Autolus Therapeutics plc

Previous wording

We maintain our books and records in pounds sterling, our results are subsequently converted to U.S. dollars, and we prepare our consolidated financial statements in accordance with U.S. GAAP, as issued by the FASB. All references in this Quarterly Report on Form 10-Q to “$” are to U.S. dollars and all references to “£” are to pounds sterling. Our unaudited condensed Consolidated Statements of Operations and Comprehensive Loss and Cash Flows for the three months ended June 30, 2024 and 2023 have been translated from pounds sterling into U.S. dollars at the rate of £1.00 to $1.2616 and £1.00 to $1.2516, respectively. Our unaudited condensed Consolidated statements of Operations and Comprehensive Loss and Cash Flows for the six months ended June 30, 2024 and 2023 have been translated from pounds sterling into U.S. dollars at the rate of £1.00 to $1.2648 and £1.00 to $1.2330, respectively. Our unaudited condensed Consolidated Balance Sheet as of June 30, 2024 and audited Consolidated Balance Sheet as of December 31, 2023 have been translated from pounds sterling into U.S. dollars at the rate of £1.00 to $1.2645 and £1.00 to $1.2662, respectively. These translations should not be considered representations that any such amounts have been, could have been or could be converted into U.S. dollars at those or any other exchange rate as of those or any other dates.

Current wording

We maintain our books and records in pounds sterling, our results are subsequently converted to U.S. dollars, and we prepare our consolidated financial statements in accordance with U.S. GAAP, as issued by the FASB. All references in this Quarterly Report on Form 10-Q to “$” are to U.S. dollars and all references to “£” are to pounds sterling. Our unaudited condensed Consolidated Statements of Operations and Comprehensive Loss and Cash Flows for the three months ended September 30, 2024 and 2023 have been translated from pounds sterling into U.S. dollars at the rate of £1.00 to $1.3008 and £1.00 to $1.2657, respectively. Our unaudited condensed Consolidated statements of Operations and Comprehensive Loss and Cash Flows for the nine months ended September 30, 2024 and 2023 have been translated from pounds sterling into U.S. dollars at the rate of £1.00 to $1.2768 and £1.00 to $1.2439, respectively. Our unaudited condensed Consolidated Balance Sheet as of September 30, 2024 and audited Consolidated Balance Sheet as of December 31, 2023 have been translated from pounds sterling into U.S. dollars at the rate of £1.00 to $1.3387 and £1.00 to $1.2730, respectively. These translations should not be considered representations that any such amounts have been, could have been or could be converted into U.S. dollars at those or any other exchange rate as of those or any other dates.

Previous wording

We are a biopharmaceutical company developing next-generation programmed T cell therapies for the treatment of cancer and autoimmune diseases. Using our broad suite of proprietary and modular T cell programming technologies, we are engineering precisely targeted, controlled and highly active T cell therapies that are designed to better recognize target cells, break down their defense mechanisms and attack and kill these cells. We believe our programmed T cell therapies have the potential to be best-in-class and to offer patients substantial benefits over the existing standard of care, including the potential for cure in some patients.

Current wording

We are an early commercial-stage biopharmaceutical company developing next-generation programmed T cell therapies for the treatment of cancer and autoimmune diseases. Using our broad suite of proprietary and modular T cell programming technologies, we are engineering precisely targeted, controlled and highly active T cell therapies that are designed to better recognize target cells, break down their defense mechanisms and attack and kill these cells. We believe our programmed T cell therapies have the potential to be best-in-class and to offer patients substantial benefits over the existing standard of care, including the potential for cure in some patients.

Previous wording

Since our inception, we have incurred significant operating losses. For the three months ended June 30, 2024 and 2023, we incurred net losses of $58.3 million and $45.6 million, respectively, and net losses of $111.0 million and $85.4 million for the six months ended June 30, 2024 and 2023, respectively, and had an accumulated deficit of $989.5 million and $878.6 million as of June 30, 2024 and December 31, 2023, respectively.

Current wording

Since our inception, we have incurred significant operating losses. For the three months ended September 30, 2024 and 2023, we incurred net losses of $82.1 million and $45.8 million, respectively, and net losses of $193.1 million and $131.2 million for the nine months ended September 30, 2024 and 2023, respectively, and had an accumulated deficit of $1,071.6 million and $878.6 million as of September 30, 2024 and December 31, 2023, respectively.

