory approval of one or more of our product candidates and our ability to finance operations. Since inception, through to December 31, 2023, we have raised an aggregate of $1,275 million through our initial public offering where we listed our ADSs on the Nasdaq Global Select Market in February 2021, private placements of our ordinary and preferred shares, debt financings, and historical payments from our collaboration partners. These funds have been and are being used to fund operations and invest in activities for technology creation, drug discovery and clinical development programs, infrastructure, creation of portfolio of intellectual property and commercial and administrative support. We have incurred significant operating losses and expect to continue to incur significant expenses and operating losses for the near future. These net losses were $55.3 million, $52.5 million and $180.0 million, for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, our accumulated deficit was $744.7 million. We expect to continue to incur significant and increasing expenses and to incur operating losses for the foreseeable future, as we advance our product candidates through preclinical and clinical development and seek regulatory approvals, manufacture drug product and drug supply, maintain and expand our intellectual property portfolio, as well as hire additional personnel, pay for further accounting, audit, legal, regulatory and consulting services, and pay costs associated with maintaining compliance with Nasdaq listing rules and the requirements of the U.S. Securities and Exchange Commission, or SEC, director and officer liability insurance, investor and public relations activities and other expenses associated with operating as a public company. We do not expect to generate revenue from the sale of our other product candidates unless and until we successfully complete clinical development of and obtain regulatory approval for such product candidates. As a result, we may need additional funding to support our continued operations and pursue our clinical development and growth strategy. Until we can generate sufficient revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings, debt financings, government funding arrangements, collaborations and marketing, distribution and licensing arrangements. We may be unable to raise additional funds or enter into such other arrangements on favorable terms, or at all, particularly in light of recently worsening macroeconomic conditions, such as supply chain disruptions, rising interest rates and volatility in the capital markets. If we fail to raise capital or enter into such arrangements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our programs. Because of the numerous risks and uncertainties associated with pharmaceutical development, we are unable to predict the timing or amount of future revenues, increased expenses or when or if we will be able to achieve or maintain profitability. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and may be forced to reduce our operations. Recent Developments In February 2024, we entered into a clinical trial collaboration and supply agreement with BMS to investigate our ImmTAC bispecific TCR candidate targeting PRAME HLA-A02, IMC-F106C, in combination with BMS’s nivolumab, in first-line advanced cutaneous melanoma. Under the terms of the collaboration, we will sponsor and fund the registrational Phase 3 clinical trial of IMC-F106C in combination with nivolumab in first-line advanced cutaneous melanoma (PRISM-MEL-301), and BMS will provide nivolumab. On February 2, 2024, we completed a private offering of $402.5 million aggregate principal amount of 2.50% Convertible Senior Notes due 2030, or the Notes. Our net proceeds from the offering of the Notes were $389.3 million, after deducting the initial purchasers’ discounts and commissions and offering expenses. 104 Table of Contents In January 2024, we announced our strategic priorities and pipeline expansion for 2024 ahead of the J.P. Morgan Healthcare Conference, including, the expansion of our platform into autoimmune with two potential first in class new bispecific candidates entering the pipeline. The key differentiator of the ImmTAAI platform is tissue-specific down modulation of the immune system. When tethered to the tissue of interest, the new candidates supress pathogenic T cells via PD1 receptor agonism. The first candidate, IMC-S118AI (PPIxPD1), is targeted specifically to the pancreatic beta-cell and is intended for the treatment of type 1 diabetes. IMC-S118AI recognizes a peptide from pre-proinsulin presented by HLA-A201 on beta-cells. The second unnamed target is present in the skin and intended to treat inflammatory dermatological diseases. The candidate is an antigen presenting cell (APC) tethered ImmTAAI and is not HLA restricted (e.g. universal for all populations). Components of Results of Operations Revenue Product revenue, Net Product revenue, net, relates to the sale of KIMMTRAK following marketing approval. We recognize product revenue at the point in time that control transfers to a customer, which is typically on delivery to our distributors and healthcare providers. We also operate under consignment arrangements where control passes when our distributors take KIMMTRAK out of consignment inventory. The amount of revenue recognized reflects the consideration to which we expect to be entitled, net of estimated deductions for rebates, chargebacks, other customer fees and product returns. These estimates consider contractual and statutory requirements, the expected payor and patient mix, sell-through data, our customers’ inventory levels, anticipated demand and the volume of customer purchase orders, internal data, and other information provided by our customers and third-party logistics providers, and, in certain countries including France, pricing negotiations. Further information on estimates is provided under the section below headed, “ Critical Accounting Estimates ”. Pre-Product Revenue, Net Pre-product revenue, net, related to the sale of tebentafusp under a compassionate use and an early access program up to September 2022. These programs provided patients with access to tebentafusp prior to KIMMTRAK becoming available as a marketed product in France. Pre-product revenue is recognized on delivery of tebentafusp to healthcare providers, which is the point in time when control is transferred. Such revenue is recognized net and represents the prices set by us that are expected to be retained after estimated deductions for product returns and government rebates, which are dependent on the outcome of French legislative processes and price negotiations, which remain ongoing. In September 2022, we began selling KIMMTRAK as a commercial product in France, and these sales are reflected in Product revenue, net. Collaboration Revenue Collaboration revenue arose under our collaboration agreements with Genentech, GSK and Lilly. Following the termination of our collaboration agreements with GSK and Lilly our only revenue collaboration as of December 31, 2023, was with Genentech. However, in February 2023, we and Genentech agreed to wind down the co-funding arrangements and clinical trial for IMC-C103C. We could be eligible to receive development and commercial milestone payments and royalties from Genentech on any sales of MAGE-A4 HLA-A02 targeted products arising under the Genentech collaboration. For more information, please see “Item 1. Business—Our Collaborations and License Agreements—Genentech Collaboration.” Collaboration revenue consisted of non-refundable upfront payments, development milestones as well as reimbursement of research and development expenses. Upfront payments and development milestones were initially recorded on our Consolidated Balance Sheets as deferred revenue and subsequently recognized as revenue as the underlying programs progressed through research and development using an estimate of the percentage completion of each program in accordance with our revenue recognition policy as described further in the notes to the consolidated financial statements. Operating Expenses Cost of Product Revenue Cost of product revenue represents production costs including raw materials, external manufacturing costs, and other costs incurred in bringing inventories to their location and condition prior to sale. Overheads and internal costs of product revenue are minimal under our manufacturing arrangements. Due to the low costs involved in manufacturing KIMMTRAK, cost of product revenue is currently not material, and while these costs are expected to increase in future periods as inflationary pressures increase, we do not expect such costs to be material for the foreseeable future. Cost of product revenue may also include costs related to excess or obsolete inventory adjustment charges. 