Annual Report for Fiscal Year Ending 12-31, 2024 (Form 10-K)

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 in conjunction with our consolidated financial statements and the related notes to those statements included elsewhere in this Annual Report. In addition to our historical consolidated financial information, the following discussion contains

forward-looking statements that reflect our plans, estimates, beliefs and expectations. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in Part I, Item 1A. "Risk Factors."

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Overview

We are a commercial-stage biopharmaceutical company working to redefine the treatment of solid tumor cancers with cell therapies. With the approval by the U.S. Food and Drug Administration ("FDA") of our first biologics license application ("BLA") for TECELRA, which is the first engineered T-cell therapy for the treatment of a solid tumor cancer approved in the U.S., we are now focused on its launch and commercialization.

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We are planning commercial launch for our second T-cell immunotherapy, lete-cel, for people with synovial sarcoma and myxoid liposarcoma in 2026. This product will significantly expand our treatable patient population within our commercial sarcoma franchise with up to $400 million annual peak combined US sales from TECELRA and lete-cel. We estimate that approximately 400 newly diagnosed patients per year are biomarker eligible for TECELRA, and an incremental 600 newly diagnosed synovial sarcoma and myxoid liposarcoma patients per year in the US will be biomarker eligible for lete-cel.

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In addition to our commercial sarcoma franchise we remain committed to our collaboration with Galapagos which uses our uza-cel candidate manufactured using the Galapagos manufacturing process. A clinical trial authorization to start a Phase 1 trial in head and neck cancer is planned for 2025.

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During the fourth quarter of 2024 we announced that we were ceasing further investment in all non-core programs. We are undertaking a reduction in headcount of approximately 29% and a reduction of total operating expenses of approximately 25% (as compared to 2024 operating expenses). As of the end of February 2025, the majority of the headcount reduction has been completed. As part of this restructuring in December 2024, we also announced changes to our executive leadership team. In addition, we are implementing additional cost reduction for our preclinical PRAME and CD70 programs and are evaluating all strategic options to maximize shareholder value.

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TECELRA and Commercialization

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We are focused on the commercialization of TECELRA for the treatment of advanced synovial sarcoma and for which we received FDA approval on August 1, 2024. As of March 18, 2025, 20 ATCs are available to initiate the treatment journey for our patients and ten patients have been apheresed. We are confident that our full network of approximately 30 ATCs will be active by the end of 2025, covering an estimated 80% of patients treated in sarcoma centers of excellence. Companion diagnostics for biomarker detection are approved and available and we have adequate manufacturing capacity to meet orders. AdaptimmuneAssist is available to support our patients and HCPs.

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Letetresgene autoleucel ("lete-cel")

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Lete-cel targets the NY-ESO antigen and has been in clinical trials (the IGNYTE-ESO trial) for people with synovial sarcoma and myxoid round cell liposarcoma (myxoid liposarcoma). It is the second product in our sarcoma franchise. Final data for the IGNYTE-ESO trial were reported at the Connective Tissue Oncology Society Annual Meeting ("CTOS") in November 2024.

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In January 2025, lete-cel was granted breakthrough therapy designation by the U.S. FDA for the treatment of patients with unresectable or metastatic myxoid liposarcoma who have received prior anthracycline-based chemotherapy, are positive for HLA-A*02:01, HLA-A*02:05, or HLA-A*02:06, and whose tumor expresses the NY-ESO-1 antigen.

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Clinical Programs

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During 2025 we anticipate filing an IND for ADP-5701 for a Phase 1 trial in Head and Neck Cancer in collaboration with Galapagos. The trial will utilize the uza-cel engineered T-cell Receptor (TCR) and Galapagos' innovative decentralized cell therapy manufacturing platform. Uza-cel has shown encouraging results in head and neck cancer with partial responses in four out of five patients to date in a Phase 1 trial using Adaptimmune's manufacturing platform.

Pre-Clinical Programs

Our preclinical pipeline is focused on the development of T-cell therapies directed to PRAME (ADP-600) and CD70 (ADP-520). We have implemented additional cost saving measures in relation to these programs.

Collaborations

We entered into a clinical collaboration agreement with Galapagos in May 2024. Under the collaboration agreement we will conduct a clinical proof-of-concept trial to evaluate the safety and efficacy of uza-cel produced on Galapagos' decentralized manufacturing platform (ADP-5701) in patients with head and neck cancer.

Prior collaborations with Genentech, relating to the research of "off-the-shelf" cell therapies, and GSK, relating to the transition of the NY-ESO and PRAME programs, have now either terminated or been concluded.

Corporate

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We have facilities in the U.S. in Philadelphia and Boston, and in the U.K.

During the fourth quarter of 2024 we announced that we were ceasing further investment in all non-core programs. We are undertaking a reduction in headcount of approximately 29% and a reduction of total operating expenses of approximately 25% (as compared to 2024 operating expenses). As of the end of February 2025, the majority of the headcount reduction has been completed. The restructuring aims to prioritize the commercial sarcoma franchise and R&D programs with the highest potential return on invested capital and transformational benefit to patients. As part of this restructuring the Company plans to focus an increasing proportion of its corporate functions in the US. We are also seeking strategic alternatives for our off-the shelf allogeneic cell therapy program. As part of this restructuring, we announced in December 2024 that Helen Tayton-Martin, our Co-founder and Chief Business and Strategy Officer, and Gavin Wood, our Chief Financial Officer, would step down on March 31, 2025 and May 31, 2025 respectively.

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In addition to the restructuring announced in 2024, in March 2025 we announced implementation of additional cost reduction for the PRAME and CD70 programs. We are currently evaluating all strategic options for the Company and its programs.

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On March 24, 2025 we entered into an amendment to the Loan Agreement. Under the amendment we will pre-pay $25 million of the loan amount under the Loan Agreement together with certain accrued interest up to the date of such pre-payment.

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Financial Operations Overview

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We have generated losses since our inception in 2008, during which time we have devoted substantially all of our resources to the research and development of our cell therapies. We expect to continue to incur losses for the foreseeable future and our net losses may fluctuate significantly from quarter to quarter. Even though we have obtained marketing approval for our first cell therapies, TECELRA, it will take a period of time before any significant revenue is realized and the amount of revenue is heavily dependent on the success of our commercialization and the costs of supplies including any post-marketing requirements we are subject to. Our expenses may fluctuate significantly

depending on the progress of our clinical trials, requirements to conduct additional clinical trials (including as a result of the filing of a BLA), requirement for further manufacturing to support our development activities, investment in additional manufacturing capabilities, requirements to support collaborations or engagement with third parties and investment in resources and infrastructure to support the commercialization of our cell therapies. Further information can be found in Item 1A. Risk Factors.

