Adicet Bio, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed March 19, 2024. This is an annual report, not a standalone fourth-quarter report. Adicet is a clinical-stage biotechnology company developing allogeneic “off-the-shelf” gamma delta T-cell therapies. It has no approved products and no product sales.
Financial performance and liquidity
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Revenue | $0 | $25.0 million |
| Research and development expense | $106.0 million | $71.2 million |
| General and administrative expense | $26.5 million | $26.3 million |
| Goodwill impairment | $19.5 million | $0 |
| Net loss | $142.7 million | $69.8 million |
| Net loss per share, basic and diluted | $3.31 | $1.70 |
| Cash and cash equivalents at year-end | $159.7 million | $257.7 million |
| Net cash used in operating activities | $93.7 million | $44.8 million |
| Net cash used in investing activities | $4.5 million | $16.8 million |
Operating margins are not meaningful for this pre-revenue company. Research and development costs rose 49%, primarily from higher CDMO and other external research costs, increased personnel, facility costs and laboratory expenses. The 2022 related-party revenue was recognized under the Regeneron collaboration; the company reported no revenue in 2023 after completing its performance obligations.
At December 31, 2023, total assets were $207.3 million, total liabilities $37.1 million and stockholders’ equity $170.2 million. Liabilities included $20.9 million of operating lease obligations. No amounts were drawn under the Banc of California loan agreement; $12.7 million was available under the facility, subject to its terms and covenants. The company reported covenant compliance.
After year-end, Adicet raised approximately $19.3 million net through its ATM program and approximately $91.8 million net in an underwritten offering. The offering included 32.38 million common shares and pre-funded warrants for 8.45 million shares; the ATM sales added 6.35 million shares. The ATM program was terminated in March 2024. Management said year-end cash plus these subsequent proceeds was expected to fund operations for at least 12 months from the financial statement issuance date, and separately estimated capitalization into the second half of 2026.
Business developments and changes
- ADI-001: The FDA cleared an IND for lupus nephritis in December 2023. The candidate remains in Phase 1 development for relapsed or refractory B-cell non-Hodgkin lymphoma (NHL). In January 2024, Adicet deprioritized enrolling large B-cell lymphoma patients to focus on mantle cell lymphoma (MCL).
- In the NHL Phase 1 trial, interim data as of May 4, 2023 covered 24 efficacy-evaluable patients: overall response rate was 71% and complete response rate 63% across dose levels. In the five-patient MCL subgroup, the reported overall and complete response rates were each 80%, with a 60% six-month complete response rate. These are small, interim cohorts; the filing describes one Grade 3-or-higher CRS event and one Grade 3-or-higher ICANS event among 24 safety-evaluable patients.
- ADI-270: A preclinical CD70-targeted candidate for renal cell carcinoma and potentially other CD70-positive tumors. The company planned to submit an IND in the second quarter of 2024, subject to development and regulatory progress.
- Adicet paused preclinical development of ADI-925 in November 2023 to prioritize resources for ADI-270. The company completed buildout of its Redwood City GMP cell-processing and vector-manufacturing suite in February 2023, but disclosed that it had not commenced manufacturing operations there and continued to rely on third parties.
- Regeneron’s ADI-002 program is licensed to Regeneron, which is responsible for its development, manufacturing and commercialization. Adicet may receive royalties on future sales; none had been earned through year-end 2023.
Outlook, risks and unusual items
Management expected to initiate the ADI-001 lupus nephritis Phase 1 trial in the second quarter of 2024, pursue one to two additional autoimmune indications subject to IND clearance, and provide preliminary autoimmune data beginning in late 2024 or 2025, depending on site activation and enrollment. For NHL, the company expected an update including additional MCL safety and efficacy data in the second half of 2024, and planned to define a potential MCL Phase 2 regulatory path in the first half of 2025, subject to data and regulatory feedback. These are forward-looking plans, not guarantees. The company provided no product revenue or earnings guidance.
- Funding and losses: Adicet has a $380.8 million accumulated deficit and expects significant future losses and additional financing needs. Management’s runway estimate depends on assumptions and spending may exceed forecasts.
- Clinical and regulatory risk: Candidates remain investigational; early, open-label results may not predict later outcomes. Trials may be delayed, fail, or reveal safety concerns, and regulatory approval is uncertain.
- Manufacturing and supply: Reliance on CDMOs and suppliers creates risks around capacity, quality, cost and timely supply. Commercial-scale manufacturing has not been demonstrated.
- Goodwill impairment: A sustained share-price decline in 2023 led to a $19.5 million charge that fully impaired goodwill.
- Equity compensation and dilution: In August 2023, 6.43 million options were repriced to $2.14 per share, subject to specified conditions; the modification generated $4.6 million of incremental compensation cost, of which $1.3 million was recognized in 2023. Subsequent financing substantially increased the share count.
- Tax contingency: California’s Franchise Tax Board was auditing the company’s 2017 revenue apportionment; Adicet was evaluating the state’s proposal and the potential payment obligation was not resolved in the filing.
- Other risks: Competition, intellectual-property challenges, collaboration dependence, reimbursement uncertainty, supply interruptions, market volatility and the ability to retain key personnel could adversely affect results. No material legal proceedings were reported.
Important facts for investors to verify
- Review subsequent ADI-001 MCL trial data, including cohort size, response durability, safety events and the basis for any pivotal-trial plan.
- Check whether the lupus nephritis and ADI-270 trial timelines were met and whether additional INDs received clearance.
- Reconcile the cash runway estimate with quarterly operating cash use, spending plans and any further financing or dilution.
- Track manufacturing readiness, CDMO capacity and whether the Redwood City facility begins operations.
- Follow the California tax audit outcome, loan-facility covenants and any developments in the Regeneron collaboration or potential royalty streams.
The financial statements received an unqualified audit opinion from KPMG. Management assessed internal control over financial reporting as effective; the auditor did not provide an attestation on internal controls.