105 Table of Contents Research and Development Expenses Research and development, or R&D expenses consist primarily of costs incurred for current or planned investigations undertaken with the prospect of gaining new scientific or technical knowledge and understanding and consist primarily of personnel-related costs, including salaries and share-based compensation expense for the various R&D departments, costs associated with clinical trial activities undertaken by contract research organizations, or CROs, and external manufacturing costs associated with R&D undertaken by contract manufacturing organizations, or CMOs, R&D laboratory consumables, internal clinical trial expenses, payments for purchased rights and milestones in connection with third-party In-process R&D, or IPRD, agreements, costs associated with maintaining laboratory equipment, costs associated with our R&D facilities, including a reasonable allocation of overhead costs, and reductions from expenses for R&D tax credits. R&D expenses are expensed as incurred, although the timing of expense recognition can vary with contractual and payment terms in order to determine when services are received. R&D expenses incurred with external organizations to undertake R&D activities on our behalf typically relate to clinical programs and are assigned to the individual programs in tables further below. However, for certain pre-clinical programs and other research spend incurred externally, such spend is not assigned to individual programs. Internal R&D expenses primarily relate to personnel-related costs, facilities, and R&D laboratory consumables and due to the cross functional expertise of our people it is not possible to provide a breakdown of internal costs by program. We expect our R&D expenses to increase in the future as we advance existing and future product candidates into and through clinical studies and pursue further regulatory approval. The process of conducting the necessary clinical studies to obtain regulatory approval is costly and time-consuming. We maintain our headcount at a level required to support our continued research activities and development of our product candidates. Clinical trials generally become larger and more costly to conduct as they advance into later stages. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our product candidates due to the inherently unpredictable nature of preclinical and clinical development. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of any product candidates that we develop from our programs. As a result, our R&D expenses may vary substantially from period to period based on the timing of our R&D activities. Research and Development Tax Credits As a company that carries out extensive R&D activities, we benefit from the U.K. R&D tax regime. Historically, we benefited from the Small and Medium-sized Enterprise, or SME, R&D tax relief program, and for certain specific categories of expenditure, the Research and Development Expenditure Credit program, or RDEC Program. As noted below, for the period ended December 31, 2023 we are only eligible for the RDEC Program. R&D tax credits are presented as a reduction to R&D expenses. While the SME Program has been particularly beneficial to us, as under such program the trading losses that arise from our qualifying R&D activities can be surrendered for a cash rebate of up to 33.35% of qualifying expenditure incurred prior to April 1, 2023, and up to 18.6% of qualifying expenditure incurred thereafter. We exceeded the size limit thresholds to qualify as a “small or medium-sized enterprise” as defined for the purposes of the SME Program, or SME, in 2023, and may therefore, unless we once again fall within such thresholds, cease to be eligible to claim U.K. R&D tax credits under the SME Program with effect from 2023. Under the RDEC Program, tax credits for qualifying R&D expenditure incurred prior to April 1, 2023 are granted at a headline rate of 13% and can generate cash rebates of up to 10.5% of qualifying R&D expenditure. The headline rate of RDEC increased to 20% on April 1, 2023 and can generate cash rebates of up to 15% on qualifying R&D expenditure incurred from this date. Amendments to the U.K. R&D tax credit regime that are contained in the Finance Bill currently proceeding through the U.K. Parliament will (if enacted) with effect from April 1, 2024 (i) (unless limited exceptions apply) introduce restrictions on the tax relief that can be claimed for expenditure incurred on sub-contracted R&D activities or externally provided workers, where such sub-contracted activities are not carried out in the U.K. or such workers are not subject to U.K. payroll taxes, and (ii) merge the SME Program and the RDEC Program into a single scheme. Selling, General and Administrative Expenses Selling, general and administrative, or SG&A, expenses consist primarily of personnel-related costs, including salaries and share-based compensation expense, for selling, corporate and other administrative and operational functions including finance, legal, human resources, commercial related expenses, information technology, as well as a proportion of facility-related costs. 106 Table of Contents Following our commercialization of KIMMTRAK and our substantial increase in planned R&D expenses, as explained above, we also expect that our SG&A expenses will increase. We expect that we will incur increased selling, distribution, commercial, accounting, audit, legal, regulatory, compliance, director, and officer insurance costs as well as investor and further public relations expenses associated with being a public company operating in multiple territories and now being a domestic filer. We anticipate that the additional costs for these services will substantially increase our SG&A expenses. Additionally, if and as we receive further regulatory approvals of product candidates, we anticipate an increase in payroll and expenses in connection with our commercial operations. We have experienced, and may continue to experience, increased personnel costs attributable to offering and maintaining competitive salaries and other impacts due to rising global inflation. Interest Income Interest income arises on cash balances and short-term money market funds. Our interest income may fluctuate depending on the movement of interest rates and our total amount of cash and cash equivalents. Interest Expense Interest expense represents costs under our loan agreements under the effective interest method. Foreign Currency (Losses) Gains These (losses) gains arise on a variety of items, including on U.S. dollar monetary assets and liabilities held by our main operating subsidiary in the U.K., including our cash balances. Our foreign currency (losses) gains can vary significantly between periods as a result of volatility in foreign exchange rates. Other Expense, Net Other expense, net arises primarily on loan