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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                

Commission File Number: 001-40367

VACCITECH PLC

(Exact Name of Registrant as Specified in its Charter)

England and Wales

Not Applicable

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

The Schrödinger Building

Heatley Road

The Oxford Science Park

Oxford, United Kingdom

OX4 4GE

(Address of principal executive offices)

(Zip Code)

Registrants telephone number, including area code: +44 (0) 1865 818 808

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

American Depositary Shares*

VACC

The Nasdaq Global Market

Ordinary shares, nominal value £0.000025 per share**

*American Depositary Shares may be evidenced by American Depositary Receipts. Each American Depositary Share represents one (1) ordinary share.

**Not for trading, but only in connection with the listing of American Depositary Shares on The Nasdaq Global Market.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes     No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes     No  

As of May 10, 2022, the registrant had 37,200,321 ordinary shares, nominal value £0.000025 per share, outstanding.

Table of Contents

Table of Contents

Page

PART I - FINANCIAL INFORMATION

1

Item 1.

Financial Statements

1

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

29

Item 4.

Controls and Procedures

30

PART II - OTHER INFORMATION

30

Item 1.

Legal Proceedings

30

Item 1A

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

Item 3.

Defaults Upon Senior Securities

33

Item 4.

Mine Safety Disclosures

33

Item 5.

Other Information

33

Item 6.

Exhibits

34

SIGNATURES

35

We own various trademark registrations and applications, and unregistered trademarks, including our name, our corporate logo and technologies acquired as part of our acquisition of Avidea Technologies, Inc. in December 2021. We have an exclusive license to use and display the Vaccitech registered trademark in order to commercialize Vaccitech in the United Kingdom. All other trade names, trademarks and service marks of other companies appearing in this prospectus are the property of their respective holders. Solely for convenience, the trademarks and trade names in this prospectus may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend to use or display other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

From time to time, we may use our website, our Facebook page at Facebook.com/Vaccitech, our Twitter account at @Vaccitechplc and our LinkedIn account at linkedin.com/company/Vaccitech-plc/to distribute material information. Our financial and other material information is routinely posted to and accessible on the Investors section of our website, available at www.vaccitech.co.uk. Investors are encouraged to review the Investors section of our website because we may post material information on that site that is not otherwise disseminated by us. Information that is contained in and can be accessed through our website, our Facebook page, our Twitter posts and our LinkedIn posts are not incorporated into, and does not form a part of, this Quarterly Report.

i

Table of Contents

PART I -  FINANCIAL INFORMATION

Item 1.   Financial Statements.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Condensed Consolidated Financial Statements (Unaudited)

Page

Condensed Consolidated Balance Sheets

2

Condensed Consolidated Statements of Operations and Comprehensive Loss

3

Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Shares and Shareholders’ Equity (Deficit)

4

Condensed Consolidated Statements of Cash Flows

5

Notes to Condensed Consolidated Financial Statements

6

1

Table of Contents

VACCITECH PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS)

(UNAUDITED)

    

March 31, 

    

December 31, 

 

    

2022

    

2021

 

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

200,596

$

214,054

Accounts receivable

 

18,011

 

20

Research and development incentives receivable

 

4,778

 

6,229

Prepaid expenses and other current assets

 

7,398

 

6,462

Total current assets

 

230,783

 

226,765

Goodwill

12,630

12,630

Property and equipment, net

 

4,583

 

1,829

Intangible assets, net

 

30,640

31,430

Right of use assets, net

6,699

 

7,257

Other assets

788

804

Total assets

$

286,123

$

280,715

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

  

Current liabilities:

Accounts payable

$

4,660

$

2,419

Accrued expenses and other current liabilities

 

11,330

7,875

Deferred revenue

 

162

 

182

Current portion of lease liability

 

331

 

523

Debt

 

159

Total current liabilities

 

16,483

11,158

Lease liability – non current

 

6,404

 

6,540

Contingent consideration

2,444

 

2,371

Deferred tax liability, net

7,221

8,084

Other non-current liabilities

434

Total liabilities

$

32,986

$

28,153

Commitments and contingencies (Note 13)

 

  

Shareholders’ equity:

 

  

 

Ordinary shares, £0.000025 nominal value; 37,193,367 shares authorized, issued and outstanding (December 31, 2021: authorized, issued and outstanding: 37,188,730)

$

1

$

1

Deferred A shares, £1 nominal value; 63,443 shares authorized, issued and outstanding (December 31, 2021: authorized, issued and outstanding: 63,443)

 

86

 

86

Deferred B shares, £0.01 nominal value; 570,987 shares authorized, issued and outstanding (December 31, 2021 authorized, issued and outstanding: 570,987)

8

8

Deferred C shares, £0.000007 nominal value, 27,828,231 shares authorized, issued and outstanding (December 31, 2021: authorized, issued and outstanding: 27,828,231)

 

0

1

 

0

1

Additional paid-in capital

 

373,087

 

369,103

Accumulated deficit

 

(105,989)

 

(108,585)

Accumulated other comprehensive loss – foreign currency translation adjustments

 

(14,456)

 

(8,488)

Noncontrolling interest

 

400

 

437

Total shareholders’ equity

$

253,137

 $

252,562

Total liabilities and shareholders’ equity

$

286,123

 $

280,715

1 Indicates amount less than thousand

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

Table of Contents

VACCITECH PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(IN THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS)

(UNAUDITED)

Three months ended

    

March 31, 2022

    

March 31, 2021

License revenue

$

15,009

$

16

Service revenue

 

 

21

Research grants and contracts

 

