What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-08-08 · 125 added, 120 removed, 338 unchanged (42% of the section changed)

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Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.

We also recommend that you read our discussion and analysis of financial condition and results of operations together with our audited financial statements and notes thereto, and the section entitled “Risk Factors”, each of which appear in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 28, 2024 (the "Annual Report") as well as the section titled “Special Note Regarding Forward-Looking Statements".

We also recommend that you read our discussion and analysis of financial condition and results of operations together with our audited financial statements and notes thereto, and the section titled “Risk Factors” each of which appear in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 28, 2024 (the "Annual Report") as well as the section titled “Special Note Regarding Forward-Looking Statements".

We are a commercial stage biotechnology company pioneering and delivering transformative immunomodulating medicines to radically improve outcomes for patients with cancer, infectious diseases, and autoimmune diseases.

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KIMMTRAK is now approved in 38 countries for the treatment of unresectable or mUM.

We have launched KIMMTRAK in 19 countries globally to date and we plan to launch KIMMTRAK in additional countries, if approved in those countries, in 2024.

We have launched KIMMTRAK in 21 countries globally to date and we plan to launch KIMMTRAK in additional countries, if approved in those countries.

KIMMTRAK is the lead product from our ImmTAX platform and was the first approved new therapy in mUM in four decades.

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We believe that these other tumor types have large addressable patient populations and significant unmet need.

We are progressing three 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 brenetafusp (IMC-F106C).

We are progressing three 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 brenetafusp.

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 June 30, 2024, we have raised an aggregate of $1,677 million through our initial public offering, private placements of our ordinary and preferred shares, debt financings, and historical payments from our collaboration partners.

Since inception, through to September 30, 2024, we have raised an aggregate of $1,677 million through our initial public offering, 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 $11.6 million and $36.1 million for the three and six months ended June 30, 2024, respectively.

As of June 30, 2024, our accumulated deficit was $780.7 million.

We had net income of $8.7 million and a net loss of $27.3 million for the three and nine months ended September 30, 2024, respectively.

As of September 30, 2024, our accumulated deficit was $772.0 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 SEC, director and officer liability insurance, investor and public relations activities and other expenses associated with operating as a public company.

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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 and 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.

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, fluctuations in 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.

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Recent Developments

During the 2024 American Society of Oncology Annual Meeting meeting ("ASCO 2024"), we presented data from the Phase 1/2 trial with brenetafusp in patients with late-line cutaneous melanoma, showing promising disease control (partial response and stable disease), progression free survival (PFS), and ctDNA molecular response with monotherapy brenetafusp, with 58% disease control rate and 4.2 months median PFS in PRAME positive patients.

Brenetafusp was also shown to be well tolerated as monotherapy and in combination with anti-PD1 agents.

We will present a poster with data from the ongoing monotherapy and combination cohorts from the same trial, in heavily pre-treated serous high grade ovarian, at the 2024 European Society for Medical Oncology Congress ("ESMO 2024"), and expect to present data in late-line non-small cell lung carcinoma by the end of 2024.

During ASCO 2024, we also presented data demonstrating that KIMMTRAK treated metastatic uveal melanoma patients with stable disease and any confirmed tumor reduction have similar clinical outcomes to patients with RECIST partial response.

During ESMO 2024, we will present, in a proffered paper session, new T cell fitness insights from the phase 2 KIMMTRAK trial in previously treated uveal melanoma.

In June 2024, we announced that we have randomized the first patient into the registrational Phase 3 PRISM-MEL-301 clinical trial.

The trial, the first Phase 3 trial with a PRAME-targeted therapy, is evaluating brenetafusp + nivolumab versus a control arm of either nivolumab or nivolumab + relatlimab in HLA-A*02:01 positive patients with first-line, advanced or metastatic cutaneous melanoma.

The potential data readout could be in 2027.

In June 2024, we also announced that we converted the Phase 2/3 TEBE-AM clinical trial into a registrational Phase 3 trial, following consultation with the FDA.

The Phase 3 trial will continue with three arms:

KIMMTRAK monotherapy, KIMMTRAK in combination with pembrolizumab, and a control arm.