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Revenue

The Company generates product revenue from sales of TECELRA.

The Company generates development revenue from collaboration agreements with customers. The Company had three development revenue-generating contracts with customers in the years ended December 31, 2024 and 2023, respectively: a collaboration agreement with Astellas that was terminated as of March 6, 2023, the Galapagos Collaboration Agreement (from May 30, 2024), a strategic collaboration and license agreement with Genentech that was terminated as of September 23, 2024 and the GSK Termination and Transfer Agreement from April 11, 2023. The original collaboration and license agreement with GSK was terminated in 2022.

The Genentech Collaboration and License Agreement

On September 3, 2021, Adaptimmune Limited, a wholly owned subsidiary of Adaptimmune Therapeutics plc, entered into a Strategic Collaboration and License Agreement with Genentech, Inc. ("Genentech") and F. Hoffman-La Roche Ltd. The collaboration has two components:

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The parties would collaborate to perform a research program, initially during an eight-year period (which may be extended for up to two additional two-year terms at Genentech's election upon payment of an extension fee for each two-year term), to develop the cell therapies, following which Genentech would determine whether to further develop and commercialize such therapies. The Company received an upfront payment of $150 million in October 2021 and milestone payments of $20 million and $15 million in December 2022 and 2023, respectively.

The Company identified the following performance obligations under the Genentech Collaboration Agreement: (i) research services and rights granted under the licenses for each of the initial "off-the-shelf" collaboration targets, (ii) research services and rights granted under the licenses for the personalized therapies, (iii) material rights relating to the option to designate additional "off-the-shelf" collaboration targets and (iv) material rights relating to the two options to extend the research term. The revenue allocated to the initial "off-the-shelf" collaboration targets and the personalized therapies was recognized as development progressed. The revenue allocated to the material rights to designate additional 'off-the-shelf' collaboration targets would have been recognized from the point that the options were exercised and then as development progressed, in line with the initial "off-the-shelf" collaboration targets, or at the point in time that the rights expired. The revenue from the material rights to extend the research term would have been recognized from the point that the options were exercised and then over the period of the extension, or at the point in time that the options expired.

On April 12, 2024, we announced the termination of the Genentech Collaboration Agreement. The termination was accounted for as a contract modification on a cumulative catch-up basis. The termination did not change the nature the performance obligations identified but resulted in a reduction of the transaction price as the additional payments and variable consideration that would have been due in periods after October 7, 2024 will now never be received. The termination resulted in a cumulative catch-up adjustment to revenue recognized at the date of the termination of $101.3 million.

On September 23, 2024, Adaptimmune Limited entered into a Mutual Release Agreement with Genentech. The Mutual Release Agreement, among other things, resolved and released each party from any and all past, present and

future disputes, claims, demands and causes of action, whether known or unknown, related to the Genentech Collaboration Agreement in any way. Under the terms of the Mutual Release Agreement, Genentech will pay $12.5 million which was received in October 2024, upon which the Genentech Collaboration Agreement was terminated. The Mutual Release Agreement was effective immediately as of September 23, 2024. The Mutual Release Agreement resulted in all remaining performance obligations being fully satisfied and the remaining deferred revenue and the additional payment were both recognized as total revenue of $37.8 million in the third quarter of 2024.

The GlaxoSmithKline ("GSK") Collaboration and License Agreement

The GSK Collaboration and License Agreement consisted of multiple performance obligations. GSK nominated its third target under the Collaboration and License Agreement in 2019, and the Company received $3.2 million following the nomination of the target and a further $4.2 million in June 2021 following achievement of a development milestone, which were being recognized as revenue as development progressed.

The collaboration was terminated in October 2022. A further amendment to the collaboration agreement was entered into on December 19, 2022 for the deletion of certain provisions relating to GSK's post termination manufacturing and supply obligations and payment of £5.0 million ($6.0 million) by GSK to Adaptimmune which was received the in the first quarter of 2023. The revenue associated with this payment and the remaining deferred income relating to the third target of $0.4 million were recognized as revenue in the year-ended December 31, 2022.

The GSK Termination and Transfer Agreement

On April 11, 2023, the Company announced the entry of the Company and GSK into a Termination and Transfer regarding the return to the Company of rights and materials comprised within the PRAME and NY-ESO cell therapy programs. The parties will work collaboratively to ensure continuity for patients in ongoing lete-cel clinical trials forming part of the NY-ESO cell therapy program.

As part of the Termination and Transfer Agreement, sponsorship of the ongoing IGNYTE and LTFU trials relating to the NY-ESO cell therapy program will transfer to the Company. In return for this, the Company received an upfront payment of £7.5 million in June 2023 following the execution of the Termination and Transfer Agreement and further milestone payments of £3 million, £12 million, £6 million and £1.5 million to the Company in September and December 2023 and June and August 2024, respectively. No further payments are due from GSK under the Termination and Transfer Agreement.

The Company has identified the following performance obligations under the Termination and Transfer Agreement: (i) to take over sponsorship and complete the IGNYTE trial and (ii) to take over sponsorship and complete the LTFU trial. The revenue allocated to both obligations is recognized over time from the point that sponsorship of the active trials that make up the trial transfer, based on the number of patients transferred and still actively enrolled to date on the trial at a given period-end relative to the total estimated periods of active patient enrollment over the estimated duration of the trial.

The Astellas Collaboration Agreement

In January 2020, the Company entered into a collaboration agreement with Astellas. The Company received $50.0 million as an upfront payment after entering into the agreement. Under the agreement the parties would agree on up to three targets and would co-develop T-cell therapies directed to those targets pursuant to an agreed research plan. For each target, Astellas would fund co-development up until completion of a Phase 1 trial for products directed to such target. In addition, Astellas was also granted the right to develop, independently of Adaptimmune, allogeneic T-cell therapy candidates directed to two targets selected by Astellas. Astellas would have sole rights to develop and commercialize products resulting from these two targets.

The agreement consisted of the following performance obligations: (i) research services and rights granted under the co-exclusive license for each of the three co-development targets and (ii) the rights granted for each of the two independent Astellas targets. The revenue allocated to the co-development targets was recognized as the development of

products directed to the targets progressed up until completion of a Phase 1 trial. The revenue allocated to each of the research licenses for the targets being independently developed by Astellas was to be recognized when the associated license commenced, which was upon designation of a target by Astellas.