Previous wording

As of June 30, 2024, we had cash and cash equivalents of $705.9 million. Based on our current clinical development plans, we believe our existing cash and cash equivalents will be sufficient to fund our current and planned operating expenses and capital expenditure requirements through at least the next twelve months from the date of issuance of our unaudited condensed consolidated financial statements included in this report.

Current wording

As of September 30, 2024, we had cash and cash equivalents of $657.1 million. Based on our current clinical development and commercialization plans, we believe our existing cash and cash equivalents will be sufficient to fund our current and planned operating expenses and capital expenditure requirements through at least the next twelve months from the date of issuance of our unaudited condensed consolidated financial statements included in this report.

Previous wording

Obe-cel in relapsed / refractory (“r/r”) adult B-cell Acute Lymphoblastic Leukemia (“B-ALL”) – The FELIX Study

Current wording

Approval of obe-cel in the United States for adult relapsed / refractory (“r/r”) adult B-cell Acute Lymphoblastic Leukemia (“B-ALL”) under the brand name AUCATZYL

Previous wording

•The Phase 1 dose confirmation study (“CARLYSLE”) in refractory systemic lupus erythematosus (“SLE”) patients is ongoing. We continue to expect initial clinical data in late 2024.

Current wording

•The Phase 1 dose confirmation trial (“CARLYSLE”) in refractory systemic lupus erythematosus (“SLE”) patients is ongoing. We expect to complete enrollment and patient dosing, as well as present initial data in first quarter of 2025. We anticipate that full data with adequate follow-up will be available for presentation in the second half of 2025 at a medical conference.

Previous wording

•Clinical programs AUTO8, AUTO6NG and AUTO1/22 are progressing well and we are planning data updates for all programs in 2025.

Current wording

•Clinical programs AUTO8, AUTO6NG and AUTO1/22 are progressing as expected and we are planning data updates for all programs in 2025.

Previous wording

We account for our revenue pursuant to the provisions of ASC 606, Revenue from Contracts with Customers. We have no products approved for commercial sale and have not generated any revenue from commercial product sales. The total revenue to date has been generated principally from license agreements. As of June 30, 2024, we had entered into various license agreements which included non-refundable upfront license fees, options for future commercial licenses, payments based upon achievement of clinical development and regulatory objectives, payments based upon achievement of certain levels of product sales, and royalties on licensed product sales.

Current wording

We account for our revenue pursuant to the provisions of ASC 606, Revenue from Contracts with Customers. Prior to the approval of AUCATZYL on November 8, 2024, we had no products approved for commercial sale, and we have not generated any revenue from commercial product sales as of September 30, 2024. The total revenue to date has been generated principally from out-licensing agreements. As of September 30, 2024, we had entered into various license agreements which included non-refundable upfront license fees, options for future commercial licenses, payments based upon achievement of clinical development and regulatory objectives, payments based upon achievement of certain levels of product sales, and royalties on licensed product sales.

Previous wording

As a company that carries out extensive R&D activities, we make claims under the U.K. R&D tax credit regime. This regime provides companies with tax relief at an effective rate of between 15% and 16.2% (subject to the rate of corporation tax we pay, if any) of qualifying R&D expenditure in an accounting period. The regime’s rules are complex, and if a tax authority were to challenge or seek to disallow our claims (in whole or in part), for example by asserting that the relevant expenditure does not meet the technical conditions to be granted tax credits, then such challenge or disallowance could have a material impact on our cash-flow and financial performance. In addition, future changes to the U.K. R&D tax credit regime may mean that we no longer qualify for it or have a material impact on the extent to which we can make claims (or benefit from them).

Current wording

As a company that carries out extensive R&D activities, we make claims under the U.K. R&D tax credit regime. This regime provides companies with a similar tax profile with a tax rebate at an effective rate of between 18.6% (for SME) and 27% (for intensive regime) of qualifying R&D expenditure in an accounting period. The regime’s rules are complex, and if a tax authority were to challenge or seek to disallow our claims (in whole or in part), for example by asserting that the relevant expenditure does not meet the technical conditions to be granted tax credits, then such challenge or disallowance could have a material impact on our cash-flow and financial performance. In addition, future legislative changes to the U.K. R&D tax credit regime may mean that we no longer qualify for it or have a material impact on the extent to which we can make claims (or benefit from them).