9

 

178

Total revenue

 

15,018

 

215

Operating expenses

 

 

Research and development

 

10,701

 

4,610

General and administrative

 

3,663

 

1,777

Total operating expenses

 

14,364

 

6,387

Income/(loss) from operations

 

654

 

(6,172)

Other income (expense):

 

 

Change in fair value of derivatives

 

 

5,994

Unrealized exchange gain on convertible loan notes

 

 

209

Loss on extinguishment of convertible loan notes

 

 

(13,789)

Interest income

 

83

 

2

Interest expense

 

(74)

 

(2,650)

Research and development incentives

 

1,048

 

955

Total other income (expense)

 

1,057

 

(9,279)

Tax benefit

 

863

 

65

Net income/(loss)

 

2,574

 

(15,386)

Net loss attributable to noncontrolling interest

 

22

 

118

Net income/(loss) attributable to Vaccitech plc Shareholders

 

2,596

 

(15,268)

Weighted-average ordinary shares outstanding, basic

 

37,191,022

 

8,057,216

Weighted-average ordinary shares outstanding, diluted

38,346,668

8,057,216

Net income/(loss) per share attributable to ordinary shareholders, basic

$

0.070

$

(1.90)

Net income/(loss) per share attributable to ordinary shareholders, diluted

$

0.068

$

(1.90)

Net income/(loss)

$

2,574

$

(15,386)

Other comprehensive loss-foreign currency translation adjustments

 

(5,983)

 

(1,416)

Comprehensive loss

 

(3,409)

 

(16,802)

Comprehensive loss attributable to noncontrolling interest

 

37

 

114

Comprehensive loss attributable to Vaccitech Plc Shareholders

$

(3,372)

$

(16,688)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

Table of Contents

VACCITECH PLC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES

AND SHAREHOLDERS’ EQUITY (DEFICIT)

(IN THOUSANDS, EXCEPT NUMBER OF SHARES)

(UNAUDITED)

Three months ended March 31, 2022

Accumulated

Additional

Other

Total

Ordinary Shares

Deferred A Shares

Deferred B Shares

Deferred C Shares

Paid-in-

Accumulated

Comprehensive

Noncontrolling

Shareholders’

  

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

capital

    

Deficit

    

Loss

    

Interest

    

Equity

Balance, January 1, 2022

37,188,730

$

1

63,433

$

86

570,987

$

8

27,828,231

$

0

1

 $

369,103

$

(108,585)

$

(8,488)

$

437

$

252,562

Share based compensation

 

 

 

 

3,984

 

 

 

 

3,984

Issue of ordinary shares

4,637

 

0

1

 

 

0

1

 

 

 

 

0

1

Foreign currency translation adjustments

 

 

 

 

 

 

(5,968)

 

(15)

 

(5,983)

Net income

2,596

(22)

2,574

Balance, March 31, 2022

37,193,367

$

1

63,443

$

86

570,987

$

8

27,828,231

$

0

1

$

373,087

$

(105,989)

$

(14,456)

$

400

$

253,137

Three months ended March 31, 2021

 

Series A Redeemable

Series B Redeemable 

Accumulated

 

Convertible Preferred

Convertible Preferred

Additional

Other

Total

 

Shares

Shares

Ordinary Shares

Deferred A Shares

Paid-in-

Accumulated

Comprehensive

Noncontrolling

Shareholders’

    

Shares

    

Amount

    

Shares

    

Amount

 

Shares

    

Amount

    

Shares

    

Amount

    

capital

    

Deficit

    

Loss

    

Interest

    

 Deficit

 

Balance, January 1, 2021

 

22,065

$

33,765

 

$

7,960,458

$

0

1

$

$

21,660

$

(57,720)

$

(1,243)

$

391

$

(36,912)

Share based compensation

797

797

Issue of Series B shares, net of issuance costs

28,957

121,837

Series B Shares issued on conversion of convertible notes

 

 

 

12,421

 

53,721

 

 

Issue of Deferred A shares

 

 

(29)

 

 

(57)

 

63,443

 

86

86

Issue of ordinary shares

 

 

 

 

263,886

 

0

1

 

0

1

Foreign currency translation adjustments

 

 

 

 

 

 

 

(1,420)

4

(1,416)

Net loss

 

 

 

 

 

 

 

(15,268)

(118)

(15,386)

Balance, March 31, 2021

 

22,065

$

33,736

 

41,378

$

175,501

8,224,344

$

0

1

63,443

$

86

$

22,457

$

(72,988)

$

(2,663)

$

277

$

(52,831)

1 Indicates amount less than thousand

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Table of Contents

VACCITECH PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

    

Three months ended

 

    

March 31, 2022

    

March 31, 2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

  

 

  

Net income/(loss)

$

2,574

$

(15,386)

Adjustments to reconcile net income/loss to net cash used in operating activities:

 

 

Share based compensation

 

3,984

 

797

Depreciation and amortization

 

966

 

92

Right of use asset and liability

 

228

 

11

Fair valuation gain on embedded derivatives

 

 

(5,994)

Unrealized foreign exchange gain on convertible loan notes

 

 

(209)

Non-cash interest expense on convertible loan notes

 

 

813

Fair value change in contingent consideration

143

Deferred tax benefit

(863)

(25)

Loss on conversion of convertible loan notes

 

 

13,789

Other non-cash expenses

12

Changes in operating assets and liabilities:

Accounts receivable

 

(18,352)

 

208

Prepaid expenses and other current assets

 

(1,121)

 

(393)

Research and development incentives receivable

 