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The Company and Universal Cells mutually agreed to terminate the Astellas Collaboration Agreement as of March 6, 2023 (the "Termination Date"). In connection with the termination, all licenses and sublicenses granted to either party pursuant to the Collaboration Agreement ceased as of the Termination Date. There were no termination penalties in connection with the termination, however the Company was still entitled to receive reimbursement for research and development work performed up to and including a period of 30 days after the Termination Date.

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The termination was accounted for as a contract modification and the modification resulted in the remaining unsatisfied and partially satisfied performance obligations under the collaboration becoming fully satisfied. The aggregate transaction price of the contract modification was $42.4 million, which was primarily comprised of deferred income relating to the third co-development target and the two independent targets and was recognized in full in March 2023.

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The Galapagos Collaboration and Exclusive License Agreement

On May 30, 2024, the Company entered into the Galapagos Collaboration Agreement. The Galapagos Collaboration Agreement includes an option for Galapagos to exclusively license the TCR T-cell therapy candidate uza-cel, manufactured on Galapagos's decentralized manufacturing platform, in head and neck cancer and potential future solid tumor indications. Under the Galapagos Collaboration Agreement, we will conduct a clinical proof-of-concept trial to evaluate the safety and efficacy of uza-cel produced on Galapagos' decentralized manufacturing platform in patients with head and neck cancer.

The Company will receive initial payments of $100 million, comprising $70 million upfront and $30 million of research and development funding, option exercise fees of up to $100 million (the amount depending on the number of indications in relation to which the option is exercised), additional development and sales milestone payments of up to a maximum of $465 million, plus tiered royalties on net sales. The $70 million upfront payment and $15 million of upfront research and development funding was received in June 2024.

The Company has identified a performance obligation relating to the various activities required to complete the POC trial and a material right associated with the exclusive license option. The Company expects to satisfy the POC Trial obligation over time over the period that the trial is completed, based on an estimate of the percentage of completion of the trial determined based on the costs incurred on the trial as a percentage of the total expected costs. The revenue allocated to the material right associated with the exclusive license option will be recognized from the point that the option is either exercised and control of the license has passed to Galapagos or the option lapses.

Cost of Goods Sold

Cost of goods sold represents the costs involved in the manufacture of our commercial products including raw materials, internal manufacturing and staff costs including a share of overheads and other costs incurred in bringing inventories to their existing condition and location prior to sale. Cost of goods sold also includes the costs for excess or obsolete inventory.

Research and Development Expenses

Research and development expenditures are expensed as incurred. Research and development expenses consist principally of the following:

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These expenses are partially offset by:

Research and development expenditure is presented net of reimbursements from reimbursable tax and expenditure credits from the U.K. government. As a company that carries out extensive research and development activities, we benefit from the U.K. research and development tax credit regime for small and medium sized companies ("SME R&D Tax Credit Scheme"), whereby our principal research subsidiary company, Adaptimmune Limited, is able to surrender the trading losses that arise from its research and development activities for a payable tax credit of up to approximately 33.4% of eligible research and development expenditures before April 1, 2023, decreasing to 18.6% after April 1, 2023. Qualifying expenditures largely comprise employment costs for research staff, consumables and certain internal overhead costs incurred as part of research projects for which we do not receive income. Subcontracted research expenditures are eligible for a cash rebate of up to approximately 21.7% before April 1, 2023, decreasing to 12.1% after April 1, 2023. A large proportion of costs in relation to our pipeline research, clinical trials management and manufacturing development activities, all of which are being carried out by Adaptimmune Limited, are eligible for inclusion within these tax credit cash rebate claims.

Expenditures incurred in conjunction with our collaboration agreements are not qualifying expenditures under the SME R&D Tax Credit Scheme but certain of these expenditures can be reimbursed through the U.K. research and development expenditure credit scheme (the "RDEC Scheme"). Under the RDEC Scheme tax relief is given at 20% of allowable R&D costs, which may result in a payable tax credit at an effective rate of approximately 15% of qualifying expenditure for the year ended December 31, 2024.

On July 18, 2023, the U.K. Government released draft legislation on proposed changes to the U.K. research and development regimes which was subsequently enacted on February 22, 2024. These changes include combining the current SME R&D Tax Credit Scheme and RDEC Schemes with a single 20% gross rate applying to all claims with an exception for R&D Intensive SMEs. For entities which qualify as R&D Intensive SMEs, a higher effective cash tax

benefit of 27% will be available. The legislation also includes changes to other rules and types of qualifying expenditure, such as the treatment of subcontracted and overseas costs.

Our research and development expenses may vary substantially from period to period based on the timing of our research and development activities, which depends upon the timing of initiation of clinical trials and the rate of enrollment of patients in clinical trials. The duration, costs, and timing of clinical trials and development of our cell therapies will depend on a variety of factors, including:

A change in the outcome of any of these variables may significantly change the costs and timing associated with the development of that cell therapy. For example, if the FDA, or another regulatory authority, requires us to conduct clinical trials beyond those that we currently anticipate will be required for regulatory approval, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

Selling, General and Administrative expenses

Our selling, general and administrative expenses consist principally of:

Other Income (Expense), Net

Other income (expense), net primarily comprises foreign exchange gains (losses). We are exposed to foreign exchange rate risk because we currently operate facilities in the United Kingdom and United States. Our expenses are generally denominated in the currency in which our operations are located, which are the United Kingdom and United States. However, our U.K.-based subsidiary incurs significant research and development costs in U.S. dollars and, to a lesser extent, Euros. Our U.K. subsidiary has an intercompany loan balance in U.S. dollars payable to the ultimate parent company, Adaptimmune Therapeutics plc. Since July 1, 2019, the intercompany loan has been considered as being a long-term investment as repayment is not planned or anticipated in the foreseeable future. It is Adaptimmune Therapeutics plc's intent not to request payment of the intercompany loan for the foreseeable future. The foreign exchange gains or losses arising on the revaluation of intercompany loans of a long-term investment nature are reported within other comprehensive (loss) income, net of tax.

Our results of operations and cash flows will be subject to fluctuations due to changes in foreign currency exchange rates, which could harm our business in the future. We seek to minimize this exposure by maintaining currency cash balances at levels appropriate to meet forthcoming expenditure in U.S. dollars and pounds sterling. To date, we have not used hedging contracts to manage exchange rate exposure, although we may do so in the future.

In addition to currency fluctuations, adverse macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs, changes to fiscal and monetary policy, tighter credit, and higher interest rates, could materially adversely affect the Company by, for example, driving higher input costs and/or impacting the Company's ability to raise future financing.