costs and other items. Income Tax Credit (Expense) We are subject to corporate taxation in the United Kingdom. Our wholly owned U.S. subsidiaries, Immunocore LLC and Immunocore Commercial LLC, are subject to corporate taxation in the United States. Our wholly owned Irish subsidiary is subject to corporate taxation in Ireland. Our wholly owned Swiss subsidiary is subject to corporate taxation in Switzerland. Due to the nature of our business and on a consolidated basis, we have generated losses since inception. Our income tax credit (expense) represents the sum of income taxes payable in the United States, Ireland and Switzerland, offset by deferred tax credits arising on deferred tax assets generated. Un-surrendered tax losses are carried forward to be offset against future taxable profits. After accounting for tax credits receivable, there were accumulated tax losses available for carry forward in the United Kingdom of $286 million as of December 31, 2023. A full valuation allowance is recognized in respect of accumulated tax losses and other temporary differences in the United Kingdom, because future profits are not sufficiently certain. A deferred tax asset is however, recognized in respect of our subsidiary in the United States, relating to unused tax credits on share based payments and other temporary differences since we expect to continue generating U.S. taxable income against which deductible temporary differences can unwind. As we begin to generate significant net product revenue, we may benefit from the U.K.’s “patent box,” which allows profits attributable to revenues from patents or patented products to be taxed at a lower rate than other revenue. The rate of tax for relevant streams of revenue for companies receiving this relief will be 10%. Comparison of the Years ended December 31, 2023 and 2022 Revenue The following table summarizes our total revenue (in thousands): Year ended December 31, 2023 2022 Increase / (decrease) % Increase / (decrease) Product revenue, net $ 238,735 $ 130,013 $ 108,722 84% Pre-product revenue, net — 10,674 (10,674 ) (100)% Total revenue from sale of therapies 238,735 140,687 98,048 70% Collaboration revenue Eli Lilly — 9,205 (9,205 ) (100)% Genentech 10,693 24,469 (13,776 ) (56)% Total collaboration revenue 10,693 33,674 (22,981 ) (68)% Total revenue $ 249,428 $ 174,361 $ 75,067 43% 107 Table of Contents Revenue from the sale of therapies Net product revenue from the sale of KIMMTRAK, and net pre-product revenue from the sale of tebentafusp as part of an early access program presented by country / region based on location of the end customer below (in thousands). Year ended December 31, 2023 2022 Increase / (decrease) % Increase / (decrease) United States $ 169,791 $ 96,893 $ 72,898 75% Europe 67,628 42,745 24,883 58% International 1,316 1,049 267 25% Total revenue from sale of therapies $ 238,735 $ 140,687 $ 98,048 70% For the year ended December 31, 2023, we generated total revenue from the sale of therapies of $238.7 million due to the sale of KIMMTRAK, of which $169.8 million was in the United States, $67.6 million in Europe and $1.3 million in International. Total revenue from the sale of therapies increased in the year ended December 31, 2023 as compared to December 31, 2022, due primarily to increased volume in the United States and global country expansion, as we continued our commercialization efforts. Collaboration revenue Revenue from collaboration agreements decreased by $23.0 million to $10.7 million in the year ended December 31, 2023, compared to $33.7 million for the year ended December 31, 2022. This decrease was due to (i) the termination of our collaboration with Eli Lilly in 2022; and (ii) our February 2023 agreement with Genentech under the terms of our Genentech Collaboration, our only remaining revenue collaboration, to close the Phase 1 clinical trial and for the parties to fulfill the remaining obligations in relation to the trial. R&D Expenses The following table summarizes our R&D expenses (in thousands): Year ended December 31, 2023 2022 Increase / (decrease) % Increase / (decrease) External R&D expenses: Tebentafusp programs $ 16,024 $ 17,777 $ (1,753 ) (10)% PRAME programs 54,761 17,901 36,860 206% Infectious disease programs 5,111 5,781 (670 ) (12)% All other external clinical and pre-clinical costs 23,215 19,713 3,502 18% Total external R&D expenses 99,111 61,172 37,939 62% Internal R&D expenses: Salaries and other employee-related costs 38,182 29,557 8,625 29% Share-based compensation expense 6,467 5,311 1,156 22% All other internal R&D costs 26,074 21,487 4,587 21% UK R&D tax credits (6,289 ) (15,606 ) 9,317 (60)% Total internal R&D expenses 64,434 40,749 23,685 58% Total R&D expenses $ 163,545 $ 101,921 $ 61,624 60% For the year ended December 31, 2023, our R&D expenses were $163.5 million, as compared to $101.9 million for the year ended December 31, 2022. 108 Table of Contents For the year ended December 31, 2023, our external R&D expenses increased by $37.9 million. This was driven by an increase of $36.9 million in expenses incurred for our PRAME programs due to a higher level of clinical trial activity and an increase of $3.5 million in expenses incurred for our other clinical and pre-clinical programs. These increases were partially offset by a reduction in spend of $1.8 million incurred for our tebentafusp programs due to a reduction in development costs following approval of KIMMTRAK in the United States and Europe in the first half of 2022. For the year ended December 31, 2023, our internal R&D expenses increased by $23.7 million. This was primarily due to an increase of $8.6 million in headcount-related expenses as our number of employees and associated staff costs increased with the growth of our clinical and pre-clinical programs, and an increase of $4.6 million related to higher consumables and facilities costs. Our R&D tax credit decreased by $9.3 million in 2023 primarily due to us no longer qualifying as a SME under the UK R&D tax regulations. We expect our R&D expenses to increase in future periods as we advance our trials and further develop our clinical and preclinical pipeline. SG&A Expenses For the year ended December 31, 2023, our SG&A expenses were $144.5 million, compared to $123.1 million for the year ended December 31, 2022, an increase of $21.4 million. The SG&A expenses for years ended December 31, 2023, and 2022, comprised the following (in thousands): Year ended December 31, 2023 2022 Increase / (decrease) % Increase / (decrease) Share-based compensation expense $ 26,002 $ 27,577 $ (1,575 ) (6)% Salaries and other employee-related costs 36,202 24,873 11,329 46% Selling and commercial costs 52,436 44,911 7,525 17% Other administrative expenses 29,855 25,698 4,157 16% Total SG&A expenses $ 144,495 $ 123,059 $ 21,436 17% Salaries and other employee related costs increased by $11.3 million during the year ended December 31, 2023, due to an increase in the number of employees engaged in commercial and administrative activities. Selling and commercial costs increased by $7.5 million reflecting higher costs of commercializing and distributing KIMMTRAK following approval in the United States, Europe and other territories in the year ended December 31, 2022. In addition, other administrative expenses increased by $4.2 million in the year ended December 31, 2023, due to higher costs associated with expansion as a growing publicly listed and commercial company. Interest Income and Interest Expense For the year ended December 31, 2023, interest income was $18.0 million compared to $3.8 million for the year ended December 31, 2022. This increase of $14.2 million reflects higher levels of cash and cash equivalents held in 2023 relative to 2022 and increases in interest rates earned on our cash deposits. For the year ended December 31, 2023, interest expense was $5.2 million compared to $5.4 million for the year ended December 31, 2022 which represents interest related to our $50.0 million loan facilities with Pharmakon and Oxford Finance, respectively. Foreign Currency (Loss) Gain For the year ended December 31, 2023, foreign currency loss was $13.2 million compared to a gain of $14.2 million for the year ended December 31, 2022. This change of $27.4 million mainly reflects the impact of the depreciation of the U.S. dollar against the pound sterling in 2023 on the high levels of cash and cash equivalents held in U.S. dollars by our main operating subsidiary in the U.K., as compared to 2022 when the U.S. dollar appreciated against the pound sterling. Income Tax Credit (Expense) For the year ended December 31, 2023, the income tax credit amounted to $5.6 million compared to expense of $11.7 million for the year ended December 31, 2022. This change of $17.3 million relates to the limitation imposed on refundable U.K. SME R&D tax credits generated in 2022, which is presented as a tax charge, and a decrease in the valuation allowance against the deferred tax asset arising on US share based compensation. 