All patients (120+) randomized from the start of the Phase 2/3 trial will be included in the Phase 3 intent-to-treat population, which will accelerate the time to final endpoint by up to 12 months.

We expect to complete enrollment by the first half of 2026, with a potential data readout later that same year.

As of June 2024, we have enrolled 3 cohorts with 5 people living with HIV (PLWH) per cohort in our Phase 1 clinical trial of IMC-M113V.

The highest tested dose is 300 mcg.

A biologically active dose has been reached and we plan to enroll more PLWH to characterize anti-viral activity and to explore higher doses.

This will move the planned data release from the fourth quarter of 2024 to the first quarter of 2025.

Randomization in the ATOM Phase 3 trial, led by the European Organisation for Research and Treatment of Cancer (EORTC) is expected to start in the second half of 2024, with a potential data readout in 2028.

In September 2024 at the European Society for Medical Oncology 2024 Meeting ("ESMO 2024"), we presented clinical data from the Phase 1 trial in heavily pre-treated platinum-resistant high grade serous ovarian cancer, with brenetafusp as monotherapy and in combination with chemotherapy.

• Monotherapy:

31 of the 37 monotherapy patients were evaluable for RECIST v1.1 tumor assessment, 58% of whom demonstrated disease control (partial response and stable disease), including two confirmed partial responses (6.5% RECIST response rate).

Of patients who had tumor progression, 64% were treated beyond progression (median of 2 additional months).

Across all 37 patients, the median progression-free survival (PFS) was 3.3 months, and the overall survival (OS), while still maturing, was 73% at 6 months.

Brenetafusp was well tolerated with no treatment-related discontinuation or death observed.

• Combination:

16 patients with platinum-resistant ovarian cancer were treated with brenetafusp and either gemcitabine, nab-paclitaxel or pegylated doxorubicin chemotherapy.

Thirteen of these 16 patients were evaluable for RECIST v1.1 tumor assessment (all 13 received prior platinum and taxane therapy, and 6 received prior gemcitabine).

69% of patients achieved disease control, including three partial responses (23% RECIST response rate).

The safety profile of brenetafusp in combination with chemotherapy was consistent with the expected profile of each individual agent.

We presented new baseline blood gene expression signature data at ESMO 2024 confirming that T cell fitness in blood is an important parameter of clinical activity for KIMMTRAK in previously treated uveal melanoma, and for brenetafusp in ovarian cancer and uveal melanoma.

We are currently evaluating brenetafusp in combination with non-platinum chemotherapies in platinum-resistant ovarian cancer and with bevacizumab and with platinum chemotherapy in earlier lines of platinum sensitive ovarian cancer.

We continue signal detection for brenetafusp in metastatic non-small-cell lung cancer ("NSCLC") cohorts, including in combination with docetaxel and with osimertinib in earlier-line NSCLC.

As a result, we will not release initial data in the fourth quarter of 2024.

Randomization in the ATOM Phase 3 trial, the only active registrational Phase 3 trial in adjuvant uveal melanoma, led by the European Organisation for Research and Treatment of Cancer ("EORTC") is expected to start in the fourth quarter of 2024.

We expect to complete the single ascending dose ("SAD") portion of the Phase 1 trial of IMC-I109V in HBV in the fourth quarter of 2024.

Components of Results of Operations

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Interest expense represents costs under our interest-bearing loans and borrowings under the effective interest method.

Foreign currency loss

These losses arise on a variety of items, including on U.S.

Foreign currency gain (loss)

These gains (losses) arise on a variety of items, including on U.S.

dollar monetary assets and liabilities held by our main operating subsidiary in the United Kingdom, including our cash, cash equivalent and marketable securities balances.

Our foreign currency losses can vary significantly between periods as a result of volatility in foreign exchange rates.

Our foreign currency gains (losses) can vary significantly between periods as a result of volatility in foreign exchange rates.

Other income (expense), net

Other income (expense), net consists primarily of the unrealized gains (losses) resulting from the change in fair value of our marketable securities and also includes loan and borrowing costs and other items.

Income tax expense

Income tax benefit (expense)

We are subject to corporate taxation in the United Kingdom and our wholly-owned subsidiaries are subject to corporate taxation in the United States, Ireland and Switzerland.