Taxation

We are subject to corporate taxation in the United Kingdom and the United States. We incur tax losses and tax credit carryforwards in the United Kingdom. No net deferred tax assets are recognized on our U.K. losses and tax credit carryforwards because there is currently no indication that we will make sufficient taxable profits to utilize these tax losses and tax credit carryforwards. On June 10, 2021, the U.K. 2021 Finance Bill was enacted. Under this bill, the rate of U.K. corporation tax increased to 25% from April 1, 2023, with lower rates and tapered relief applied to companies with profits below £250,000.

We benefit from reimbursable tax credits in the United Kingdom through the SME R&D Tax Credit Scheme as well as the RDEC Scheme which are presented as a deduction to research and development expenditure.

Our subsidiary in the United States, Adaptimmune LLC, has generated taxable profits due to a Service Agreement between our U.S. and U.K. operating subsidiaries and is subject to U.S. federal corporate income tax of 21%. Due to its activity in the United States, and the sourcing of its revenue, Adaptimmune LLC is not currently subject to significant state or local income taxes due to being located in a Keystone Opportunity Zone, which eliminates our state and local taxes in Pennsylvania. No net deferred tax assets are recognized on our U.S. deferred tax attributes, which includes capitalized research and development expenditure and share-based payment temporary differences, because there is not sufficient objectively verifiable evidence that we will make sufficient taxable profits to utilize these attributes. The Company also benefits from the U.S Research Tax Credit and Orphan Drug Credit.

TCR² Therapeutics, Inc. ("TCR²") has incurred net losses since acquisition. TCR²'s operating loss and tax credit carryforwards and other tax attributes are reduced by a valuation allowance to the amount supported by reversing taxable temporary differences because there is currently no indication that we will make sufficient taxable profits to utilize these deferred tax assets. The utilization of TCR²'s losses is also subject to limitations under Section 382 of the Internal Revenue Code, due to the change in ownership.

In the future, if we generate taxable income in the United Kingdom, we may benefit from the United Kingdom's "patent box" regime, which would allow certain profits attributable to revenues from patented products to be taxed at a rate of 10%. As we have many different patents covering our products, future upfront fees, milestone fees, product revenues, and royalties may be taxed at this favorably low tax rate.

U.K. Value Added Tax ("VAT") is charged on all qualifying goods and services by VAT-registered businesses. An amount of 20% of the value of the goods or services is added to all relevant sales invoices and is payable to the U.K. tax authorities. Similarly, VAT paid on purchase invoices paid by Adaptimmune Limited and Adaptimmune Therapeutics plc is reclaimable from the U.K. tax authorities.

Results of Operations

Comparison of Years Ended December 31, 2024 and 2023

The following table summarizes the results of our operations for the years ended December 31, 2024, and 2023, together with the changes to those items (in thousands):

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Revenue

Total revenue increased by $117.8 million to $178.0 million in the year ended December 31, 2024, compared to $60.3 million for the year ended December 31, 2023, primarily due to the termination of the Genentech Collaboration Agreement in April 2024, resulting in a cumulative catch-up adjustment of $101.3 million in the second quarter of 2024, and the subsequent Mutual Release Agreement, resulting in the remaining deferred revenue and additional payment being recognized as $37.8 million of revenue in the third quarter of 2024. This compares to the termination of the Astellas Collaboration Agreement in the first quarter of 2023, which resulted in the remaining deferred revenue for the collaboration of $42.4 million being recognized as revenue in March 2023.

Total revenue from Galapagos, Genentech and GSK in the year ended December 31, 2024 was $0.5 million, $163.9 million and $12.3 million respectively, compared to $44.0 million, $15.8 million and $0.5 million from Astellas, Genentech and GSK in 2023, respectively. The revenue recognized in 2024 and 2023 for Genentech and Astellas, respectively, includes the impact of the events noted above, as well as revenue recognized as research and development work for the collaborations was performed.

Research and development expenses

Research and development expenses increased by $22.6 million to $149.1 million for the year ended December 31, 2024 from $126.5 million for the year ended December 31, 2023. Our research and development expenses comprise the following (in thousands):

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The net increase in our research and development expenses of $22.6 million for the year ended December 31, 2024, compared to the year ended December 31, 2023 was primarily due to the following:

Our subcontracted costs for the year ended December 31, 2024 were $52.1 million, compared to $48.4 million in the same period of 2023. This includes $39.8 million directly associated with our afami-cel, lete-cel and uza-cel T-cells and $12.3 million of other costs.

Our research and development expenses are highly dependent on the phases and progression of our research projects and will fluctuate depending on the outcome of ongoing clinical trials.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $13.7 million to $87.3 million for the year ended December 31, 2024 compared to $73.5 million in the same period in 2023. Our selling, general and administrative expenses comprise the following (in thousands):

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The net increase in our selling, general and administrative expenses of $13.7 million for the year ended December 31, 2024 compared to the same period in 2023 was largely due to:

Impairment of long-lived assets classified as held and used

Impairment of long-lived assets classified as held and used relate to an impairment loss on leasehold improvement assets relating to the UK manufacturing facility, recognized following the restructuring and reprioritization of activities announced in November 2024.

Interest income

Interest income primarily relates to interest on cash, cash equivalents and available-for-sale debt securities and is presented net of amortization/accretion of the premium/discount on purchase of the debt securities. Interest income was $6.6 million for the year ended December 31, 2024, compared to $6.0 million for the year ended December 31, 2023.

Interest expense

Interest expense primarily relates to interest arising on the loan with Hercules Capital.

Other (expense) income, net

Other (expense) income, net was an expense of $1.7 million for the year ended December 31, 2024 compared to $0.8 million for the year ended December 31, 2023. Other income, net primarily relates to unrealized foreign exchange gains and losses on cash and cash equivalents, and intercompany loans held in U.S. dollars by our U.K. subsidiary other than those of a long-term investment nature, where repayment is not planned or anticipated in the foreseeable future.

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Gain on Bargain Purchase

The gain on bargain purchase of $22.0 million arose in June 2023 from the strategic combination with TCR² Therapeutics Inc on June 1, 2023.

Income taxes

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Income tax expenses were $3.6 million for the year ended December 31, 2024 compared to $1.3 million for the year ended December 31, 2023. Income taxes arise in the United States due to Adaptimmune LLC generating taxable profits. Income taxes have increased by $2.2 million for the year ended December 31, 2024 compared to the same period in 2023 due to increased activity in our U.S. subsidiary resulting in higher intercompany recharges and higher taxable profit. We incur losses in the United Kingdom.