109 Table of Contents Comparison of the Years ended December 31, 2022 and 2021 Revenue The following table summarizes our total revenue (in thousands): Year ended December 31, 2022 2021 Increase / (decrease) % Increase / (decrease) Product revenue $ 130,013 $ — $ 130,013 100% Pre-product revenue 10,674 4,078 6,596 162% Total revenue from sale of therapies 140,687 4,078 136,609 3,350% Collaboration revenue GSK — 8,385 (8,385 ) (100)% Eli Lilly 9,205 — 9,205 100% Genentech 24,469 24,021 448 2% Total collaboration revenue 33,674 32,406 1,268 4% Total revenue $ 174,361 $ 36,484 $ 137,877 378% Revenue from the sale of therapies Net product revenue from the sale of KIMMTRAK, and net pre-product revenue from the sale of tebentafusp as part of a compassionate use and an early access program presented by country / region based on location of the customer below (in thousands). Year ended December 31, 2022 2021 Increase / (decrease) % Increase / (decrease) United States $ 96,893 $ — $ 96,893 100% Europe 42,745 4,078 38,667 948% International 1,049 — 1,049 100% Total revenue from sale of therapies $ 140,687 $ 4,078 $ 136,609 3,350% For the year ended December 31, 2022, we generated total revenue from the sale of therapies of $140.7 million due to the sale of KIMMTRAK and tebentafusp, of which $96.9 million was in the United States, $42.7 million in Europe and $1.0 million in International. We received marketing approval for KIMMTRAK in the United States and Europe in the first half of 2022 and other territories during the year ended December 31, 2022, and did not have marketing approval for, and thus no product revenue from, KIMMTRAK in the year ended December 31, 2021. We recorded $10.7 million and $4.1 million of net pre-product revenue from the sale of tebentafusp under a compassionate use and an early access program in the year ended December 31, 2022 and 2021 respectively. These programs ended in September 2022. Collaboration revenue Revenue from collaboration agreements increased by $1.3 million to $33.7 million in the year ended December 31, 2022, compared to $32.4 million for the year ended December 31, 2021. This increase was primarily due to the release of the remaining deferred revenue under the Eli Lilly Collaboration after the parties agreed to terminate the Lilly Collaboration in 2022, partly offset by a decrease in revenue under the GSK Collaboration, under which no revenue was recognized in 2022 following the termination of the GSK Collaboration in 2021. The majority of collaboration revenue arose in both years under the Genentech Collaboration, our only remaining revenue collaboration. 110 Table of Contents R&D Expenses The following table summarizes our R&D expenses (in thousands): Year ended December 31, 2022 2021 Increase / (decrease) % Increase / (decrease) External R&D expenses: Tebentafusp programs $ 17,777 $ 34,134 $ (16,357 ) (48)% PRAME programs 17,901 6,967 10,934 157% Infectious disease programs 5,781 5,377 404 8% All other external clinical and pre-clinical costs 19,713 13,848 5,865 42% Total external R&D expenses 61,172 60,326 846 1% Internal R&D expenses: Salaries and other employee-related costs 29,557 26,352 3,205 12% Share-based compensation expense 5,311 5,365 (54 ) (1)% All other internal R&D costs 21,487 21,193 294 1% UK R&D tax credits (15,606 ) (12,988 ) (2,618 ) 20% Total internal R&D expenses 40,749 39,922 827 2% Total R&D expenses $ 101,921 $ 100,248 $ 1,673 2% For the year ended December 31, 2022, our R&D expenses were $101.9 million, as compared to $100.2 million for the year ended December 31, 2021. For the year ended December 31, 2022, our external R&D expenses increased by $0.8 million. This was driven by an increase of $10.9 million in expenses incurred for our PRAME programs due to a higher level of clinical trial activity and $5.9 million in expenses incurred in connection with our other clinical and pre-clinical programs. These increases were offset by a reduction in spend of $16.4 million incurred for our tebentafusp programs due to a reduction in development costs following approval of KIMMTRAK in the United States and Europe in the first half of 2022. For the year ended December 31, 2022, our internal R&D expenses increased by $0.8 million. This was primarily due to an increase in our R&D tax credit of $2.6 million due to higher qualifying R&D expenses, offset by an increase of $3.2 million in headcount-related expenses as our number of employees and associated staff costs increased. SG&A Expenses For the year ended December 31, 2022, our SG&A expenses were $123.1 million, compared to $110.8 million for the year ended December 31, 2021, an increase of $12.2 million. The SG&A expenses for years ended December 31, 2022, and 2021 comprised the following: Year ended December 31, 2022 2021 Increase / (decrease) % Increase / (decrease) SG&A expenses: Share-based compensation expense $ 27,577 $ 43,529 $ (15,952 ) (37)% Salaries and other employee-related costs 24,873 17,789 7,084 40% Selling and commercial costs 44,911 27,878 17,033 61% Other administrative expenses 25,698 21,627 4,071 19% Total SG&A expenses $ 123,059 $ 110,823 $ 12,236 11% Selling and commercial costs increased by $17.0 million in the year ended December 31, 2022 reflecting costs of commercializing and distributing KIMMTRAK following approval in the United States and Europe. In addition, salaries and other employee-related costs increased by $7.1 million during the year ended December 31, 2022, due to a higher number of employees engaged in commercial and administrative activities. Other administrative expenses increased by $4.1 million in the year ended December 31, 2022, due to ongoing costs associated with expansion as a growing publicly listed company. These increases were partially offset by a decrease in the share-based compensation expense of $16.0 million as a result of a significantly higher number options being granted in 2021 in connection with our initial public offering, or IPO, and the associated accelerated recognition of expense on these grants due to the graded vesting that is applicable to the majority of our options. 