1,300

 

(955)

Accounts payable

 

1,739

 

(707)

Accrued expenses and other current liabilities

 

2,830

 

(108)

Deferred revenue

 

(15)

 

98

Other assets

 

(4)

 

Net cash used in operating activities

$

(6,579)

$

(7,969)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

Purchases of property and equipment

 

(1,092)

 

(392)

Net cash used in investing activities

$

(1,092)

$

(392)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

  

 

  

Issue of shares and exercise of stock options

 

0

1

 

0

1

Repayment of debt

(159)

Initial public offering costs

 

 

(22)

Transaction costs for Series B shares

 

 

(3,402)

Proceeds from issue of Series B shares

 

 

125,239

Net cash (used)/provided by financing activities

(159)

121,815

EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS

$

(5,628)

$

(785)

Net (decrease) increase in cash and cash equivalents

 

(13,458)

 

112,669

Cash and cash equivalents, beginning of the period

 

214,054

 

43,266

Cash and cash equivalents, end of the period

$

200,596

$

155,935

Supplemental cash flow disclosures:

Cash paid for interest

$

$

1,844

Non-Cash investing and financing activities

Capital expenditures included in accounts payable

$

1,365

$

67

Issue of deferred A shares

$

$

86

Issue of Series B shares

$

$

53,721

Changes to right-of-use asset resulting from lease reassessment event

$

(36)

$

Asset retirement obligation

$

443

$

1 Indicates amount less than thousand

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.

Nature of Business and Basis of Presentation

Vaccitech plc (Vaccitech) is a public limited company incorporated pursuant to the laws of England and Wales in March 2021. Vaccitech is engaged in the discovery and development of novel immunotherapeutics and vaccines for the treatment and prevention of infectious diseases, autoimmunity, and cancer. Vaccitech is headquartered in Oxford, United Kingdom. Vaccitech and direct and indirect subsidiaries, Vaccitech (UK) Limited, Vaccitech Australia Pty Limited, Vaccitech Oncology Limited (“VOLT”), Vaccitech USA Inc., Vaccitech North America, Inc. and Vaccitech Italia S.R.L, are collectively referred to as the “Company”.

In connection with the initial public offering of American Depositary Shares (“ADSs”), in March 2021, Vaccitech completed a corporate reorganization wherein the shareholders of Vaccitech (UK) Limited (formerly Vaccitech Limited) exchanged each of their ordinary shares, Series A Shares and Series B Shares of the Company for the same quantity of ordinary shares, series A shares (“Vaccitech plc Series A Shares”) and series B shares (“Vaccitech plc Series B Shares”) in Vaccitech plc (resulting in the shareholders of the Company holding the same percentage and class of shares in Vaccitech plc (formerly Vaccitech Rx Limited) as they had in Vaccitech (UK) Limited (formerly Vaccitech Limited). The group reorganization under common control constitutes a change in reporting entity and has been given retrospective effect reflecting the net assets of Vaccitech (UK) Limited (formerly Vaccitech Limited) and its subsidiaries and Vaccitech plc at their historical carrying amounts. As a result of the reorganization the comparative period presented these unaudited condensed consolidated financial statements have been presented as if Vaccitech plc was the holding company of the group.

The Company operates in an environment of rapid technological change and substantial competition from pharmaceutical and biotechnology companies. The Company is subject to risks common to companies in the biopharmaceutical industry in similar stage of its life cycle including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its vaccine product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of any of its products that are approved, and protection of proprietary technology. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain required regulatory approval or that any approved products will be commercially viable. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will generate significant product sales. If the Company does not successfully commercialize any of its products or mitigate any of these other risks, it will be unable to generate revenue or achieve profitability.

Basis of presentation

The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Certain notes or other information that are normally required by GAAP have been omitted if they substantially duplicate the disclosures contained in the Company’s annual audited consolidated financial statements. Accordingly, the unaudited condensed consolidated financial statements should be read in connection with the Company’s audited financial statements and related notes as of and for the year ended December 31, 2021.

On May 4, 2021, the Company effected a 309-for-1 stock split of ordinary shares. Each resultant ordinary share from the stock split was redesignated as one ordinary share and one deferred C share. Accordingly, all ordinary share and per share amounts for the comparative prior period presented in the accompanying unaudited condensed consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the stock split.

The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

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VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Unaudited Condensed Financial Information

The accompanying Condensed Consolidated Balance Sheet as of March 31, 2022, the Condensed Consolidated Statements of Operations and Comprehensive Loss, Condensed Consolidated Statements of Changes In Redeemable Convertible Preferred Shares and Shareholders’ Equity (Deficit) and the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 are unaudited. These unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements. In our opinion, the unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of our financial position as of March 31, 2022, our results of operations and our cash flows for the three months ended March 31, 2022 and 2021. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or any other interim period.

2.

Summary of Significant Accounting Policies

The accounting policies of the Company are set forth in Note 2 to the consolidated financial statements as of and for the year ended December 31, 2021 except as discussed below related to newly adopted accounting pronouncements.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of costs and expenses during the reporting period. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates under different assumptions or conditions.

We have experienced and expect to continue to experience disruptions as a result of the COVID-19 pandemic that could severely impact the Company’s clinical and pre-clinical development timelines for the Company’s clinical and pre-clinical programs. Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. In respect of the international situation in Ukraine, we have assessed the impact on the Company as minimal. We have no operations or suppliers based in Ukraine, Belarus, or Russia, and there is consequently no additional risk or negative impact on the unaudited condensed consolidated financial statements. We have no operations or suppliers based in Turkey either, and therefore the Company is not impacted by the potential hyperinflationary environment in that country. As of the date of issuance of these unaudited condensed consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s financial statements.