Comparison of Years Ended December 31, 2023 and 2022

The following table summarizes the results of our operations for the years ended December 31, 2023, and 2022, together with the changes to those items (in thousands):

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Revenue

Revenue increased by $33.1 million to $60.3 million in the year ended December 31, 2023, compared to $27.1 million for the year ended December 31, 2022, primarily due to the termination of the Astellas collaboration, resulting in the remaining deferred income for the collaboration being recognized as revenue in March 2023.

Research and development expenses

Research and development expenses decreased by $1.2 million to $126.5 million for the year ended December 31, 2023 from $127.7 million for the year ended December 31, 2022. Our research and development expenses comprise the following (in thousands):

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The net decrease in our research and development expenses of $1.2 million for the year ended December 31, 2023, compared to the year ended December 31, 2022 was primarily due to the following:

Our subcontracted costs for the year ended December 31, 2023 were $48.4 million, compared to $54.7 million in the same period of 2022. This includes $26.4 million directly associated with our afami-cel and ADP-A2M4CD8 T-cells and $22.0 million of other costs.

Our research and development expenses are highly dependent on the phases and progression of our research projects and will fluctuate depending on the outcome of ongoing clinical trials.

General and administrative expenses

General and administrative expenses increased by $10.1 million to $73.5 million for the year ended December 31, 2023 compared to $63.4 million in the same period in 2022. Our general and administrative expenses comprise the following (in thousands):

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The net increase in our general and administrative expenses of $10.1 million for the year ended December 31, 2023 compared to the same period in 2022 was largely due to:

Interest income

Interest income primarily relates to interest on cash, cash equivalents and available-for-sale debt securities and is presented net of amortization/accretion of the premium/discount on purchase of the debt securities. Interest income was $6.0 million for the year ended December 31, 2023, compared to $1.5 million for the year ended December 31, 2022. The increase was primarily due to having net accretion of the discount on marketable securities for 2023; accretion on available-for-sale debt securities for the year ended December 31, 2023, was $2.0 million compared to amortization of $2.5 million for the year ended December 31, 2022. This was driven by a change in the Company's portfolio mix and through the acquisition of securities as part of the TCR² acquisition, where more securities were U.S. Treasury securities purchased at a discount rather than corporate debt securities purchased at a premium.

Other (expense) income, net

Other (expense) income, net was an expense of $0.8 million for the year ended December 31, 2023 compared to $0.5 million for the year ended December 31, 2022. Other income, net primarily relates to unrealized foreign exchange gains and losses on cash and cash equivalents, and intercompany loans held in U.S. dollars by our U.K. subsidiary other than those of a long-term investment nature, where repayment is not planned or anticipated in the foreseeable future.

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Gain on Bargain Purchase

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The gain on bargain purchase of $22.0 million arose in June 2023 from the strategic combination with TCR² Therapeutics Inc on June 1, 2023.

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Income taxes

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Income tax expenses were $1.3 million for the year ended December 31, 2023 compared to $2.5 million for the year ended December 31, 2022. Income taxes arise in the United States due to Adaptimmune LLC generating taxable profits. Income taxes have decreased by $1.2 million for the year ended December 31, 2023 compared to the same period in 2022 due to U.S. taxation regime changes coming into effect in 2022, affecting the period over which certain expenses may be deducted from taxable income. The impact of these changes was reduced in 2023 due to the effect of previously capitalized expenses in 2022 becoming deductible in 2023. We incur losses in the United Kingdom.

Liquidity and Capital Resources

Sources of Funds

Since our inception, we have incurred significant net losses and negative cash flows from operations. We financed our operations primarily through sales of equity securities, cash receipts under our Astellas Collaboration Agreement, Galapagos, Genentech and GSK Collaboration and License Agreements and GSK Termination and Transfer Agreement, government grants and research and development tax and expenditure credits. From inception through to December 31, 2024, we have raised:

We use a non-GAAP measure, Total Liquidity, which is defined as the total of cash and cash equivalents and marketable securities, to evaluate the funds available to us in the near-term. A description of Total Liquidity and reconciliation to cash and cash equivalents, the most directly comparable U.S. GAAP measure, are provided below under "Non-GAAP measures".

As of December 31, 2024, we had cash and cash equivalents of $91.1 million and Total Liquidity of $151.6 million.

During the year ended December 31, 2024, the Company incurred a net loss of $70.8 million, used cash of $73.2 million in its operating activities, and generated revenues of $178.0 million. The Company has incurred net losses since inception, and it expects to incur operating losses in foreseeable future periods.

The Company needs to acquire additional funding to finance its operating activities. We are actively looking at a variety of strategic opportunities and have engaged TD Cowen to evaluate strategic options for the Company and all of its programs. These could include potential mergers with third parties, acquisitions of part or all of the business together with other collaborations or partnerships. We are also considering acquiring additional funding through use of the Company ATM and/or other methods of raising equity financing. In addition the Company is also reducing its operating costs and has taken the decision to pause spending on its PRAME and CD70 programs. Although we are currently progressing plans to acquire additional funding, we may be unable to obtain sufficient additional capital to continue funding our operations or at all..

In accordance with Accounting Standards Codification ("ASC") 205-40, Going Concern, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued. Management concluded that substantial doubt exists as to whether we can continue as a going concern within one year after the date the financial statements are issued. See Note 2(c) to the Consolidated Financial Statements for further detail.

None of the potential mitigating actions above are under the direct control of the Company. As a result, the substantial doubt over the Company's ability to continue as a going concern within 12 months from the date of filing of this Annual Report on Form 10-K is not alleviated as of the date of filing.

Cash Flows

The following table summarizes the results of our cash flows for the years ended December 31, 2024, 2023 and 2022 (in thousands).

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Year ended December 31, 2024 compared to year ended December 31, 2023

Net cash used in operating activities decreased by $67.7 million to $73.2 million for the year ended December 31, 2024, compared to $140.9 million for the year ended December 31, 2023. The net cash used in operating activities in the year end December 31, 2024, decreased as a result of the payments of $85 million, $13.8 million and $9.7 million from Galapagos, Genentech and GSK, respectively, compared to $16.8 million and $34.7 million from

Genentech and GSK in 2023, respectively, and receipts of R&D tax credits of $44.3 million in 2024 compared to $1.6 million in 2023. This was offset by an increase in operating expenditure as the Company commenced commercialization of TECELRA.