111 Table of Contents Interest Income and Interest Expense For the year ended December 31, 2022, interest income was $3.8 million compared to $0.1 million for the year ended December 31, 2021. This increase of $3.7 million reflects higher levels of cash and cash equivalents held in 2022 relative to 2021 and increases in interest rates earned on our cash deposits. For the year ended December 31, 2022, interest expense was $5.4 million compared to $5.6 million for the year ended December 31, 2021. Interest expense in both years primarily represents interest on our $50.0 million loan facility with Oxford Finance and Pharmakon. The reduction of $0.2m was due to differences in interest rates. Foreign Currency Gain For the year ended December 31, 2022, foreign currency gain was $14.2 million compared to $0.3 million for the year ended December 31, 2021. This increase of $13.9 million reflects higher levels of cash and cash equivalents held in U.S. dollars by our main operating subsidiary in the U.K. in 2022 relative to 2021 and appreciation of the U.S. dollar against the pound sterling. Other Expense, net For the year ended December 31, 2022, other expense, net was $1.7 million compared to $0.1 million for the year ended December 31, 2021. This increase of $1.6 million arose primarily on losses on loan extinguishment in 2022. Income Tax Expense For the year ended December 31, 2022, the income tax expense amounted to $11.7 million compared to $0.2 million for the year ended December 31, 2021. This increase relates to the limitation imposed on refundable U.K. SME R&D tax credits generated in 2022, which is presented as a tax charge. Liquidity and Capital Resources Sources of Liquidity Although we have recorded product revenue for sales of KIMMTRAK and tebentafusp in the year ended December 31, 2023, we have continued to incur operating losses and negative cash flows from our operations since our inception. We expect to incur significant expenses and operating losses for the foreseeable future in connection with our ongoing activities, particularly as we continue to commercialize KIMMTRAK, continue R&D and the advancement of our product candidates through preclinical and clinical development, and seek regulatory approval and pursue commercialization of any approved product candidates. We expect that our R&D and SG&A costs will increase in connection with our planned clinical and commercial activities. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our development programs, the status of, and results from, clinical trials, the potential need to conduct additional clinical trials to obtain approval of our product candidates for all intended indications, the timing and outcome of regulatory filings and actions, commercialization of approved products, as well as any technology acquisitions or additional collaborations into which we may enter with third parties for our product candidates increased costs attributable to macroeconomic factors such as rising inflation and interest rates and supply chain disruptions, and any unforeseen cash needs. As a result, we may need additional capital to fund our operations until such time as we can generate sufficient revenue from product sales. We have funded our operations to date primarily with proceeds from sales of equity securities, debt financing, and payments from collaboration partners. Through December 31, 2023, we have raised an aggregate of $1,275 million. As of December 31, 2023 and 2022, we had cash and cash equivalents of $442.6 million and $402.5 million, respectively. At our IPO in February 2021, we listed our ordinary shares in the form of ADSs on the Nasdaq Global Select Market and raised gross proceeds of approximately $297 million. In addition to the ADSs sold in the IPO, we completed the concurrent sale of an additional 576,923 ADSs at the IPO price of $26.00 per ADS, for gross proceeds of approximately $15 million, in a private placement to the Gates Foundation, and in July 2022, we raised gross proceeds of approximately $140.0 million through the sale of our ordinary shares in the form of ADSs and non-voting ordinary shares in a private placement. On September 9, 2022, we entered into an Open Market Sale Agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, pursuant to which we may issue and sell ADSs, each representing one ordinary share, having an aggregate offering price of up to $250 million, from time to time, in one or more at-the-market offerings, for which Jefferies will act as sales agent and/or principal. The at-the-market facility has been registered under the Securities Act pursuant to our Registration Statement on Form F-3ASR (File No. 333-264105). As of December 31, 2023, no issuances or sales had been made pursuant to the Sales Agreement. 112 Table of Contents Other than our loan facility entered into with Pharmakon Advisors, LP in November 2022 (the Pharmakon Loan Agreement), under which we have borrowed $50 million, which bears interest at a fixed rate of 9.75% and is due to mature in November 2028, we currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, other than our lease obligations and supplier purchase commitments. On February 2, 2024, we completed a private offering of $402.5 million aggregate principal amount of the Notes. Our net proceeds from the offering of the Notes were $389.3 million, after deducting the initial purchasers’ discounts and commissions and the offering expenses. The Notes are senior, unsecured obligations of the Company and will mature on February 1, 2030, unless earlier converted, redeemed or repurchased. The Notes will accrue interest payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2024, at a rate of 2.50% per year. Our intention is to use part of the proceeds to repay in full loans outstanding under the Pharmakon Loan Agreement. As of the date of this Annual Report, we have not yet repaid those loans and our indebtedness includes both the Pharmakon Loan Agreement and the Notes. Cash Flows As of December 31, 2023, we had cash and cash equivalents of $442.6 million, as compared with $402.5 million as of December 31, 2022. The increase of $40.1 million in cash and cash equivalents was primarily due to cash generated from operations including, an increase of KIMMTRAK revenue as well as an increase in cash proceeds received from the exercise of employee stock options partially offset by purchases of property, plant and equipment. Our working capital was $389.8 million as of December 31, 2023 as compared with $373.1 million as of December 31, 2022. The following table summarizes the primary sources and uses of cash for each period presented (in thousands): Year ended December 31, 2023 2022 2021 Cash and cash equivalents at beginning of the year $ 402,472 $ 321,082 $ 176,658 Net cash provided by (used) in operating activities 2,940 (49,209 ) (143,106 ) Net cash used in investing activities (5,425 ) (2,197 ) (1,280 ) Net cash provided by financing activities 34,346 145,442 288,185 Net foreign exchange difference on cash held 8,293 (12,646 ) 625 Cash and cash equivalents at end of the year $ 442,626 $ 402,472 $ 321,082 Net cash provided by our operating activities was $2.9 million for the year ended December 31, 2023, compared to cash used in operating activities of $49.2 million and $143.1 million for the years ended December 31, 2022 and 2021, respectively. The increase of $52.1 million in the year ended December 31, 2023 was primarily due to significantly higher product revenue in the year ended December 31, 2023, due to the growth of KIMMTRAK volume primarily in the U.S., partly offset by higher R&D expenses due to an increase in clinical trial programs and higher SG&A expenses from increased investments in our commercial and administrative infrastructure in the year ended December 31, 2023 as compared to the year ended December 31, 2022. Net cash used in operating activities was $49.2 million for the year ended December 31, 2022, compared to $143.1 million for the year ended December 31, 2021. This decrease of $93.9 million in the year ended December 31, 2022 was primarily due to significantly higher product revenue in the year ended December 31, 2022, following regulatory approval of KIMMTRAK in 2022, partly offset by SG&A expenses from increased investments in our commercial and administrative infrastructure in the year ended December 31, 2022 as compared to the year ended December 31, 2021. Net cash used in investing activities was $5.4 million, $2.2 million, and $1.