Previous wording

The SME program has been particularly beneficial to us, as under this program the trading losses that arise from our qualifying R&D activities can be surrendered for a cash rebate of up to 18.6% of qualifying expenditure incurred after April 1, 2023. Additionally, the U.K. Government enacted further changes to the SME regime on February 22, 2024 which include the introduction of a new rate for R&D intensive companies of 27% (which we may not qualify for) and came into effect for expenditures incurred after April 1, 2023. Qualifying expenditures largely comprise employment costs for research staff, consumables, outsourced contract research organization costs and utilities costs incurred as part of research projects for which we do not receive income. 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 our subsidiary Autolus Limited, are eligible for inclusion within these tax credit cash rebate claims.

Current wording

The SME regime has been particularly beneficial to us, as under this regime the trading losses that arise from our qualifying R&D activities can be surrendered for a cash rebate of up to 18.6% of qualifying expenditure incurred after April 1, 2023. Qualifying expenditures largely comprise employment costs for research staff, consumables, outsourced contract research organization costs and utilities costs incurred as part of research projects for which we do not receive income. 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 our subsidiary Autolus Limited, are eligible for inclusion within these tax credit cash rebate claims.

Previous wording

On April 1, 2023, the headline rate under the RDEC program increased from 13% to 20% and can generate cash rebates of up to 15% (increased from 10.5%) on qualifying R&D expenditure incurred from this date.

Current wording

On April 1, 2023, the headline rate under the RDEC regime increased from 13% to 20% and can generate cash rebates of up to 15% (increased from 10.5%) on qualifying R&D expenditure incurred from this date.

Previous wording

The benefit from U.K. RDEC and U.K. SME programs is recognized as income in the Consolidated Statement of Operations and Comprehensive Loss and is subject to tax at the prevailing rate.

Current wording

The benefit from U.K. RDEC and U.K. SME programs is recognized as income in the Consolidated Statement of Operations and Comprehensive Loss and is subject to tax at the prevailing rate (RDEC only).

Previous wording

We currently meet the conditions of the SME regime, but we also can make claims under the RDEC regime to the extent that our projects are grant funded. We may not be able to continue in the future to qualify as a small or medium-sized enterprise under the SME program, based on size criteria concerning employee headcount, turnover and gross assets. If we cease to qualify under the SME regime, we may make a claim under the RDEC regime for periods ending December 31, 2024, or the merged R&D regime from the period ending December 31, 2025. It should be noted, however, that the types of qualifying expenditure in respect of which we may make claims under the RDEC regime are more restricted than under the SME regime (for example, it may be the case that certain subcontracted costs in respect of which claims may be made under the SME regime do not qualify for relief under the current RDEC regime).The subcontracted rules under the merged regime are more aligned to the current SME regime.

Current wording

We currently meet the conditions of the SME regime, but we also can make claims under the RDEC regime to the extent that our projects are grant funded. We do not expect to qualify for the SME regime after December 31, 2024 due to an expected increase in employee headcount. If we cease to qualify under the SME regime, we may make a claim under the RDEC regime for periods ending December 31, 2024, or the merged R&D regime for the period ending December 31, 2025. It should be noted, however, that in some instances the types of qualifying expenditure which we may make claims under the RDEC regime differ to those under the SME regime (for example, it may be the case that certain subcontracted costs in respect of which claims may be made under the SME regime do not qualify for relief under the current RDEC regime).The subcontracted rules under the merged regime are more aligned to the current SME regime.

Previous wording

General and administrative expenses consist primarily of salaries, related benefits, travel and share-based compensation expense for personnel in executive, finance, legal and other administrative functions. General and administrative expenses also include allocated facility-related costs, patent filing and prosecution costs and professional fees for marketing, insurance, legal, consulting, accounting and audit services.

Current wording

General and administrative expenses consist primarily of salaries, related benefits, travel and share-based compensation expense for personnel in executive, finance, legal and other administrative functions. General and administrative expenses also include allocated facility-related costs, patent filing and prosecution costs and professional fees for marketing, insurance, legal, consulting, accounting and audit services. Included in general and administrative expenses is historical irrecoverable input VAT previously claimed on general and administrative expenses and subsequently reversed.

Previous wording

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the planned development of our product candidates. Additionally, if we believe a regulatory approval of one of our product candidates appears likely, we would anticipate an increase in salaries and related benefits as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of our product candidate.

Current wording

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the planned development of our product candidates. We anticipate an increase in salaries and related benefits as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of AUCATZYLand our other product candidates.

Previous wording

Other income (expense), net consists primarily of foreign currency transaction gains and losses, sublease income and gains or losses arising from the termination of leases.

Current wording

Other income (expense), net consists primarily sublease income and gains or losses arising from the termination of leases.