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In addition, the U.K. R&D tax credits received in the year ended December 31, 2024, were $42.7 million higher than that received during the year ended December 31, 2023, due to the U.K. R&D tax credit for the year ended December 31, 2022 being received in January 2024.

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Year ended December 31, 2023 compared to year ended December 31, 2022

Net cash used in operating activities decreased by $0.9 million to $140.9 million for the year ended December 31, 2023, compared to $141.8 million for the year ended December 31, 2022. The net cash used in operating activities in the year end December 31, 2023 decreased due to a decrease in operating expenditure as a result of the restructuring and de-prioritization of non-core programs that was initiated in the final quarter of 2022, which included a reduction in headcount of approximately 25% and de-prioritization of non-core activities and payments of $16.8 million and $34.7 million from Genentech and GSK in 2023, respectively as compared to payments of $21.3 million from Genentech in 2022. This was partially offset following the business combination with TCR² which resulted in an increase in headcount of 39 and additional operating expenditures relating to activities originating from TCR² as well as various legal and professional fees relating to the acquisition. The impact of these changes resulted in a total combined increase of other corporate costs of $8.2 million but a decrease in salaries, temporary staff, travel, training and other employee-related costs of $2.2 million and subcontracted expenditure of $6.3 million compared to the equivalent period in 2022.

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In addition, the U.K. R&D tax credits received in the year ended December 31, 2023, were $25.2 million lower than that received during the year ended December 31, 2022, because the U.K. R&D tax credit for the year ended December 31, 2022, which in previous years has been received in the fourth quarter of the year, was not received until January 2024.

Components of cash flows from operating activities

Net cash used in operating activities of $73.2 million for the year ended December 31, 2024 comprised a net loss of $70.8 million offset by noncash items of $34.6 million and a net cash outflow of $37.0 million from changes in operating assets and liabilities. The most significant items impacting the change in operating assets and liabilities include the $85 million payments from Galapagos and $33.2 million reduction in Research and development credits receivable. The noncash items consisted primarily of depreciation expense on plant and equipment of $10.8 million, amortization of intangibles of $0.4 million, impairment of long-lived assets of $10.4 million, share-based compensation expense of $12.1 million, accretion of marketable securities of $1.3 million, unrealized foreign exchange losses of $2.0 million and other losses of $0.2 million.

Net cash used in operating activities of $140.9 million for the year ended December 31, 2023 comprised a net loss of $113.9 million offset by noncash items of $2.1 million and a net cash outflow of $25.0 million from changes in operating assets and liabilities. The most significant items impacting the change in operating assets and liabilities include the $15 million additional payment from Genentech and $34.7 million in payments from GSK, offset by a $15.9 million increase in R&D tax credits receivable. The noncash items consisted primarily of depreciation expense on plant and equipment of $9.5 million, amortization of intangibles of $0.4 million, share-based compensation expense of $11.8 million, accretion of marketable securities of $2.0 million, unrealized foreign exchange losses of $0.2 million and other losses of $0.2 million.

Net cash used in operating activities of $141.8 million for the year ended December 31, 2022 comprised a net loss of $165.5 million offset by noncash items of $25.2 million and $1.5 million of unfavorable changes in operating assets and liabilities. The most significant items impacting the change in operating assets and liabilities include the $20 million additional payment from Genentech and $26.9 million in U.K. R&D tax credit receipts, offset by $6 million receivable due from GSK. The noncash items consisted primarily of depreciation expense on plant and equipment of

$5.3 million, amortization of intangibles of $0.8 million, share-based compensation expense of $18.2 million, amortization of marketable securities of $2.5 million, unrealized foreign exchange gains of $2.4 million and other losses of $0.8 million.

Investing Activities

Net cash used in investing activities was $59.0 million for the year ended December 31, 2024 compared to net cash provided by investing activities of $176.5 million for the year ended December 31, 2023. The net cash provided by investing activities for the respective periods consisted primarily of:

The Company invests surplus cash and cash equivalents in marketable securities. Cash provided by investing activities decreased in the year ended December 31, 2024 due to a combination of the cash received from the TCR² acquisition in 2023 and a decrease in maturity or redemption of marketable securities due to 2023 having a high volume of investments maturing due to a combination of higher opening investments on January 1, 2023 compared to January 1, 2024 and the maturity of investments acquired as part of the TCR² acquisition, all of which matured in 2023.

Net cash provided by investing activities increased in the year ended December 31, 2023 due to cash received from the TCR² acquisition and an increase in maturity or redemption of marketable securities due to a combination of most securities on hand at December 31, 2022 reaching maturity in 2023 and from the maturity of investments acquired as part of the TCR² acquisition, all of which matured in 2023.

Net cash provided by investing activities was $89.1 million for the year ended December 31, 2022 compared to net cash provided by investing activities of $75.8 million for the year ended December 31, 2021. The Company invests surplus cash and cash equivalents in marketable securities. Cash provided by investing activities increased in the year ended December 31, 2022. Maturity or redemption of marketable securities of $167.0 million was offset by investment in marketable securities of $48.1 million in the year ended December 31, 2022.

Financing Activities

Net cash provided by financing activities was $78.7 million, $0.9 million and $12.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Net cash provided by financing activities for the year ended December 31, 2024 consisted of net proceeds from public offerings of $29.2 million, proceeds from exercise of share options of $0.1 million and $49.5 million proceeds from the issuance of borrowings, net of discount.

Net cash provided by financing activities for the year ended December 31, 2023 consisted of net proceeds from public offerings of $0.6 million and proceeds from exercise of share options of $0.3 million.

Net cash provided by financing activities for the year ended December 31, 2022 consisted of net proceeds from public offerings of $12.8 million and proceeds from exercise of share options of $0.1 million.

Non-GAAP Measures

Total Liquidity (a non-GAAP financial measure)

Total Liquidity (a non-GAAP financial measure) is the total of cash and cash equivalents and marketable securities. Each of these components appears in the Consolidated Balance Sheet. The U.S. GAAP financial measure most directly comparable to Total Liquidity is cash and cash equivalents as reported in the consolidated financial statements, which reconciles to Total Liquidity as follows (in thousands):

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We believe that the presentation of Total Liquidity provides useful information to investors because management reviews Total Liquidity as part of its management of overall solvency and liquidity, financial flexibility, capital position and leverage. The definition of Total Liquidity includes marketable securities, which are highly liquid and available to use in our current operations.