Recently issued accounting pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected not to “opt out” of the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company can adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and can do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company.

The Company adopted ASU No. 2021-10 - Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance on January 1, 2022. The new standard did not have an impact on the Company’s unaudited condensed consolidated financial statements.

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VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

3.

Net income/(loss) per share

The following table sets forth the computation of basic and diluted net income/loss per share for the three months ended March 31, 2022 and 2021 (in thousands, except number of shares):

Three months ended March 31, 

 

    

2022

    

2021

    

Numerator:

 

  

 

  

Net income/(loss)

$

2,574

$

(15,386)

Net loss attributable to noncontrolling interest

 

22

 

118

Net income/(loss) attributable to Vaccitech shareholders

$

2,596

$

(15,268)

Denominator:

 

 

Weighted-average ordinary shares outstanding, basic

 

37,191,022

 

8,057,216

Effect of dilutive stock options

1,155,646

Weighted-average ordinary shares outstanding, diluted

38,346,668

8,057,216

Net income/(loss) per share attributable to ordinary shareholders, basic

$

0.070

$

(1.90)

Net income/(loss) per share attributable to ordinary shareholders, diluted

$

0.068

$

(1.90)

Potential ordinary shares issuable upon conversion or exercise of Series A & Series B Shares and stock options that are excluded from the computation of diluted weighted-average shares outstanding are as follows:

Three months ended March 31, 

    

2022

    

2021

Series A shares

 

6,818,085

Series B shares

 

12,785,802

Stock options

 

2,014,204

1,895,097

4.

Prepaid and other current assets (in thousands)

March 31, 

December 31, 

    

2022

    

2021

Prepayments and accrued income

$

5,479

$

4,612

Value Added Tax receivable

 

31

 

705

Employee retention and payroll tax credit

80

150

Others

 

1,808

 

995

Total

$

7,398

$

6,462

5.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

    

March 31, 

    

December 31, 

2022

2021

Accrued manufacturing and clinical expenses

$

4,082

$

1,789

Accrued board of director compensation

 

30

 

91

Accrued bonus

 

503

 

1,333

Accrued payroll and employee benefits

 

726

 

1,072

Accrued professional fees

 

2,082

 

2,338

Accrued other

 

1,628

 

1,252

Value Added Tax payable

2,279

Total

$

11,330

$

7,875

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VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

6.

Series B shares

On March 15, 2021, the Company issued 28,957 Series B preferred shares (‘‘Series B Shares’’) amounting to $125,239 thousand and incurred transaction costs of $3,402 thousand.

On March 31, 2021, the Company subdivided each of the Series A shares and Series B shares (including the Series B shares issued on conversion of the convertible loan notes) into one share of the same class and one deferred A share with a nominal value of £1.00 per share.

On May 4, 2021 prior to the closing of the Company’s initial public offering and pursuant to the terms of its articles of association, all of the Series A Shares and Series B Shares were converted into 19,603,887 ordinary shares, 570,987 deferred B shares and 19,603,887 deferred C shares.

7.

Convertible loan notes

The Company recognized interest expense of $2,650 thousand and a change in fair value of $5,994 thousand in relation to the conversion and redemption features embedded in the convertible loan notes in the condensed consolidated statements of operations and comprehensive loss for the period ended March 31, 2021.

The Series B funding on March 15, 2021 constituted a qualified equity financing in accordance with the terms of the convertible loan notes. As a result, the convertible loan notes were converted on March 15, 2021 into 12,421 Series B Shares with the conversion price being 0.8 times the Series B Shares issue price.

The conversion was accounted for as an extinguishment of the convertible loan notes. As a result, the 12,421 Series B preferred shares issued on conversion was recognized at the settlement-date fair value of the Series B shares ($53,721 thousand) and a loss of $13,789 thousand was recognized in earnings for the difference between (1) the fair value of those shares and (2) the sum of the carrying amounts of the convertible loan notes ($25,557 thousand) and the bifurcated conversion and redemption feature liability ($14,375 thousand).

8.

Deferred A Shares

On March 31, 2021, Vaccitech Plc subdivided each of the Series A shares and Series B shares into one share of the same class and one deferred A share with a nominal value of £1.00 per share. The deferred A shares do not have rights to dividends or to participate in profits on a return of assets on liquidation, the deferred A shares shall confer on the holders thereof an entitlement to receive out of the assets of the Company available for distribution amongst the shareholders (subject to the rights of any new class of shares with preferred rights) the amount credited as paid up on the deferred A shares held by them respectively after (but only after) payment shall have been made to the holders of the ordinary shares of the amounts paid up or credited as paid up on such shares and the sum of £1,000 thousand ($1,373 thousand) in respect of each ordinary share held by them respectively. The deferred A shares shall confer on the holders thereof no further right to participate in the assets of the Company.

9.

Fair value

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, security deposit, accounts payable, certain accrued expenses, and contingent consideration. The carrying amounts of cash and cash equivalents, accounts receivable, security deposit, accounts payable and accrued expenses approximated their respective fair value due to the short-term nature and maturity of these instruments.

As of March 31, 2022, the Company had a contingent consideration liability of $2,444 thousand related to the acquisition of Avidea Technologies, Inc. The fair value of the contingent consideration is a Level 3 valuation with the significant unobservable inputs being the probability of success of achievement of the milestone and the expected date of the milestone achievement. Significant judgment is employed in determining the appropriateness of certain of these inputs.