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. The net cash used in investing activities during all years was primarily related to purchases of property, plant and equipment. Net cash provided by our financing activities during the year ended December 31, 2023 was $34.3 million as compared to $145.4 million for the year ended December 31, 2022. The decrease of $111.1 million was the result of the net cash proceeds from the PIPE in July 2022 of $139.5 million with no similar proceeds in the year ended December 31, 2023, offset partially by an increase in cash proceeds from the exercise of share options in 2023 relative to 2022. Net cash provided by our financing activities during the year ended December 31, 2022 was $145.4 million, compared to $288.2 million for the year ended December 31, 2021. The decrease of $142.8 million was the result of net cash proceeds of $286.9 million in connection with our IPO and concurrent private placement in the year ended December 31, 2021 as compared to net cash proceeds from the PIPE of $139.5 million in the year ended December 31, 2022, partially offset by an increase of cash proceeds from the exercise of share options of $8.4 million in the years ended December 31, 2022 as compared to the year ended December 31, 2021. 113 Table of Contents Future Capital Requirements Since our inception, we have incurred significant losses due to our substantial R&D and SG&A expenses. We have an accumulated deficit of $744.7 million as of December 31, 2023. We expect to continue to incur significant losses in the foreseeable future and expect our expenses to increase in connection with our ongoing activities, particularly as we continue to commercialize KIMMTRAK in additional territories and continue R&D and clinical activities for our product candidates. In addition, since our initial public offering in February 2021, we have incurred additional costs associated with operating as a public company, which could continue to increase further in future periods. Our expenses will also increase if, and as, we: • pursue further approval and commercialization of KIMMTRAK in additional indications and territories; • continue to advance the development of our clinical trials and pre-clinical programs; • continue to invest in our soluble TCR platforms to conduct research to identify novel technologies; • change or add additional suppliers; • add additional infrastructure to our quality control, quality assurance, legal, compliance and other groups to support our operations as we progress product candidates toward commercialization; • seek to attract and retain skilled personnel; • create additional infrastructure to further support our operations as a public company listed in the United States and our product development and planned future commercialization efforts; • seek marketing approvals and reimbursement for our other product candidates; • further develop a sales, marketing and distribution infrastructure to further commercialize any products for which we may obtain marketing approval; • seek to identify and validate additional product candidates; • acquire or in-license other product candidates and technologies; • maintain, protect, defend, enforce and expand our intellectual property portfolio; and • experience any delays, interruptions or encounter issues with any of the above, including any delays or other impacts as a result of the war in Ukraine, the state of war between Hamas and Israel, global geopolitical tension, supply chain disruptions, worsening macroeconomic conditions, including supply chain disruptions, rising interest rates and inflation, and health epidemics or pandemics. Since our inception, we have raised funds from sales of equity securities, debt financing, product and pre-product revenue and collaboration agreements. In order to maintain such levels of expenditure and our anticipated expenditure, we expect to raise further funds by exploring debt or equity financing, or potentially further collaborations, in the future. The amount we are able to raise from these options can vary with market conditions, including the impacts of recently worsening macroeconomic conditions such as supply chain disruptions, rising interest rates and volatility in the capital markets, and our longer term strategy as a company is dependent on our ability to successfully raise such funding. Moreover, we have based our estimates on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We held cash and cash equivalents of $442.6 million as of December 31, 2023. Based on our current operating plans, we expect that our existing cash and cash equivalents, along with anticipated revenue from KIMMTRAK and the cash proceeds from our February 2024 Notes offering, will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of filing of this Annual Report. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Given our need for additional financing to support the long-term clinical development of our programs, we intend to consider additional financing opportunities when market terms are favorable to us. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including: 114 Table of Contents • the progress, timing, scope and costs of our clinical trials, including the ability to timely initiate clinical sites, enroll subjects and manufacture soluble bispecific TCR product candidates for our ongoing, planned and potential future clinical trials; • the time and costs required to perform R&D to identify and characterize new product candidates from our research programs; • the time and cost necessary to obtain regulatory authorizations and approvals that may be required by regulatory authorities to execute clinical trials or commercialize our products; • the amount of sales and other revenues from KIMMTRAK in the U.S., Europe, and other regions, if approved; • our ability to successfully commercialize our other product candidates; • our ability to have clinical and commercial products successfully manufactured consistent with FDA, regulations of the EU and other authorities’ regulations; • the amount of sales and other revenues from product candidates that we may commercialize, if any, including the selling prices for such potential products and the availability of adequate third-party coverage and reimbursement for patients; • the sales and marketing costs associated with commercializing our products, if approved, including the cost and timing of building our marketing and sales capabilities; • the cost of building, staffing and validating our manufacturing processes, which may include capital expenditure; • the terms and timing of any revenue from our existing collaborations; • the costs of operating as a public company; • the time and cost necessary to respond to technological, regulatory, political and market developments; • the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; • the costs, associated with, and terms and timing of, any future any potential acquisitions, strategic collaborations, licensing agreements or other arrangements that we may establish; and • the inability of clinical sites to enroll patients as healthcare capacities are required to cope with natural disasters, epidemics or other health system emergencies. A change in the outcome of any of these or other variables with respect to the development of any of our current and future product candidates could significantly change the costs and timing associated with the development and commercialization of that product candidate. Furthermore, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans. Until we can generate sufficient revenue to finance our cash requirements, which we may never do, we expect to finance our future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing or distribution arrangements as well as grant funding. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the terms of these securities may include liquidation or other preferences that adversely affect our shareholders’ rights. Further, to the extent that we raise additional capital through the sale of common stock or securities convertible or exchangeable into common stock, our shareholders’ ownership interest will be diluted. If we raise additional capital through debt financing, it would be subject to fixed payment obligations and may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain additional funding on favorable terms when needed, we may have to delay, reduce the scope of or terminate one or more of our R&D programs or clinical trials. 115 Table of Contents Our ability to raise additional capital may also be adversely impacted by potential worsening global economic conditions and disruptions to, and volatility in, financial markets in the United States and worldwide. We are also mindful that conditions in the current macroeconomic environment could affect our ability to achieve our goals. We sell our products in countries that face economic volatility and weakness. Although we have historically collected receivables from customers in such countries, sustained weakness or further deterioration of the local economies and currencies may cause customers in those countries to be unable to pay for our products. We will continue to monitor these conditions and will attempt to adjust our business processes, as appropriate, to mitigate macroeconomic risks to our business. Contractual Obligations Leases and manufacturing As part of our ongoing operations, we have material contractual lease obligations over expected lease terms of several years and expiry dates extending to 2043 primarily for our most significant facilities in the United Kingdom. These obligations and potential obligations could result in payments of up to $61.3 million. The majority of such payments represent longer-term commitments as outlined in the notes to our consolidated financial statements. The lease agreements are cancellable assuming certain conditions are met prior to expiry. We expect to continue to incur expenses for such leases for the foreseeable future. As we continue to grow, launch further products or expand our operations in other countries, we may determine that it is necessary to enter into further lease agreements, which would further increase our cash outflows. Further obligations or commitments in the near term relate to our capital expenditure requirements for the purpose of improving our leased facilities. If we continue to grow, such commitments may become significant in value. We have a number of existing manufacturing obligations, some of which relate to the manufacture of KIMMTRAK. We have similar obligations related to our earlier stage programs. These obligations and potential obligations could result in payments of up to $13.1 million, and are expected to increase as we commit to advancing the development of our IMC-F106C program in 2024 and beyond. While we have already incurred costs for commercial launches in the United States, Europe and other territories, additional manufacturing obligations may arise in future in relation to product sales in these territories. We have also entered into third-party agreements relating to marketing and distribution. The majority of such obligations have standard payment terms, and our level of non-cancellable commitments with such parties is not considered material. To meet demand, we may amend or enter into further agreements with CMOs or other parties which could cause our cash requirements to increase. While receipts from the sale of KIMMTRAK or other future products may fund our ongoing manufacturing and sales efforts, there can be no assurance that we will earn such revenues. In the longer term, if we received regulatory approval for our other product candidates, we would expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize. We may also require additional capital to pursue in-licenses or acquisitions of other product candidates. In addition to the above obligations, commitments and potential future cash outflows, we enter into a variety of agreements and financial commitments in the normal course of business. The terms generally provide us the option to cancel, reschedule and adjust our requirements based on our business needs, prior to the delivery of goods or performance of services. However, it is not possible to predict the amount of future payments under these agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. Financing obligations From a financing perspective, we are required to make interest payments, and, from 2026 onward, repayments of principal borrowings under our loan agreement with Pharmakon, until at least 2028. The loan liability as of December 31, 2023 was $48.0 million, and further details regarding this loan facility are provided in the notes to our consolidated financial statements. We have the option to draw down a further $50 million under our agreement with Pharmakon. Under the terms of our agreement with the Gates Foundation, we are required to develop, manufacture and commercialize soluble TCR bispecific therapeutic candidates targeted to mutually agreed neglected diseases, currently HIV, with the potential to treat people at an affordable price in developing countries. In the event of certain defaults by us under the agreement, the Gates Foundation has the right to sell, or require us to buy-back, any of the shareholdings of us held by the Gates Foundation. In such an event, if within 12 months after such redemption or sale, we experience a change in control at a valuation of more than 150% of the valuation used for the redemption or the sale of the shares, we have agreed to pay the Gates Foundation compensation equal to the excess of what it would have received in such transaction if it still held its shares at the time of such change of control over what it received in the sale or redemption of its shares. On February 2, 2024, we completed a private offering of $402.5 million aggregate principal amount of the Notes, including the exercise in full of the initial purchasers’ option to purchase up to an additional $52.5 million principal amount of Notes. Our net proceeds from the offering of the Notes were $389.3 million, after deducting the initial purchasers’ discounts and commissions and the offering expenses. The Notes are senior, unsecured obligations of the Company and will mature on February 1, 2030, unless earlier converted, redeemed or repurchased. The Notes will accrue interest payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2024, at a rate of 2.50% per year. 116 Table of Contents Selected Financial Data – for the quarters ended 2023 under U.S. GAAP (unaudited) The following table contains selected quarterly unaudited financial information for the year ended December 31, 2023 (in thousands, except per share data). The selected information for each of the quarters reflects our retrospective change due to the conversion from IFRS to U.S. GAAP and includes all normal and recurring adjustments necessary for the fair presentation of our results of operations. 