Material Cash Requirements

As of December 31, 2024 the Company has not generated material revenue from product supplies or royalties. The Company's material cash requirements primarily relate to costs associated with the clinical development of our cell therapies, the development and enhancement of our manufacturing capabilities and securing a commercially viable manufacturing platform for all of our cell therapies, advancing additional cell therapies into preclinical testing and progressing such cell therapies through to clinical trials, supporting commercialization for TECELRA and to fund working capital, including for other general corporate purposes.

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Operating leases

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As of December 31, 2024 the Company had material operating lease obligations of $24.0 million under non-cancellable leases for laboratory and office property in Oxfordshire, United Kingdom, Philadelphia, United States and Massachusetts, United States. Further details of our operating leases are provided in Item 2 and in Note 8 of Item 16 of this Annual Report.

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Purchase obligations

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As of December 31, 2024, the Company's unconditional purchase obligations for capital expenditure totaled $1.5 million and are primarily composed of future payments for intangible assets including software licenses, of which the Company expects to incur $0.9 million within one year and $0.6 million within one to three years.

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The Company also had non-cancellable commitments for the purchase of clinical materials, contract manufacturing, commercial activities and maintenance which have been committed but not yet paid up to $16.6 million, of which the Company expects to incur $11.2 within one year, $3.8 million within one to three years and $1.6 million within three to five years. The amount and timing of these payments vary depending on the rate of progress of development.

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Future payments associated with clinical trials are not considered purchase commitments because they are contingent on enrollment in clinical trials and the activities required to be performed by the clinical sites.

MD Anderson

In 2016, Adaptimmune entered into a multi-year strategic alliance with MD Anderson designed to expedite the development of T-cell therapies for multiple types of cancer. We and MD Anderson collaborated on a number of studies including clinical and preclinical development of our T-cell therapies. Under the terms of the agreement, we committed at least $19.6 million to fund studies. The Company made an upfront payment of $3.4 million to MD Anderson in the year ended December 31, 2017 and milestone payments of $2.3 million, $3.5 million, $0.5 million and $2.3 million in the years ended December 31, 2018, 2020, 2021 and 2022, respectively.

The collaboration ended on March 23, 2022, and enrolment has ceased, therefore the remaining clinical milestones totaling $4.1 million will not be met or become payable by the Company. The remaining preclinical work can continue until completion; the Company expects that the remaining billing upon completion less amounts invoiced to date totals approximately $0.5 million.

On 2 December 2024, MD Anderson served litigation in the District Court of Harris County against Adaptimmune LLC ("Adaptimmune") relating to the strategic alliance. MD Anderson claims damages of over $21 million (excluding legal fees and costs of court) caused by Adaptimmune's breach of contract. Alternatively, MD Anderson brings an action for quantum meruit, promissory estoppel, unjust enrichment, negligent misrepresentation and reformation. Adaptimmune provided its Original Answer, Affirmative Defenses, Special Exceptions and Counterclaims on January 22, 2025 denying all allegations of the MD Anderson petition and counterclaiming for breach of contract. MD Anderson filed a motion to dismiss Adaptimmune's counterclaim, Special Exceptions and Original Answer to the counterclaim denying all allegations in the counterclaim on February 11, 2025.

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The case has not yet proceeded to discovery stage and we do not believe there is any merit to the claims being brought by MD Anderson. As such, no provision for a loss contingency has been made as of December 31, 2024.

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Other obligations

On August 26, 2019, we entered into a collaboration and license agreement relating to the development of next-generation T-cell products with Noile-Immune Biotech, Inc. An upfront exclusive license option fee of $2.5 million was paid to Noile-Immune in 2019. This has been recognized within Research and Development in the Consolidated Statement of Operations for the year ended December 31, 2019. Under the agreement, development and commercialization milestone payments up to a maximum of $312 million may be payable if all possible targets are selected and milestones achieved. Noile-Immune would also receive mid-single-digit percentage royalties on net sales of resulting products.

On May 14, 2019, we entered into a Collaboration Agreement relating to the development of next-generation T-cell products with Alpine. We paid an upfront exclusive license option fee of $2.0 million to Alpine in June 2019. Under the agreement, Adaptimmune will pay Alpine for ongoing research and development funding costs and development and commercialization milestone payments up to a maximum of $288 million, which may be payable if all possible targets are selected and milestones achieved. The upfront payment of $2.0 million and the payments for ongoing research are recognized within Research and development. A further payment of $1 million was paid and recognized within Research and development in the Consolidated Statement of Operations for the year ended December 31, 2022. Alpine would also receive low single-digit royalties on worldwide net sales of applicable products.

As part of the process of obtaining regulatory approval for its products, the Company entered into various agreements for the development of assays for commercial supply, some of which have milestone or other payments that trigger on or after regulatory approval is received from the FDA, and upon the occurrence of future sales or commercial usage of the respective assay.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Our preparation of these

consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, expenses and related disclosures at the date of the consolidated financial statements, as well as revenue and expenses during the reporting periods. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from these estimates under different assumptions or conditions.

Our accounting policies are described in more detail in Note 2 to our consolidated financial statements. We do not believe any of our accounting policies were critical to the judgments and estimates used in the preparation of our financial statements in the year ended December 31, 2024.

Other Accounting Policies, Judgments and Estimates

For the years ended December 31, 2024 and 2023 these accounting policies were not considered to be critical to the judgments and estimates used in the preparation of our financial statements, but were considered to be so for the year ended December 31, 2022.

Identification of performance obligations - research collaborations and related agreements

When the Company enters into research collaboration agreements with customers, both new agreements and amendments to pre-existing agreements, these contracts typically include various promises to customers, both explicit and implicit. As the Company's research collaborations normally relate to early-stage research and development for novel cell therapies, they often include services, licenses and other promises to customers that the Company has not previously provided. As such, when the Company enters into a new collaboration with customers, an assessment is performed to determine both what the explicit promises in the contract are, which may or may not be indicated by the pricing structure of the contract, and whether the contract contains any implicit promises to the customer. This assessment involves judgment about what the substance of the collaboration with the customer is, what goods or services the customer is ultimately engaging with the Company for and which of those goods and services are distinct in the context of the contract.

The Company recognizes revenue as the identified performance obligations are satisfied, which occurs as the Company transfers the promised good or service. The Company transfers a promised good or services as the customer obtains control of the good or service. The nature of the performance obligation and the Company's promise to the customer will determine whether the performance obligation is satisfied, and therefore revenue recognized, over time or at a point in time. The Company recognizes revenue over time using a single measure of progress for each performance obligation that most faithfully depicts the Company's performance in transferring control of goods or services promised to the customer. This assessment requires judgement and involves consideration of both output and input methods to determine which measure is most appropriate for the performance obligation being satisfied. As the Company's collaboration agreements typically have multi-year terms or include performance obligations which are not expected to be settled in a short period of time, the timing of, and measure of progress for, when the Company satisfies performance obligations, can have a significant impact on how the Company recognizes revenue.