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Unsurrendered 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 $324 million as of June 30, 2024.

After accounting for tax credits receivable, there were accumulated tax losses available for carry forward in the United Kingdom of $320 million as of September 30, 2024.

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.

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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 Three Months Ended June 30, 2024 and 2023

As we begin to generate significant net product revenue, we may benefit from the U.K.’s “patent box” regime, which allows profits attributable to revenues from patents or patented products to be taxed at a lower rate than other revenue.

The effective rate of tax for relevant streams of revenue for companies receiving this relief is 10%.

Comparison of the Three Months Ended September 30, 2024 and 2023

The following table summarizes our total revenue (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

2024 2023 Increase /

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Product revenue, net from the sale of KIMMTRAK is presented by country / region based on location of the end customer below (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

2024 2023 Increase /

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$ 80,248 $ 62,629 $ 17,619 28.1 %

For the three months ended June 30, 2024, we generated product revenue, net of $75.3 million due to the sale of KIMMTRAK, of which $55.6 million was in the United States, $15.4 million in Europe (including the impact of a net increase in estimated reserves related to prior periods of $6.7 million) and $4.3 million in International.

Product revenue, net increased in the three months ended June 30, 2024 as compared to June 30, 2023, 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 to $0.1 million in the three months ended June 30, 2024, compared to $2.8 million for the three months ended June 30, 2023.

This decrease was due to our February 2023 agreement with Genentech to close the Phase 1 clinical trial and for the parties to fulfill the remaining obligations under the terms of our Genentech collaboration.

For the three months ended September 30, 2024, we generated product revenue, net of $80.2 million due to the sale of KIMMTRAK, of which $57.3 million was in the United States, $21.0 million in Europe (including the impact of a net increase in estimated reserves related to prior periods of $3.6 million) and $1.9 million in International.

Product revenue, net increased in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, due primarily to increased volume in the United States and global country expansion, as we continued our commercialization efforts.

The following table summarizes our R&D expenses (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

2024 2023 Increase /

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Total R&D expenses $ 52,770 $ 43,249 $ 9,521 22.0 %

For the three months ended June 30, 2024, our R&D expenses were $51.1 million, as compared to $38.2 million for the three months ended June 30, 2023.

For the three months ended June 30, 2024, our external R&D expenses increased by $11.0 million primarily due to an increase of $10.9 million in expenses incurred for our PRAME programs as a result of the initiation of our registrational Phase 3 PRISM-MEL-301 clinical trial, scale-up of manufacturing and increase in the number of patients in combination expansions in our PRAME-A02 Phase 1 clinical trial.

For the three months ended June 30, 2024, our internal R&D expenses increased by $1.9 million primarily due to an increase in headcount-related expenses as our number of employees and associated personnel costs increased with the growth of our clinical and preclinical programs partially offset by an increase in our R&D tax credits.

For the three months ended September 30, 2024, our R&D expenses were $52.8 million, compared to $43.2 million for the three months ended September 30, 2023.

For the three months ended September 30, 2024, our external R&D expenses increased by $9.2 million primarily due to an increase of $6.0 million in expenses incurred for our tebentafusp programs as a result of the advanced cutaneous melanoma ("TEBE-AM") and ATOM Phase 3 trials.

All other external clinical and preclinical costs increased by $2.7 million due to continued progress in the pipeline.

For the three months ended September 30, 2024, our internal R&D expenses increased by $0.4 million primarily due to an increase in headcount-related expenses as our number of employees and associated personnel costs increased with the growth of our clinical and preclinical programs partially offset by an increase in our R&D tax credits.

SG&A Expenses

The following table summarizes our SG&A expenses (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

2024 2023 Increase /

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Total SG&A expenses $ 35,532 $ 35,469 $ 63 0.2 %

For the three months ended June 30, 2024, our SG&A expenses were $38.6 million compared to $35.0 million for the three months ended June 30, 2023, an increase of $3.6 million.

Salaries and other employee-related costs increased by $2.2 million during the three months ended June 30, 2024, primarily due to the internalization of our U.S.

sales force in the second half of 2023, for the three months ended June 30, 2023 these costs were included within selling and commercial costs.