2023 March 31 June 30 September 30 December 31 Total revenue $(54,659) $59,757 $64,850 $70,162 Cost and operating expenses $(69,356) $73,514 $78,994 $87,213 Net (loss)/income $(19,449) $(17,014) $906 $(19,730) Basic net (loss) / earnings per share $(0.40) $(0.35) $0.02 $(0.40) Our Key Collaboration Agreements Genentech Collaboration In June 2013, we entered into a research collaboration and license agreement, or the 2013 Genentech Agreement, with Genentech, and F. Hoffmann-La Roche Ltd, or Roche, pursuant to which we, along with Genentech and Roche, agreed to collaborate in the development, manufacture and ultimately, commercialization of soluble TCR bispecific therapeutic candidate compounds. Under the 2013 Genentech Agreement, Genentech paid us an initial upfront payment of $20 million in exchange for exclusive licenses to two of our targets, MAGE-A4 and as well as an undisclosed target. The first pre-clinical program nominated under the 2013 Genentech Agreement was target MAGE-A4, which we refer to as our IMC-C103C program. In February 2023, Genentech accepted our proposal to cease co-funding the development of MAGE-A4 HLA-A02 targeted programs, except for our equal share of the wind-down costs of the IMC-C103C Phase 1 clinical trial. Genentech will acquire an exclusive worldwide license to the MAGE-A4HLA-A02 soluble TCR bispecific therapeutic candidate compounds and will be fully responsible for all further development and commercialization of such candidate compounds, at its expense. We are eligible to receive development and commercial milestone payments plus royalties from Genentech on any sales of MAGE-A4 HLA-A02 targeted products arising under the Genentech Agreement. For more information, please see “Item 1 Business —Our Collaborations and License Agreements—Genentech Collaboration.” Gadeta Collaboration In December 2022, we entered into a Collaboration, Option and License Agreement, or the Gadeta Collaboration, with Gadeta B.V., or Gadeta, which was acquired by Clade Therapeutics, or Clade, in October 2023. Under the Gadeta Collaboration, we will collaborate on ‘201 γδ-TCR target discovery, and we will have the option to develop ImmTAC therapies derived from the ‘201 TCR as part of the research collaboration. Following the acquisition of Gadeta by Clade, the rights under the Gadeta Collaboration then were transferred to Ateda Therapeutics, or Ateda. Our rights and obligations under the terms of the Gadeta Collaboration have not altered through this transfer and we have an option for an exclusive license to further research, develop and commercialize an ImmTAC candidate from the Gadeta Collaboration. If we exercised this option, Gadeta could be eligible to receive further payments from us. We have made payments totaling $2.0 million to Gadeta under the Gadeta Collaboration as of December 31, 2023. Any further payments under the Gadeta Collaboration will be due to Ateda. Critical Accounting Estimates Our consolidated financial statements as of December 31, 2023 and 2022, and for the years ended 2023, 2022 and 2021 have been prepared in accordance with U.S. GAAP. The preparation of the consolidated financial statements requires us to make judgements, estimates and assumptions that affect the value of assets and liabilities—as well as contingent assets and liabilities—as reported on the balance sheet date, and revenues and expenses arising during the fiscal year. The estimates and associated assumptions are based on information available when the consolidated financial statements are prepared, historical experience and various other factors which are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond our control. Hence, estimates may vary from the actual values. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or the period of revision and future periods if this revision affects both current and future periods. 117 Table of Contents Expected rebate and chargeback percentage for revenue deductions Since approval of KIMMTRAK in 2022, we have a short history of actual rebate claims or chargebacks, and such information may have limited predictive value. We use the expected value method to estimate expected rebate and chargeback percentages for revenue deductions, which considers the likelihood of a rebate or chargeback being applicable to sales. The proportion of sales subject to a rebate or chargeback is inherently uncertain and estimates are based on internal assumptions, which may change as we develop more product experience, and third-party data, which we assess for reliability and relevance. We are subject to state government Medicaid programs and other qualifying federal and state programs in the United States requiring rebates to be paid to participating state and local government entities, depending on the eligibility and circumstances of patients treated with KIMMTRAK after we have sold vials to specialty distributors. We are also subject to chargebacks from its specialty distributors under the 340B program in the United States, whereby qualifying hospitals are entitled to purchase KIMMTRAK at a lower price. For such sales, our specialty distributors charge back the difference between the wholesale acquisition cost and this lower price. Estimating expected rebate and chargeback percentages for revenue deductions is judgmental due to the time delay between the date of the sale to specialty distributors and the subsequent dates on which we are able to determine actual amounts of chargebacks and rebates. We form estimates of 340B chargeback deductions by analyzing sell-through data relating to the hospital mix of onward sales made by specialty distributors. For Medicaid and other rebates, we form estimates based on information obtained from claims received and other industry data, and external health coverage statistics. Judgment is applied to consider the relevance and reliability of information used to make these estimates. Judgment is also required in determining expected rebate percentages for the amount of net pre-product revenue and product revenue in France. Rebates payable to the Economic Committee for Health Products, or CEPS, under compassionate use, early access and commercial programs are subject to a high degree of estimation uncertainty. Our estimate of these rebates represents the difference between the expected agreed price for the commercial sale of KIMMTRAK in France, which is subject to negotiation, and the initial price of tebentafusp and KIMMTRAK sold under early access and commercial programs until this price is agreed. Analysis of further legislative requirements, sales volumes and the expected benefit of KIMMTRAK to patients in France is also required in the assessment of rebates payable. We apply judgement to assess internal targets, pricing information of other therapies approved for sale in France, information obtained from price negotiations of KIMMTRAK in other countries, and information connected with KIMMTRAK’s safety profile when forming its estimated rebate deduction from revenue. A similar approach is taken across other European markets, with judgements made in line with expected pricing outcomes. Our total accrued revenue deductions as of December 31, 2023 were $ 66.7 million, including amounts of $61.7 million for the critical estimates subject to greater estimation uncertainty and judgments described above. These are included within Accrued expenses and other current liabilities and Accrued expenses, non-current in the Consolidated Balance Sheet as of December 31, 2023. A 20% increase or decrease in estimates of expected rebate and chargeback percentages for amounts payable to governments or government agencies for the critical estimates described above would have resulted in a $12.3 million reduction or increase, respectively, in Total revenue from the sale of therapies reported in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2023. We believe our expected values of accruals reported in the Consolidated Balance Sheet are materially appropriate; however, due to the uncertainties and judgements outlined above, it is possible eventual amounts could significantly differ to these estimates. For critical estimates reported at the end of December 31, 2022 where the uncertainty was resolved in the year ended December 31, 2023, actual amounts resulted in the recognition of an additional $2.6 million of revenue in the year ended December 31, 2023, which represented a 10% difference to the amount estimated at December 31, 2022. Recently Issued and Adopted Accounting Pronouncements We discuss the effect of recently issued and adopted pronouncements in Note 2 to the consolidated financial statements.