Previous wording

Un-surrendered U.K. losses may be carried forward indefinitely to be offset against future taxable profits, subject to numerous utilization criteria and restrictions. The amount that can be offset each year is limited to £5.0 million plus an incremental 50% of U.K. taxable profits. After accounting for tax credits receivable, we had accumulated tax losses for carry forward in the U.K. of $418.1 million at December 31, 2023. A valuation allowance has been recognized against our deferred tax asset relating to our U.K. losses. We carried a $3.2 million deferred tax asset balance related to the U.S. entity at June 30, 2024 for which there are no valuation allowance. At June 30, 2024, we recorded a full valuation allowance against the net deferred tax asset in the U.K., as the recoverability due to future taxable profits was unknown. On April 1, 2023 the main rate of the U.K. corporation tax was increased to 25% for companies with profits in excess of £250,000, or the small profits rate of 19% for companies with profits of £50,000 or less (with marginal relief from the main rate available to companies with profits between £50,000 and £250,000).

Current wording

Un-surrendered U.K. losses may be carried forward indefinitely to be offset against future taxable profits, subject to numerous utilization criteria and restrictions. The amount that can be offset each year is limited to £5.0 million plus an incremental 50% of U.K. taxable profits. After accounting for tax credits receivable, we had accumulated tax losses for carry forward in the U.K. of $418.1 million at December 31, 2023. A valuation allowance has been recognized against our deferred tax asset relating to our U.K. losses. We carried a $3.4 million deferred tax asset balance related to the U.S. entity at September 30, 2024 for which there is no valuation allowance. At September 30, 2024, we recorded a full valuation allowance against the net deferred tax asset in the U.K., as the recoverability due to future taxable profits was uncertain. On April 1, 2023, the main rate of the U.K. corporation tax was increased to 25% for companies with profits in excess of £250,000, or the small profits rate of 19% for companies with profits of £50,000 or less (with marginal relief from the main rate available to companies with profits between £50,000 and £250,000).

Previous wording

•a decrease of $0.3 million in general office expenses.

Current wording

•an increase of $2.8 million in general office expenses primarily relating to historical irrecoverable input VAT due to a change in VAT treatment,

Previous wording

•an increase of $4.3 million in clinical trial costs primarily relating to our research and development activities including transport costs of manufacturing consumables,

Current wording

•an increase of $1.8 million in clinical costs primarily relating to our research and development activities, including transport costs of manufacturing consumables,

Previous wording

•an increase of $0.1 million in depreciation and amortization related to property and equipment.

Current wording

•an increase of $0.1 million in information technology infrastructure maintenance cost, offset in part by:

Previous wording

•a decrease of $0.7 million in professional consulting and legal fees in relation to our research and development activities,

Current wording

•a decrease of $3.5 million in professional consulting and legal fees in relation to our research and development activities,

Previous wording

•an increase of $1.3 million in U.K. R&D tax credits (decrease in R&D expense) due primarily to an increase in qualifying research and development expenditures related to the SME scheme,

Current wording

•an increase of $0.3 million in U.K. R&D tax credits (decrease in R&D expense) due primarily to an increase in qualifying research and development expenditures related to the SME scheme.

Previous wording

•an increase of $2.5 million in costs related to commercial-stage readiness activities,

Current wording

•an increase of $7.2 million in costs related to commercial-stage readiness activities,

Previous wording

•an increase of $2.7 million in legal and professional fees related to our general and administrative activities,

Current wording

•a decrease of $0.7 million in legal and professional fees related to our general and administrative activities, and

Previous wording

•a decrease of $0.1 million in general office expenses.

Current wording

•a decrease of $0.1 million in depreciation and amortization related to property and equipment.

Previous wording

For the three months ended June 30, 2024, we recognized an impairment loss on operating lease right-of-use assets and related property and equipment of $0.4 million related to a leased property in Enfield, United Kingdom. There was no similar impairment recognized for the three months ended June 30, 2023.

Current wording

For the three months ended September 30, 2023, we recognized an impairment loss on operating lease right-of-use assets and related property and equipment of $0.4 million related to a leased property in Stevenage, United Kingdom. There was no similar impairment recognized for the three months ended September 30, 2024.

Previous wording

Other income (expense), net increased to $1.2 million for the three months ended June 30, 2024 from $0.5 million for the three months ended June 30, 2023. The increase of $0.7 million was primarily due to the strengthening of the pound sterling exchange rate relative to the U.S. dollar between the two periods.

Current wording

Foreign exchange losses increased to $11.9 million for the three months ended September 30, 2024 from $1.7 million for the three months ended September 30, 2023. The increase of $10.2 million was primarily due to the strengthening of the pound sterling exchange rate relative to the U.S. dollar resulting in a net foreign exchange loss.