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VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

For the three months ended March 31, 2021, the Company had an embedded derivative liability related to the conversion features, the cash redemption feature on maturity and the cash redemption feature upon an exit event that settles in noncash consideration embedded in convertible loan notes. The fair value of the embedded derivatives is a Level 3 valuation with the significant unobservable inputs being the probability of exercise of conversion and cash redemption features. Significant judgment is employed in determining the appropriateness of certain of these inputs.

The following table summarizes changes to our financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy (in thousands):

Three months ended

March 31, 

    

2022

    

2021

Beginning balance

$

2,371

$

20,109

Change in fair value recognized in net income/loss

 

143

 

(5,994)

Settlement

 

 

(14,375)

Foreign exchange translation

 

(70)

 

260

Ending balance

$

2,444

$

10.Goodwill

During the first quarter of 2022, the Company identified qualitative indicators of impairment due to sustained decline in the price of the Company’s American Depositary Shares. Therefore, the Company performed an interim qualitative assessment as of March 31, 2022 to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Based on this assessment, management determined it is not more likely than not that the fair value of the reporting unit is less than its carrying amount. The Company will perform its annual goodwill impairment test as of November 30, 2022.

11.Share-Based Compensation

During the three month period ended March 31, 2022, in accordance with the terms of the Annual Increase of the Vaccitech plc Share Award Plan 2021, the total number of ordinary shares available for issuance under the Plan increased by 4% of the Company’s issued and outstanding ordinary shares as of January 1, 2022.

During the three months ended March 31, 2022, the Company granted 1,632,922 options to employees and directors with a grant date fair value of $3.75 and a weighted average exercise price of $11.24 per share. For the three months ended March 31, 2021, the Company granted 364,620 options to employees and directors with a grant date fair value of $9.14 and a weighted average exercise price of $0.00003 per share.

The fair value of each stock option issued to employees was estimated at the date of grant using Black-Scholes with the following weighted-average assumptions:

    

Three months ended

    

March 31, 

    

2022

    

2021

 

Expected volatility

 

92.3

%  

125.0

%

Expected term (years)

 

6.00

 

6.42

Risk-free interest rate

 

1.9

%  

0.7

%

Expected dividend yield

 

%  

%  

As of March 31, 2022 4,814,173 options with a weighted average exercise price of $9.52 were outstanding. As of March 31, 2022, there was $14,840 thousand unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted average period of 2.36 years.

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VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

No Restricted Stock Units (“RSUs”) were issued in the three months ended March 31, 2022, and there were no RSUs outstanding during the period ended March 31, 2022. During the three months ended March 31, 2021, 263,886 Restricted Stock Units (“RSUs”) were converted into ordinary shares. The RSUs granted on January 9, 2020 contains a nondiscretionary antidilution provision which entitles the grantee to additional RSUs to ensure that the aggregate RSUs granted equal 1.5% of the total fully diluted share capital of the Company. As of March 31, 2021, 264,042 RSUs were outstanding. No compensation cost has been recognized in respect of these outstanding RSUs which vests on the IPO Resolution Date as the initial public offering is not considered probable until it occurs.

Share based compensation expense is classified in the condensed consolidated statement of operations and comprehensive loss as follows (in thousands):

    

Three months ended

March 31, 

    

2022

    

2021

Research and development

$

842

$

319

General and administrative

 

3,142

 

478

Total

$

3,984

$

797

12.

Contract Assets and Liabilities

The Company discloses Accounts receivable separately in the Condensed Consolidated Balance Sheet at the net amount expected to be collected. Contract assets primarily relate to the Company’s conditional right to consideration for work completed but not billed at the reporting date. As of March 31, 2022, the Company did not have any contract assets.

Contract liabilities primarily relate to payments received from customers in advance of performance under the contract and are disclosed as deferred revenue separately in the Condensed Consolidated Balance Sheet. The Company’s contract liabilities arise when payment is received upfront for various multi-period extended license and service arrangements.

Changes in the contract liabilities during the period are as follows (in thousands):

    

March 31, 2022

Balance as of January 1, 2022

$

182

Revenue recognized related to contract liability balance

 

(15)

Foreign exchange translation

 

(5)

Balance as of March 31, 2022

$

162

Revenue recognized related to the contract liability balance for the three months ended March 31, 2021 was $16 thousand.

During the three months ended March 31, 2022, the Company recognized revenue of $14,993 thousand (three months ended March 31, 2021: $Nil) in relation to the Amendment, Assignment and Revenue Sharing Agreement (“License Agreement Amendment”) with Oxford University Innovation Limited entered into in April 2020, which vested and assigned all intellectual property rights in relation to any ChAdOx1 or ChAdOx2 vector-based vaccine in the field of SARS-CoV2 to Oxford University Innovation Limited.

13.

Commitments and Contingencies

In-License Agreements

The Company is party to a number of licensing agreements most of which are with related parties. These agreements serve to provide the Company with the right to develop and exploit the counterparties’ intellectual property for certain medical indications. As part of execution of these arrangements, the Company paid certain upfront fees, which have been expensed as incurred because the developing technology has not yet reached technical feasibility, the lack of alternative use, and the lack of proof of potential value. The agreements cover a variety of fields, including influenza, cancer, HPV, HBV and MERS. The Company’s obligations for future

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VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

payments under these arrangements are dependent on its ability to develop promising drug candidates, the potential market for these candidates and potential competing products, and the payment mechanisms in place in countries where the Company retains the right to sell. Each agreement provides for specific milestone payments, typically triggered by achievement of certain testing phases in human candidates, and future royalties ranging from 1 to 5% for direct sales of a covered product to 3 to 7% of net payments received for allowable sublicenses of technology developed by the Company. The obligation to make these payments is contingent upon the Company’s ability to develop candidates for submission for phased testing and approvals, and for the development of markets for the products developed by the Company. The Company has not made any material payments under these license agreements during the periods ended March 31, 2022 and March 31, 2021.