In addition, there was an increase in the number of employees engaged in business support functions, including medical and regulatory activities, to support our growing pipeline and commercial activities.

For each of the three months ended September 30, 2024 and 2023, our SG&A expenses were $35.5 million.

Salaries and other employee-related costs increased by $4.3 million, primarily due to the internalization of our U.S.

sales force in the fourth quarter of 2023, whereas these costs were included within selling and commercial costs for the three months ended September 30, 2023.

In addition, there was an increase in the number of employees in medical and regulatory activities and business support functions, to support our growing pipeline and commercial activities.

This was offset by a decrease in share-based compensation expense of $1.7 million due to higher estimated forfeitures in the three months ended September 30, 2024 and a decrease in other administrative expenses.

Interest Income and Interest Expense

For the three months ended June 30, 2024, interest income was $6.2 million compared to $4.3 million for the three months ended June 30, 2023.

This increase of $1.9 million reflects higher levels of cash and cash equivalents held in 2024 relative to 2023 due primarily to the net cash proceeds from the 2.5% convertible senior notes due in 2030 issued in February 2024 (the "Notes") and increases in interest rates earned on our cash and cash equivalents balances.

For the three months ended June 30, 2024, interest expense was $4.3 million compared to $1.3 million for the three months ended June 30, 2023 and the increase was primarily related to interest on the Notes.

Foreign Currency Loss

For the three months ended June 30, 2024, foreign currency loss was $0.5 million compared to a loss of $5.9 million for the three months ended June 30, 2023.

This change of $5.4 million reflects less significant exchange rate movements in 2024 relative to 2023.

For the three months ended September 30, 2024, interest income was $6.0 million compared to $5.1 million for the three months ended September 30, 2023.

This increase of $0.9 million reflects higher levels of cash and cash equivalents held in 2024 relative to 2023 due primarily to the net cash proceeds from the convertible senior notes issued in February 2024 (the "Notes") and increases in interest rates earned on our cash and cash equivalents balances.

For the three months ended September 30, 2024, interest expense was $4.3 million compared to $1.3 million for the three months ended September 30, 2023 and the increase was primarily related to interest on the Notes.

Foreign Currency Gain

For the three months ended September 30, 2024, foreign currency gain was $4.0 million compared to a gain of $11.2 million for the three months ended September 30, 2023.

This decrease of $7.2 million reflects less significant exchange rate movements in the three months ended September 30, 2024 relative to the three months ended September 30, 2023.

Other Income (Expense), Net

Other income (expense), net consists primarily of the unrealized gains resulting from the change in fair value of our marketable securities and also includes loan and borrowing costs and other items.

Income Tax Expense

For the three months ended June 30, 2024, the income tax charge was $1.5 million compared to $0.2 million for the three months ended June 30, 2023.

Comparison of the Six Months Ended June 30, 2024 and 2023

For the three months ended September 30, 2024, other income, net was $9.0 million compared to other expense, net of $0.2 million for the three months ended September 30, 2023.

The change is primarily related to the unrealized gains resulting from the change in fair value of our marketable securities, which were purchased in 2024.

Income Tax Benefit (Expense)

For the three months ended September 30, 2024, the income tax benefit was $2.6 million compared to $0.2 million for the three months ended September 30, 2023.

This increase is related to a favorable discrete item for U.S.

research tax credits claimed on our 2023 U.S.

income tax return.

Comparison of the Nine Months Ended September 30, 2024 and 2023

The following table summarizes our total revenue (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2023 Increase /

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Product revenue, net from the sale of KIMMTRAK is presented by country / region based on location of the end customer below (in thousands).

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2023 Increase /

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$ 225,937 $ 171,142 $ 54,795 32.0 %

For the six months ended June 30, 2024, we generated product revenue, net of $145.7 million, due to the sale of KIMMTRAK, of which $105.6 million was in the United States, $34.4 million in Europe (including the impact of a net increase in estimated reserves related to prior periods of $11.2 million) and $5.7 million in International.

Product revenue, net increased in the six months ended June 30, 2024 as compared to June 30, 2023, due primarily to increased volume in the United States and global country expansion, as we continued our commercialization efforts.