Previous wording

Interest income increased to $9.7 million for the three months ended June 30, 2024, as compared to $3.4 million for the three months ended June 30, 2023. The increase in interest income of $6.3 million primarily related to increase in yield and also higher account balances associated with our cash and cash equivalents during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Current wording

Interest income increased to $8.3 million for the three months ended September 30, 2024, as compared to $3.6 million for the three months ended September 30, 2023. The increase in interest income of $4.7 million primarily related to increase in yield and also higher account balances associated with our cash and cash equivalents during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Previous wording

Interest expense increased to $10.2 million for the three months ended June 30, 2024 as compared to $5.0 million for the three months ended June 30, 2023. Interest expense increased by $5.2 million primarily due to an increase in the balance of the liabilities for future royalties and milestones, net associated with our Collaboration Agreement with Blackstone and the BioNTech License and Option Agreement.

Current wording

Interest expense increased to $10.7 million for the three months ended September 30, 2024 as compared to $5.0 million for the three months ended September 30, 2023. Interest expense increased by $5.7 million primarily due to an increase in the balance of the liabilities for future royalties and milestones, net associated with our Collaboration Agreement with Blackstone and the BioNTech License and Option Agreement which was executed in February 2024.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2024, and 2023 (in thousands):

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2024, and 2023 (in thousands):

Previous wording

License revenue amounting to $10.1 million for the six months ended June 30, 2024 related to license revenue recognized pursuant to the License and Option Agreement with BioNTech. License revenue of $1.3 million for the six months ended June 30, 2023 primarily related to the execution of the Cabaletta Bio Inc. (“Cabaletta”) Option and License Agreement, which included recognition of a non-refundable license fee payable to us.

Current wording

License revenue amounting to $10.1 million for the nine months ended September 30, 2024 related to license revenue recognized pursuant to the License and Option Agreement with BioNTech. License revenue of $1.7 million for the nine months ended September 30, 2023 primarily related to the execution of the Cabaletta Bio Inc. (“Cabaletta”) Option and License Agreement, which included recognition of a non-refundable license fee and license revenue from an investee of Syncona Portfolio Limited, which is a holder of more than 10% of our share capital.

Previous wording

•an increase of $5.2 million in clinical trial costs primarily relating to our research and development activities including transport costs of manufacturing consumables,

Current wording

•an increase of $6.9 million in clinical costs primarily relating to our research and development activities including transport costs of manufacturing consumables,

Previous wording

•an increase of $0.6 million in facilities costs related primarily to our new manufacturing facility, The Nucleus, in Stevenage, U.K. as well as increases in costs related to maintaining our current leased properties, and

Current wording

•an increase of $1.2 million in facilities costs related primarily to our new manufacturing facility, The Nucleus, in Stevenage, U.K. as well as increases in costs related to maintaining our current leased properties, and

Previous wording

•an increase of $0.4 million in depreciation and amortization related to property and equipment, offset in part by:

Current wording

•an increase of $1.0 million in depreciation and amortization related to property and equipment, offset in part by:

Previous wording

•a decrease of $1.5 million in professional consulting and legal fees in relation to our research and development activities,

Current wording

•a decrease of $5.0 million in professional consulting and legal fees in relation to our research and development activities,

Previous wording

•an increase of $1.8 million in U.K. R&D tax credits (decrease in R&D expense) due primarily to an increase in qualifying research and development expenditures related to the Small and Medium Enterprise (“SME”) scheme,

Current wording

•an increase of $1.6 million in U.K. R&D tax credits (decrease in R&D expense) due primarily to an increase in qualifying research and development expenditures related to the SME scheme, and

Previous wording

•a decrease of $0.6 million in information technology infrastructure maintenance costs, and

Current wording

•a decrease of $0.6 million in information technology infrastructure maintenance costs.

Previous wording

•an increase of $4.8 million in costs related to commercial-stage readiness activities,

Current wording

•an increase of $12.0 million in costs related to commercial-stage readiness activities,

Previous wording

•an increase of $1.7 million in legal and professional fees related to our general and administrative activities, and

Current wording

•an increase of $1.7 million in legal and professional fees related to our general and administrative activities,

Previous wording

•an increase of $0.6 million related to information technology infrastructure and support for information systems related to the conduct of corporate and commercial operations,

Current wording

•an increase of $0.9 million related to information technology infrastructure and support for information systems related to the conduct of corporate and commercial operations, and