Leases

The Company leases certain laboratory and office space under operating leases, which are described below.

The Oxford Science Park, Oxford

The Company leases an office and laboratory space from a related party in Oxford, England under an operating lease with a contractual term expiring in 2028. The lease does not contain renewal terms. Variable payments include amounts due to the lessor for additional services and cost reimbursements. On February 1, 2022 the Company gave notice to terminate The Oxford Science Park lease. The lease will be terminated on July 30, 2022, by which date the Company will have relocated its corporate headquarters from Oxford to The Harwell Science and Innovation Campus, Oxfordshire.

The Harwell Science and Innovation Campus, Oxfordshire

On September 3, 2021, the Company entered into a lease agreement for the lease of approximately 31,000 square feet in Harwell, Oxfordshire which expires in September 2031. The Company intends to use the property as its corporate headquarters. As the Company’s leases typically do not provide an implicit rate, the Company uses an estimate of its incremental borrowing rate based on the information available at the lease commencement date, being the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The Company has provided the lessor with a refundable security deposit of $702 thousand (£534 thousand) which is included in Other assets.

The Company recorded a right-of-use asset and a lease liability on the effective date of the lease term. The Company’s right-of-use asset and lease liability are as follows (in thousands):

    

March 31, 

    

December 31, 

 

    

2022

    

2021

Right-of-use asset

$

6,699

$

7,257

 

Lease liability, current

 

331

 

523

Lease liability, noncurrent

 

6,404

 

6,540

Weighted average remaining lease term (years)

9.35

9.45

Weighted average discount rate

8.0

%

7.9

%

Other information

Three months ended March 31, 

    

2022

    

2021

Short-term lease expense

101

Operating cash flows from operating leases

$

307

$

81

During the three months ended March 31, 2022, the Company recorded $488 thousand (three months ended March 31, 2021: $92 thousand) in operating lease costs (including short-term lease expense and variable lease costs).

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VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Future annual minimum lease payments under operating leases as of March 31, 2022 were as follows (in thousands):

6.00

.

Remainder of 2022

    

$

327

2023

 

472

2024

 

1,170

2025

 

1,170

2026

 

1,170

Thereafter

 

5,470

Total minimum lease payments

$

9,779

Less: imputed interest

 

(3,044)

Total lease liability

$

6,735

During the current period, we recognized an asset retirement obligation (“ARO”) for leasehold improvements in relation to the Harwell Science and Innovation Campus premises where in accordance with the terms of the lease, the Company has to restore part of the building upon vacating the premises. The ARO liability totaled $434 thousand and $Nil as of March 31, 2022 and December 31, 2021, respectively and are included in other non-current liabilities on the condensed consolidated balance sheets.

Other contingencies

The Company is a party in various contractual disputes, litigation, and potential claims arising in the ordinary course of business. The Company does not believe that the resolution of these matters will have a material adverse effect on its financial position or results of operations.

14.Related Party Transactions

During the three months ended March 31, 2022, the Company recognized net income of $55 thousand after offsetting lease costs for laboratory and office space in Oxford of $74 thousand against a refund of $129 thousand (three months ended March 31, 2021: $40 thousand expense) from its shareholder, Oxford Science Enterprises plc. As of March 31, 2022, the Company had a receivable of $154 thousand (December 31, 2021: $32 thousand payable) from Oxford Science Enterprises plc.

During the three months ended March 31, 2022, the Company incurred expenses of $1 thousand (three months ended March 31, 2021: $19 thousand) to its shareholder, the University of Oxford, related to clinical study costs. As of March 31, 2022, the Company owed $1 thousand (December 31, 2021: $Nil) to University of Oxford.

During the three months ended March 31, 2022, the Company incurred expenses of $193 thousand (three months ended March 31, 2021: $116 thousand) and recognized license revenue of $14,993 thousand (three months ended March 31, 2021: $Nil) from Oxford University Innovation Limited which is a wholly owned subsidiary of the Company’s shareholder, the University of Oxford. As of March 31, 2022, the Company was owed $17,791 thousand (December 31, 2021: $Nil) from Oxford University Innovation Limited.

There were no convertible loans outstanding during the three months period ended March 31, 2022. During the three months ended March 31, 2021, the interest on convertible loans issued to Oxford Science Enterprises plc and the University of Oxford, shareholders of the Company was $429 thousand. There were no convertible loans outstanding as of March 31, 2021.

There were no Series B Shares issued or outstanding during the three months period ended March 31, 2022. On March 15, 2021 Oxford Science Enterprises plc subscribed to 3,468 Series B Shares in an amount of $14,999 thousand. The Company also recognized a loss of $2,125 thousand on the conversion of the convertible loan notes into 2,008 Series B Shares. On May 4, 2021 prior to the closing of the Company’s initial public offering and pursuant to the terms of its articles of association, the Series B Shares were converted into 1,692,084 ordinary shares. At December 31, 2021 there were no Series B Shares outstanding.

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VACCITECH PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

15.Subsequent Events

On April 4, 2022 a merger was effected between subsidiaries Vaccitech USA, Inc. and Vaccitech North America, Inc, with Vaccitech North America, Inc. being the surviving entity.