For the nine months ended September 30, 2024, we generated product revenue, net of $225.9 million, due to the sale of KIMMTRAK, of which $162.9 million was in the United States, $55.5 million in Europe (including the impact of a net increase in estimated reserves related to prior periods of $12.6 million) and $7.6 million in International.

Product revenue, net increased in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, 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 $5.7 million to $0.2 million in the six months ended June 30, 2024, compared to $5.9 million for the six months ended June 30, 2023.

Revenue from collaboration agreements decreased by $7.9 million to $0.2 million in the nine months ended September 30, 2024, compared to $8.1 million for the nine months ended September 30, 2023.

The following table summarizes our R&D expenses (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2023 Increase /

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All other external clinical and preclinical costs 17,309 13,733 3,576 26.0 %

10,948 10,025 923 9.2 %

Total external R&D expenses 108,228 65,935 42,293 64.1 %

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Total R&D expenses $ 161,301 $ 117,980 $ 43,321 36.7 %

For the six months ended June 30, 2024, our R&D expenses were $108.5 million, as compared to $74.7 million for the six months ended June 30, 2023.

For the six months ended June 30, 2024, our external R&D expenses increased by $33.1 million primarily due to an increase of $28.8 million in expenses incurred for our PRAME programs as a result of the initiation of our registrational Phase 3 PRISM-MEL-301 clinical trial, scale-up of manufacturing and increase in the number of patients in combination expansions in our PRAME-A02 Phase 1 clinical trial.

For the six months ended June 30, 2024, our internal R&D expenses increased by $0.7 million primarily due to an increase in headcount-related expenses as our number of employees and associated personnel costs increased with the growth of our clinical and preclinical programs partially offset by an increase in our R&D tax credits.

For the nine months ended September 30, 2024, our R&D expenses were $161.3 million, compared to $118.0 million for the nine months ended September 30, 2023.

For the nine months ended September 30, 2024, our external R&D expenses increased by $42.3 million primarily due to an increase of $29.8 million in expenses incurred for our PRAME programs as a result of the initiation of our registrational Phase 3 PRISM-MEL-301 clinical trial, scale-up of manufacturing and increase in the number of patients in combination expansions in our PRAME-A02 Phase 1 clinical trial.

R&D expenses incurred for our tebentafusp programs increased by $8.1 million primarily due to the advanced cutaneous melanoma ("TEBE-AM") and ATOM Phase 3 trials.

All other external clinical and preclinical costs increased by $3.6 million due to continued progress in the pipeline.

For the nine months ended September 30, 2024, our internal R&D expenses increased by $1.0 million primarily due to an increase of $5.5 million in headcount-related expenses as our number of employees and associated personnel costs increased with the growth of our clinical and preclinical programs partially offset by an increase in our R&D tax credits.

SG&A Expenses

The following table summarizes our SG&A expenses (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2023 Increase /

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Total SG&A expenses $ 113,457 $ 103,046 $ 10,411 10.1 %

For the six months ended June 30, 2024, our SG&A expenses were $77.9 million, compared to $67.6 million for the six months ended June 30, 2023, an increase of $10.3 million.

Salaries and other employee-related costs increased by $7.8 million during the six months ended June 30, 2024, primarily due to the internalization of our U.S.

sales force in the second half of 2023, for the three months ended June 30, 2023 these costs were included within selling and commercial costs.

In addition, there was an increase in the number of employees engaged in business support functions, including medical and regulatory activities to support our growing pipeline and commercial activities.

For the nine months ended September 30, 2024, our SG&A expenses were $113.5 million, compared to $103.0 million for the nine months ended September 30, 2023, an increase of $10.4 million.

Salaries and other employee-related costs increased by $12.1 million during the nine months ended September 30, 2024, primarily due to the internalization of our U.S.

sales force in the fourth quarter of 2023, whereas for the nine months ended September 30, 2023 these costs were included within selling and commercial costs.

In addition, there was an increase in the number of employees in medical and regulatory activities and business support functions to support our growing pipeline and commercial activities.

Interest Income and Interest Expense

For the six months ended June 30, 2024, interest income was $14.5 million compared to $7.4 million for the six months ended June 30, 2023.

