Adicet Bio, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 15, 2022. This is an annual report, not a standalone fourth-quarter report. Adicet is a clinical-stage biotechnology company developing allogeneic gamma delta T-cell cancer therapies and had no approved products or product sales.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Collaboration revenue, entirely from Regeneron | $9.7 million | $17.9 million |
| Research and development expense | $48.9 million | $34.3 million |
| General and administrative expense | $22.2 million | $22.8 million |
| Total operating expenses | $71.2 million | $57.1 million |
| Operating loss | $61.4 million | $39.2 million |
| Net loss | $62.0 million | $36.7 million |
| Basic and diluted loss per share | $2.00 | $5.01 |
| Net cash used in operating activities | $51.1 million | $41.6 million |
- Revenue fell 46%, primarily because 2020 included revenue associated with a $10.0 million Regeneron milestone and a $5.0 million cumulative catch-up recognition. R&D expense rose 43%, mainly as clinical development and ADI-001 trial activity expanded.
- At year-end, cash and cash equivalents were $277.5 million; current assets were $282.4 million and current liabilities $16.3 million. Accumulated deficit was $168.3 million. No conventional product margins are reported because the company has no product sales.
- Financing activities provided $242.7 million in cash, largely from February and December public offerings and a concurrent private placement. Investing activities used $2.8 million, including $13.0 million of property and equipment purchases, primarily for the Redwood City facility.
- The amended PacWest facility had $4.4 million of ancillary services outstanding and $10.6 million available for term loans at year-end; the filing states no term-loan indebtedness was outstanding. The facility carries interest at the greater of 0.25% above prime or 4.25%.
- Management stated year-end cash was expected to fund operations for at least 12 months from issuance of the financial statements. Elsewhere, the filing estimated funding into the second half of 2024; that runway depends on assumptions and spending.
Business developments and changes
- Lead candidate ADI-001, an anti-CD20 allogeneic gamma delta T-cell therapy for non-Hodgkin lymphoma, entered a Phase 1 trial in March 2021. In interim data through November 22, 2021, six patients had been treated; four were efficacy-evaluable. Three of four evaluable patients responded (reported ORR 75%): two complete responses and one partial response characterized by investigators as near complete. One evaluable patient had progressive disease. The filing cautions that the data remain subject to review and verification.
- Interim safety reporting described generally favorable tolerability and no dose-limiting toxicities, GvHD, ICANS, or Grade 3 or higher CRS reported to date. The small, early-stage patient group limits conclusions; the company planned a further update in the first half of 2022.
- After year-end, on January 28, 2022, Regeneron exercised its option for exclusive worldwide rights to ADI-002 and paid Adicet $20.0 million. Adicet declined to co-fund development; Regeneron is responsible for development, manufacturing, and commercialization costs, and Adicet is entitled to high-single-digit royalties on potential net sales.
- Three additional candidates were in discovery or preclinical stages; the company anticipated IND filings between 2023 and 2025. These are plans, not assured milestones.
- The company raised approximately $128.8 million net in a February 2021 public offering, $15.0 million in a concurrent private placement, and approximately $94.2 million net in a December 2021 public offering. Shares outstanding increased from 19.7 million at year-end 2020 to 39.7 million at year-end 2021.
Outlook, risks, and unusual items
- Management expects substantial continuing losses and higher R&D spending as clinical programs advance. Further capital will be needed to develop and potentially commercialize candidates; financing may be unavailable or dilutive.
- Key risks include ADI-001 clinical failure or unexpected safety issues; regulatory and enrollment delays; dependence on third-party manufacturers and suppliers; scaling and consistency of allogeneic cell production; reliance on Regeneron and other partners; intellectual-property challenges; and competitive, reimbursement, and market-acceptance uncertainty. COVID-19 could disrupt trials, suppliers, or regulatory work, although the company reported no significant operational disruption to date.
- R&D expense included a $1.2 million impairment charge for acquired RTB101 in-process research and development. Adicet terminated its Novartis license in 2021 and concluded the related CVR liability was zero; it terminated its CVR obligations in October 2021.
- Previously reported material weaknesses in financial-reporting controls were assessed by management as remediated at December 31, 2021 after staffing, system, and control changes. The auditor issued an unqualified opinion on the financial statements but did not attest to internal-control effectiveness, consistent with the company’s emerging-growth-company status.
- There were no material legal proceedings reported. The company reported operating lease liabilities of $20.9 million at year-end, including obligations related to its facilities.
Important facts for investors to verify
- Updated ADI-001 trial results: patient numbers, response durability, follow-up, dose selection, and safety events, including CRS, neurotoxicity, and GvHD.
- Actual cash burn and updated runway against the filing’s differing runway statements; the January 2022 Regeneron payment is subsequent to the 2021 balance sheet.
- Regeneron’s development progress and the terms, timing, and conditions of potential royalties or additional option exercises.
- Manufacturing capacity, consistency, supply redundancy, and costs as trials expand.
- Potential dilution from future fundraising and equity awards, and the company’s ability to maintain effective financial controls as reporting requirements increase.