On April 28, 2022 the cash was received in full in respect of the license revenue and corresponding outstanding accounts receivable as of March 31, 2022 with Oxford University Innovation Limited.

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Item 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes appearing elsewhere in this Unaudited Quarterly Report on Form 10-Q and our audited financial statements and related notes thereto for the year ended December 31, 2021 included in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 25, 2022. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks, uncertainties, and assumptions. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those set forth in our Annual Report on Form 10-K and in other filings with the SEC.

Overview

We are a clinical-stage biopharmaceutical company engaged in the discovery and development of novel immunotherapeutics and vaccines for the treatment and prevention of infectious diseases, autoimmunity, and cancer. We use our proprietary platform to develop product candidates that stimulate powerful, targeted immune responses against pathogens and tumor cells. We design our product candidates to stimulate immune responses that are robust, highly specific, and are differentiated by the magnitude of the T cell populations induced, which exhibit critical functionality and durability. We are focused on applying our platform capabilities and the expertise of our team to address significant unmet medical needs in two settings - the therapeutic setting, for the treatment of chronic infectious diseases and cancer, and the prophylactic setting, for the prevention of infectious diseases, based on our platform’s ability to respond rapidly to epidemic and pandemic threats.

We have a broad pipeline of both clinical and preclinical stage therapeutic and prophylactic programs. Our current therapeutic programs include VTP-300 for the treatment of chronic hepatitis B infection, or CHB, VTP-200 for the treatment of human papilloma virus infection, or HPV, VTP-850 for the treatment of prostate cancer and VTP-600 for the treatment of non-small cell lung cancer, or NSCLC. Our current prophylactic programs include VTP-400 for the prevention of herpes zoster, or shingles, and VTP-500 for the prevention of Middle East respiratory syndrome, or MERS. Preclinical, IND-enabling programs are underway to utilize the SNAPvax platform in both cancer and an immune tolerance indication. In addition, we co-invented a COVID-19 vaccine candidate with the University of Oxford, which we assigned to Oxford University Innovation, or OUI, to facilitate the license of those rights by OUI to AstraZeneca UK Limited, or AstraZeneca. The vaccine, formerly referred to as AZD1222, is now authorized for use under the marketing name Vaxzevria in a number of countries. AstraZeneca has exclusive worldwide rights to develop and commercialize Vaxzevria.

On May 4, 2021, we completed our initial public offering, or IPO, pursuant to which we issued and sold 6,500,000 American Depository Shares, or ADSs, at a public offering price of $17.00 per ADS, resulting in net proceeds of $102.8 million, after deducting underwriting discounts and commissions and offering expenses. Prior to our IPO, we funded our operations primarily from private placements of our ordinary and preferred shares, private placements of loan notes convertible into ordinary shares, as well as from grants and licensing agreements, research tax credit payments, investments from non-controlling interest a $2.4 million upfront payment from OUI in July 2020 in connection with the Amendment, Assignment and Revenue Share Agreement, or the OUI License Agreement Amendment, related to the licensing of the COVID-19 vaccine, Vaxzevria, formerly known as AZD1222. We do not expect to generate revenue from any of our own product candidates until we obtain regulatory authorization for one or more of such product candidates, if at all, and commercialize our products, or we enter into out-licensing agreements with third parties. Substantially all of our net losses have resulted from costs incurred in connection with our research and development activities and from general and administrative costs associated with our operations.

On March 28, 2022, pursuant to the OUI License Agreement Amendment, we were notified of the commencement of the royalty payments, arising from AstraZeneca’s commercial sales of Vaxzevria. Under the terms of an exclusive worldwide license agreement between OUI and AstraZeneca, OUI is entitled to milestone payments and royalties on commercial sales of Vaxzevria that began after the pandemic period. As part of the assignment from us to OUI, we are entitled to receive approximately 24% of payments received by OUI from AstraZeneca. Our share of the milestone and royalty payments received by OUI from AstraZeneca in the first quarter of 2022 amounted to approximately $15.0 million. There is, however, no guarantee that such royalty payments will continue in the future and, if they do, that we will be notified of such royalty and milestone payment in a timely manner. If we do not receive notification of our share of the royalty and milestone payments in a timely manner, we may not be able to recognize the milestone and royalty payments as revenue in the quarter they are earned.

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We have incurred net losses each year since inception. For the three months ended March 31, 2022, we generated net income of $2.6 million. For the three months ended March 31, 2021, we incurred net loss of $15.4 million. As of March 31, 2022, we had an accumulated deficit of $106.0 million and we do not expect positive cash flows from operations in the foreseeable future. We expect to continue to incur net operating losses for at least the next several years as we advance our product candidates through clinical development, seek regulatory approval, prepare for approval, and in some cases proceed to commercialization of our product candidates, as well as continue our research and development efforts and invest to establish a commercial manufacturing facility, as and when appropriate.