For the nine months ended September 30, 2024, interest income was $20.4 million compared to $12.5 million for the nine months ended September 30, 2023.

This increase of $7.9 million reflects higher levels of cash and cash equivalents held in 2024 relative to 2023 due primarily to the net cash proceeds from the Notes issued in February 2024 and increases in interest rates earned on our cash and cash equivalents balances.

For the six months ended June 30, 2024, interest expense was $7.5 million compared to $2.5 million for the six months ended June 30, 2023 and the increase was primarily related to interest on the Notes.

Foreign Currency Loss

For the six months ended June 30, 2024, foreign currency loss was $2.9 million compared to $11.9 million for the six months ended June 30, 2023.

This change of $9.0 million reflects less significant exchange rate movements in 2024 relative to 2023.

For the nine months ended September 30, 2024, interest expense was $11.8 million compared to $3.8 million for the nine months ended September 30, 2023 and the increase was primarily related to interest on the Notes.

Other Income (Expense), Net

Other income (expense), net consists primarily of the unrealized gains resulting from the change in fair value of our marketable securities and also includes loan and borrowing costs and other items.

Income Tax Expense

For the six months ended June 30, 2024, the income tax charge was $1.8 million compared to $0.5 million for the six months ended June 30, 2023.

For the nine months ended September 30, 2024, other income, net was $13.2 million compared to other expense, net of $0.7 million for the nine months ended September 30, 2023.

The change is primarily related to the unrealized gains resulting from the change in fair value of our marketable securities, which were purchased in 2024.

Income Tax Benefit (Expense)

For the nine months ended September 30, 2024, the income tax benefit was $0.8 million compared to a charge of $0.3 million for the nine months ended September 30, 2023.

This change is related to a favorable discrete item for U.S.

research tax credits claimed on our 2023 U.S.

income tax return.

Liquidity and Capital Resources

Sources of Liquidity

Although we have recorded product revenue for sales of KIMMTRAK and have positive operating cash flows in the six months ended June 30, 2024, we have continued to incur operating losses and cumulative negative cash flows from our operations since our inception.

We have an accumulated deficit of $780.7 million as of June 30, 2024.

Although we have recorded product revenue for sales of KIMMTRAK, have positive operating cash flows in the nine months ended September 30, 2024 and have net income in the three months ended September 30, 2024, we have continued to incur operating losses and cumulative negative cash flows from our operations since our inception.

We have an accumulated deficit of $772.0 million as of September 30, 2024.

Since our inception, we have funded our operations primarily with proceeds from sales of equity securities, debt financings and historical payments from our collaboration partners.

Through June 30, 2024, we have raised an aggregate of $1,677 million.

As of June 30, 2024 and December 31, 2023, we had cash, cash equivalents and marketable securities of $859.6 million and $442.6 million, respectively.

Through September 30, 2024, we have raised an aggregate of $1,677 million.

As of September 30, 2024 and December 31, 2023, we had cash, cash equivalents and marketable securities of $901.3 million and $442.6 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.

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The at-the-market facility has been registered under the Securities Act pursuant to our Registration Statement on Form F-3ASR (File No.

As of June 30, 2024, no issuances or sales had been made pursuant to the Sales Agreement.

As of September 30, 2024, no issuances or sales had been made pursuant to the Sales Agreement.

We entered into a loan with Pharmakon Advisors, LP (the "Pharmakon Loan Agreement") in November 2022, 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 intend to use a portion of our cash and cash equivalents to repay in full the loan outstanding under the Pharmakon Loan Agreement during the three months ending December 31, 2024.

As of the date of this Quarterly Report, we have not yet repaid the loan outstanding under the Pharmakon Loan Agreement and this is included in our indebtedness as of September 30, 2024 .

On February 2, 2024, we completed a private offering of $402.5 million aggregate principal amount of the Notes.

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The Notes will accrue interest payable semi-annually 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 in the fourth quarter of 2024.

As of the date of this Quarterly Report, we have not yet repaid those loans and our indebtedness includes both the Pharmakon Loan Agreement and the Notes.

Other than the above mentioned loan facilities, 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.

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $859.6 million, as compared with $442.6 million as of December 31, 2023.