An exercise to identify performance obligations and determine how performance obligations are satisfied was required in the years ending December 31, 2024, and 2023 for the Galapagos Collaboration Agreement and the GSK Termination and Transfer Agreement, respectively, although the assessment for the Galapagos Collaboration Agreement in 2024 was not considered to be critical to the judgements used in the preparation of our financial statements.

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Allocation of transaction price using the relative standalone selling price

Upfront and other payments included in the transaction price of a contract are allocated between performance obligations using the Company's best estimate of the relative standalone selling price of the performance obligation. The relative standalone selling price is estimated by determining the market values of development and license obligations. As these inputs are not directly observable, the estimate is determined considering all reasonably available information

including internal pricing objectives used in negotiating the contract, together with internal data regarding the cost and margin of providing services for each deliverable, taking into account the different stage of development of each development program and consideration of adjusted-market data from comparable arrangements, where applicable and available. This assessment involves judgment and could have a significant impact on the amount and timing of revenue recognition.

An assessment of the allocation of transaction price using the relative standalone selling price was required in the years ended December 31, 2024 and 2023 for the Galapagos Collaboration Agreement and the GSK Termination and Transfer Agreement, respectively, although the assessments were not considered to be critical to the judgements used in the preparation of our financial statements.

Impairment of long-lived assets classified as held and used

The determination of whether long-lived assets classified as held and used depends on whether the asset exhibits indicators of potential impairment, which includes changes in the business environment in which the Company operates that affect the asset and changes in the planned usage of the asset.

Long-lived assets classified as held and used are considered not recoverable if the carrying amount exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the asset. An impairment loss is recognized on such assets to the amount that the carrying amount of the asset exceeds its fair value.

The fair value of long-lived assets is calculated using an expected present value technique. The fair value methodology used will differ depending on the nature and potential usage of the asset that is impaired. These approaches use a variety of inputs including external market data and price quotes and internal forecasts of the cash inflows and outflows that could be generated from the usage or disposition of the asset. This estimate involves significant judgment and could have a significant impact on the recognition and amount of impairment losses.

An assessment of fair value of various long-lived assets, primarily right-of-use and leasehold assets relating to the Company's facilities, was required in the year ended December 31, 2024 following the restructuring announced in November 2024.

Operating Leases (Incremental Borrowing Rate)

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Since the rates implicit in our leases are not readily determinable, we use the Company's incremental borrowing rates (the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment) based on the information available at commencement date in determining the discount rate used to calculate the present value of lease payments. As our external borrowings are not collateralized directly on equivalent assets, the incremental borrowing rates are determined using information on indicative borrowing rates that would be available to us based on the value, currency and borrowing term provided by financial institutions, adjusted for company and market specific factors.

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Although we do not expect our estimates of the incremental borrowing rates to generate material differences within a reasonable range of sensitivities, judgement is involved in selecting an appropriate rate, and the rate selected for each lease will have an impact on the value of the lease liability and corresponding right-of-use (ROU) asset in the Consolidated Balance Sheets.

Deferred Taxes

Deferred tax is accounted for using the asset and liability method that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amount and the tax bases of assets and liabilities at the applicable tax rates. As of December 31, 2024, we have deferred tax assets of $313.1 million, offset by deferred tax liabilities of $3.6 million and a valuation allowance of $309.5 million.

A valuation allowance is provided when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Future realization of the tax benefit of a deferred tax asset depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward period available under the tax law. The Company considers the following possible sources of taxable income when assessing whether there is sufficient taxable income to realize a tax benefit for deductible temporary differences and carryforwards:

The Company considers both positive and negative evidence regarding realization of the deferred tax assets and the subjectivity of this evidence. This assessment includes estimating future taxable income, scheduling reversals of temporary differences, evaluating expectations of future profitability, determining refund potential in the event of net operating loss carrybacks, and evaluating potential tax-planning strategies.

The Company has generated losses in the United Kingdom since inception and is forecasted to generate tax losses for the next several years and therefore the deferred tax assets arising in the United Kingdom are only considered more-likely-than-not of being realized to the extent that reversing temporary taxable differences are available.

TCR² has incurred net losses since acquisition and generates research and development tax credits. No net deferred tax assets are recognized on TCR²'s losses and tax credit carryforwards because there is currently no indication that we will make sufficient taxable profits to utilize these tax losses and tax credit carryforwards.

Adaptimmune LLC has generated taxable income since the fiscal year ended June 30, 2014 due to a Service Agreement between our U.S. and U.K. operating subsidiaries and is forecast to generate taxable income in future periods from this agreement and commercial sales of our products. In determining whether the deferred tax asset is more-likely-than-not of being recognized, the Company has taken into account the recent history of taxable profits, the forecast of future taxable income, including whether future originating temporary deductible differences are likely to be realized, and the reversal of temporary taxable deductions. Several of the temporary deductible differences reverse over a long time period, such as those relating to share-based compensation expense, which the Company forecasts are likely to reverse over the next five years. The Company considers that forecasting taxable income beyond the next few years is very subjective due to the nature and extent of the development process subcontracted from the Company in the United Kingdom to Adaptimmune LLC and the level of future commercial product sales. Less weight has been given to forecasts of taxable income beyond the next few years.

The Company's analysis is subject to estimates and judgments particularly relating to the timing of the reversal of temporary deductible differences for stock compensation expense and the availability of future taxable income beyond the next few years, which depend on the nature and extent of the subcontract development work performed by Adaptimmune LLC.

The deferred tax asset arising in Adaptimmune LLC is only considered more-likely-than-not of being realized to the extent that there are available reversing temporary taxable differences. As there is substantial doubt over whether the Company is a going concern, the Company considered Adaptimmune LLC's future taxable income over the period that our cash, cash equivalents and marketable securities are expected to fund our currently anticipated research, development and commercial activities and planned capital spending. Based on this assessment, the Company determined that there is not sufficient objectively verifiable positive evidence of future taxable income exclusive of reversing temporary differences and carryforwards that Adaptimmune LLC will generate each year such that it would be more-likely-than-not that the current deferred tax asset in the Adaptimmune LLC may be utilized. Therefore, the

Company concluded that a full valuation allowance should be maintained against the deferred tax asset of Adaptimmune LLC.

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