At this time, we cannot reasonably estimate, or know the nature, timing and estimated costs of all of the efforts that will be necessary to complete the development of any of our product candidates that we develop through our programs. We are also unable to predict when, if ever, material net cash inflows will commence from sales of product candidates we develop, if at all. This is due to the numerous risks and uncertainties associated with developing product candidates to approval and commercialization, including the uncertainty of:

successful completion of preclinical studies and clinical trials;
sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials;
acceptance of investigational new drug applications, or INDs, for our planned clinical trials or future clinical trials;
successful enrollment and completion of clinical trials;
data from our clinical program supporting approvable and commercially acceptable risk/benefit profiles for our product candidates in the intended populations;
receipt and maintenance of necessary regulatory and marketing approvals from applicable regulatory authorities, in the light of the commercial environment then existent;
availability and successful procurement of raw materials required to manufacture our products for clinical trials, scale-up of our manufacturing processes and formulation of our product candidates for later stages of development and commercial production;
establishing either our own manufacturing capabilities or satisfactory agreements with third-party manufacturers for clinical supply for later stages of development and commercial manufacturing;
entry into collaborations where appropriate to further the development of our product candidates;
obtaining and maintaining intellectual property and trade secret protection or regulatory exclusivity for our product candidates as well as qualifying for, maintaining, enforcing and defending such intellectual property rights and claims;
successfully launching or assisting with the launch of commercial sales of our product candidates following approval;
acceptance of each product’s benefits and uses by patients, the medical community and third-party payors following approval;
the prevalence and severity of any adverse events experienced with our product candidates in development;
establishing and maintaining a continued acceptable safety profile of the product candidates following approval;
obtaining and maintaining healthcare coverage and adequate reimbursement from third-party payors if necessary or desirable; and
effectively competing with other therapies.

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and/or timing associated with the development of that product candidate or could prevent continuation of that program being in the company’s interests. For example, if the FDA or another regulatory authority were to require us to conduct clinical

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trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to patient enrollment or other reasons, we might be required to expend significant additional financial resources and time on the completion of clinical development. In some circumstances, such as the emergence of a significantly more effective therapy from a competitor, it may be appropriate to discontinue a product candidate program. We expect that our cash balance as of March 31, 2022 will enable us to fund our operating expenses and capital requirements into the fourth quarter of 2024.

Recent Developments

On April 6, 2022, we announced that we were notified of the commencement of royalty payments relating to commercial sales of Vaxzevria. Our share of the milestone and royalty payments received by OUI from AstraZeneca in the first quarter of 2022 amounted to approximately $15.0 million.

In April 2022, we launched a program in HPV-associated cancer utilizing the SNAPvax platform, for which we expect to file an Investigational New Drug, or IND, application in the first quarter of 2023. In addition, we are moving forward with an immunotherapeutic designed to induce regulatory T cells. The first indication we will target is celiac disease which should enter the clinic in a similar timeframe.

On April 29, 2022, we received scientific advice from the European Medicines Agency defining a licensure pathway for our candidate MERS vaccine, VTP-500, which allows us to estimate expenses of the development pathway more accurately.

Impact of the COVID-19 Pandemic

The ongoing spread of COVID-19, which we refer to as the COVID-19 pandemic, and the policies and regulations implemented by governments in response to the COVID-19 pandemic have had a significant impact, both directly and indirectly, on the global economy and our business and operations, including continuing disruption to our clinical trial activities. Of note, the initiation of our Phase 1 clinical trial for VTP-500, which was being conducted at the University of Oxford, was paused and discontinued due to COVID-19. In addition, the COVID-19 pandemic has had a negative effect on the operations of our third-party manufacturers and the supply chain for our product candidates and clinical trial materials, due to limitations on travel imposed or recommended by federal, state/provincial, or municipal governments, employers and others.

Our study protocols have been amended so that participants who have previously received Vaxzevria (or any other adenovirus-based vaccine) wait for a minimum of three months between their last adenovirus vaccine and injection with our immunotherapeutic product candidates to prevent prior vector immunity affecting the study.

In the VTP-200 program, the initiation of investigational sites for the Phase 1b/2 clinical trial (HPV001) across all countries has been impacted by COVID-19. The UK is particularly affected as resources to support set up of trials not related to COVID-19 have been low across sites. Other pandemic related issues affecting recruitment include the mass vaccination programs and the adverse publicity early in the second quarter of 2021 around Vaxzevria. Participant recruitment continues to be delayed with last patient first visit anticipated in the second quarter of 2022 and the interim analysis is expected to be available in the fourth quarter of 2022.

For our Phase 1 (HBV001) clinical trial for VTP-300, recruitment of patients with Chronic Hepatitis B (CHB) in the UK has been challenging, due to COVID-19 lockdowns. We completed recruitment for all cohorts in first quarter of 2022. For our Phase 1b/2a (HBV002) clinical trial for VTP-300, CHB patient recruitment continues with delays in Taiwan, South Korea, and the United Kingdom due to the ongoing COVID-19 restrictions in those countries. Patient recruitment has also been delayed in South Korea due to the roll out of Vaxzevria vaccine and vaccine hesitancy. Patient recruitment is estimated to be completed in the second quarter of 2022, with full efficacy data expected in the second half of 2022.

If the disruption due to the COVID-19 pandemic continues, our planned future preclinical and clinical development for our other product candidates could also be delayed due to government orders and site policies as a result of the pandemic. The pandemic and government measures taken in response have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. In response to the spread of COVID-19, in most of 2020 and 2021, we mandated that our non-laboratory based employees, such as clinical, manufacturing, finance, administrative, quality, regulatory and program managers split their time between working from home and the

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office, being sure to adhere to COVID-19 working guidelines when on the office premises. Our increased reliance on personnel working from home may negatively impact productivity, increase the potential risks of data privacy or security breaches, or disrupt, delay, or otherwise adversely impact our business.

We are still assessing our business plans and the impact the COVID-19 pandemic may have on our ability to advance the development of our product candidates as a result of adverse impacts on the research sites, service providers, vendors, or suppliers on whom we rely, or to raise financing to support the development of our ongoing product candidate development. No assurances can be given that thi