Our working capital was $771.8 million as of June 30, 2024, as compared with $389.8 million as of December 31, 2023.

Other than the above mentioned indebtedness, 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.

As of September 30, 2024, we had cash, cash equivalents and marketable securities of $901.3 million, compared with $442.6 million as of December 31, 2023.

Our working capital was $739.7 million as of September 30, 2024, compared with $389.8 million as of December 31, 2023.

The following table summarizes the primary sources and uses of cash and cash equivalents for each period presented (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash and cash equivalents at beginning of period

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Net foreign exchange difference on cash held

11,326 (2,491)

Cash and cash equivalents at end of period

$ 537,767 $ 444,138

Net cash provided by our operating activities was $18.9 million for the six months ended June 30, 2024, compared to cash provided by operating activities of $10.6 million for the six months ended June 30, 2023.

The increase of $8.3 million in the six months ended June 30, 2024 was primarily due to increases in revenues, interest income and accrued expenses, partially offset by an increase in R&D expenses.

Net cash used in investing activities was $350.8 million and $4.4 million for the six months ended June 30, 2024 and 2023, respectively.

The net cash used in investing activities increased for the six months ended June 30, 2024 due to purchases of marketable securities.

Net cash provided by our financing activities during the six months ended June 30, 2024 was $395.2 million as compared to $17.7 million for the six months ended June 30, 2023.

The increase of $377.5 million was the result of the net cash proceeds from the Notes of $389.1 million with no similar proceeds in the six months ended June 30, 2023.

Net cash provided by our operating activities was $40.0 million for the nine months ended September 30, 2024, compared to cash provided by operating activities of $20.7 million for the nine months ended September 30, 2023.

The increase of $19.3 million in the nine months ended September 30, 2024 was primarily due to increases in net product revenue and accrued expenses, partially offset by an increase in operating expenses and prepayments and other current assets.

Net cash used in investing activities was $351.6 million and $4.6 million for the nine months ended September 30, 2024 and 2023, respectively.

The net cash used in investing activities increased for the nine months ended September 30, 2024 due to purchases of marketable securities.

Net cash provided by our financing activities during the nine months ended September 30, 2024 was $395.4 million compared to $28.1 million for the nine months ended September 30, 2023.

The increase of $367.3 million was the result of the net cash proceeds from the Notes of $389.1 million with no similar proceeds in the nine months ended September 30, 2023, partially offset by a decrease in exercise of share options.

Future Capital Requirements

We expect to continue to incur significant operating 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, continue our research and development programs and the advancement of our product candidates through preclinical and clinical development, and seek regulatory approval and pursue commercialization of any approved 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.

The amounts and timing of our actual expenditure may vary significantly depending on numerous factors.

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• maintain, protect, defend, enforce and expand our intellectual property portfolio;

• 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, worsening macroeconomic conditions, including supply chain disruptions, rising interest rates and inflation, and health epidemics or pandemics.

• 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 conflict in the Middle East, global geopolitical tension, worsening macroeconomic conditions, including supply chain disruptions, fluctuations in interest rates and inflation, and health epidemics or pandemics.

In order to maintain such levels of expenditure and our anticipated expenditure, we may 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 long-term strategy as a company is dependent on our ability to successfully raise such funding.

The amount we are able to raise from these options can vary with market conditions, including the impacts of macroeconomic conditions such as supply chain disruptions, fluctuations in interest rates and volatility in the capital markets, and our long-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, cash equivalents and marketable securities of $859.6 million as of June 30, 2024.

We held cash, cash equivalents and marketable securities of $901.3 million as of September 30, 2024.

Based on our current operating plans, we expect that our existing cash, cash equivalents and marketable securities, along with anticipated future revenue from KIMMTRAK, will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of filing of this Quarterly Report.

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We are required to make interest payments for the Notes issued in February 2024.

As of June 30, 2024, we had $402.5 million aggregate principal amount of the Notes outstanding, which will mature on February 1, 2030, unless earlier converted, redeemed or repurchased.

“Non-current interest-bearing loans and borrowings” of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report for further information.

We are also required to make interest payments, and, from 2026 onward, repayments of principal borrowings under our Pharmakon Loan Agreement, until at least 2028.

The loan liability as of June 30, 2024 was $48.1 million, and further details regarding this loan facility are provided in Note 5.

''Non-current interest-bearing loans and borrowings'' of the notes to our condensed consolidated financial statements, in Part I of this Quarterly Report.

As of September 30, 2024, we had $402.5 million aggregate principal amount of the Notes outstanding, which will mature on February 1, 2030, unless earlier converted, redeemed or repurchased.

“Current and non-current interest-bearing loans and borrowings” of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report for further information.

We are also required to make interest payments, and, from 2026 onward, contractual repayments of principal borrowings under our Pharmakon Loan Agreement, until at least 2028.

The loan liability as of September 30, 2024 was $48.2 million, and further details regarding this loan facility are provided in Note 5.

''Current and non-current interest-bearing loans and borrowings'' of the notes to our condensed consolidated financial statements, in Part I of this Quarterly Report.

We had the option to draw down a further $50 million under our Pharmakon Loan Agreement through June 2024, and we elected not to exercise this option.

We intend to use a portion of our cash and cash equivalents to repay in full the loan outstanding under the Pharmakon Loan Agreement during the three months ending December 31, 2024, which will release us from the forementioned obligations.

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.

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As of December 31, 2023, we determined our performance obligation under the collaboration with Genentech was complete.

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.

If MAGE-A4 HLA-A02 targeted products are commercialized, we would be 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.

Any future milestones will be recorded when they become probable of being achieved.

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Following the acquisition of Gadeta by Clade, the rights under the Gadeta Collaboration were transferred to Ateda Therapeutics ("Ateda").

Our rights and obligations 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.

Our rights and obligations have not been 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, Ateda could be eligible to receive further payments from us.

We have incurred amounts totaling $2.75 million under the Gadeta Collaboration as of June 30, 2024.

In April 2024 Clade was acquired by Century Therapeutics and our rights or obligations under the Gadeta Collaboration have not been affected by the acquisition.

We have incurred amounts totaling $2.75 million under the Gadeta Collaboration as of September 30, 2024.

In April 2024, Clade was acquired by Century Therapeutics and our rights or obligations under the Gadeta Collaboration were not affected by the acquisition.

Critical Accounting Estimates

Our condensed consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 , respectively, have been prepared in accordance with U.S.

Our condensed consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 , respectively, have been prepared in accordance with U.S.

The preparation of the condensed consolidated financial statements requires us to make judgments, 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 period.

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Judgment is also required in determining expected rebate percentages for the amount of net product revenue in France.

Rebates payable under 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.

Rebates payable are subject to a high degree of estimation uncertainty.

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.

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For other European markets where the price is open to negotiation, judgements are made in line with expected pricing outcomes.

Our total accrued revenue deductions as of June 30, 2024 were $107.0 million, including amounts of $96.3 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 Condensed Consolidated Balance Sheet as of June 30, 2024.

In the second half of 2024, we expect to pay approximately $40.0 million related to accrued revenue deductions.

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 $19.3 million reduction or increase in Product revenue, net reported in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the six months ended June 30, 2024.

Our total accrued revenue deductions as of September 30, 2024 were $133.6 million, including amounts of $118.2 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 Condensed Consolidated Balance Sheet as of September 30, 2024.

In the three months ending December 31, 2024, we expect to pay approximately $40.0 million related to accrued revenue deductions.

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 $23.6 million reduction or increase in Product revenue, net reported in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the nine months ended September 30, 2024.

We believe our expected values of accruals reported in the Condensed 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 as of December 31, 2023 where the uncertainty remains unresolved, additional information in the six months ended June 30, 2024, resulted in a change in estimate of an additional $11.2 million of net increase to our total accrued revenue deductions as of June 30, 2024.

For critical estimates reported as of December 31, 2023 where the uncertainty remains unresolved, additional information in the nine months ended September 30, 2024, resulted in a change in estimate of an additional $12.6 million of net increase to our total accrued revenue deductions as of September 30, 2024.

Recently Issued and Adopted Accounting Pronouncements

2 unchanged sentences

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 2. Management’s Discussion and Analysis