Adicet Bio, Inc. SEC 10-Q Report

Adicet Bio, Inc., a biotechnology company focused on developing allogeneic gamma delta T cell therapies for autoimmune diseases and cancer, has released its Form 10-Q report for the quarter ended September 30, 2024. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces.

Financial Highlights

Adicet Bio, Inc. reported significant improvements in its financial performance for the quarter ended September 30, 2024:

• Total Operating Expenses: $33.2 million, decreased by $19.1 million or 37% compared to the same period in 2023.
• Loss from Operations: $33.2 million, decreased by $19.1 million or 37% compared to the same period in 2023.
• Net Loss: $30.5 million, decreased by $19.4 million or 39% compared to the same period in 2023.
• Net Loss Per Share, Basic and Diluted: $0.34, decreased from $1.16 in the same period in 2023.
• Interest Income: $2.7 million, increased by $0.2 million or 8% compared to the same period in 2023.
• Total Operating Expenses (Nine Months Ended September 30, 2024): $96.9 million, decreased by $23.6 million or 20% compared to the same period in 2023.
• Loss from Operations (Nine Months Ended September 30, 2024): $96.9 million, decreased by $23.6 million or 20% compared to the same period in 2023.
• Net Loss (Nine Months Ended September 30, 2024): $88.4 million, decreased by $24.8 million or 22% compared to the same period in 2023.
• Net Loss Per Share, Basic and Diluted (Nine Months Ended September 30, 2024): $1.02, decreased from $2.63 in the same period in 2023.
• Interest Income (Nine Months Ended September 30, 2024): $8.6 million, increased by $0.8 million or 11% compared to the same period in 2023.

Business Highlights

Adicet Bio, Inc. has made significant strides in advancing its pipeline and expanding its clinical development programs:

• Research and Development Focus: The company is advancing a pipeline of 'off-the-shelf' gamma delta T cells, engineered with chimeric antigen receptors (CARs), to facilitate durable activity in patients. The focus is on developing product candidates for autoimmune diseases and cancer.
• Lead Product Candidate - ADI-001: ADI-001, a first-in-class allogeneic gamma delta T cell therapy expressing a CAR targeting CD20, is being developed for the potential treatment of autoimmune diseases. The company has expanded its ADI-001 autoimmune clinical development program to include systemic lupus erythematosus (SLE), systemic sclerosis (SSc), and anti-neutrophil cytoplasmic autoantibody associated vasculitis (AAV).
• Clinical Trials for ADI-001: In September 2024, Adicet Bio activated sites for its Phase 1 clinical trial of ADI-001 in autoimmune diseases and opened enrollment for patients with lupus nephritis (LN). The company expects to initiate enrollment for patients with SLE, SSc, idiopathic inflammatory myopathy (IIM), and stiff person syndrome (SPS) in the first quarter of 2025, and for patients with AAV in the second half of 2025.
• FDA Fast Track Designation: In June 2024, the FDA granted Fast Track Designation to ADI-001 for the potential treatment of relapsed/refractory class III or class IV lupus nephritis (LN).
• ADI-270 Development: ADI-270 is an investigational allogeneic gamma delta CAR T cell therapy targeting CD70 for the treatment of renal cell carcinoma (RCC) and other solid tumor indications. The company plans to initiate a Phase 1 multicenter, open-label clinical trial to assess the safety and anti-tumor activity of ADI-270 in RCC patients in the fourth quarter of 2024.
• FDA Clearance and Fast Track Designation for ADI-270: In June 2024, Adicet Bio received FDA clearance for its IND application for ADI-270 in RCC. In July 2024, the company also received FDA Fast Track Designation for ADI-270 for the potential treatment of patients with metastatic/advanced clear cell RCC.
• Research and Development Activities in China: In May 2024, Adicet Bio initiated research and development activities in China through a series of contractual agreements entered into among Shanghai Adicet Biotechnology Co., Ltd. (the Adicet VIE), Adicet (Shanghai) Biotechnology Co., Ltd. (Adicet Shanghai), and the shareholders of the Adicet VIE.
• Future Outlook for ADI-001: Adicet Bio plans to report preliminary clinical data from its Phase 1 clinical study of ADI-001 in lupus nephritis (LN) in the first half of 2025, and for other autoimmune diseases in the second half of 2025, subject to study site initiation and patient enrollment.
• Future Outlook for ADI-270: The company plans to share preliminary clinical data for ADI-270 in the first half of 2025, subject to site initiation and patient enrollment.

Strategic Initiatives

Adicet Bio, Inc. has undertaken several strategic initiatives to support its long-term growth and financial stability:

• Pipeline Advancement: The company is advancing its pipeline of allogeneic gamma delta T cell therapies for autoimmune diseases and cancer. This includes the development of ADI-001 for autoimmune diseases and ADI-270 for renal cell carcinoma (RCC).
• Capital Management: In January 2024, the company raised approximately $19.3 million through the JonesTrading ATM Program and subsequently terminated this program in March 2024. The company then entered into the Jefferies ATM Program but has not sold any shares under this program as of September 30, 2024. Additionally, the company completed an underwritten public offering in January 2024, raising net proceeds of approximately $91.7 million. The company also amended its Loan Agreement with Banc of California to extend the drawdown period and adjust the financial covenants. As of September 30, 2024, the company had no indebtedness outstanding under the Loan Agreement.
• Future Outlook: Adicet Bio expects that its cash, cash equivalents, and short-term investments in treasury securities will be sufficient to fund its forecasted operating expenses, capital expenditure requirements, and debt service payments for at least the next twelve months. The company plans to continue its focus on developing its product candidates, with a goal to file one new Investigational New Drug (IND) application every 12-18 months. The company also anticipates reporting preliminary clinical data from its Phase 1 clinical study of ADI-001 in lupus nephritis (LN) in the first half of 2025 and for other autoimmune diseases in the second half of 2025. Additionally, the company plans to initiate a Phase 1 clinical trial for ADI-270 in RCC patients in the fourth quarter of 2024 and share preliminary clinical data in the first half of 2025.

Challenges and Risks

Adicet Bio, Inc. faces several challenges and risks that could impact its business operations and financial performance:

• Limited Operating History and Financial Losses: The company has a limited operating history and has incurred net losses since inception. It anticipates substantial net losses in the future due to significant research and development and other expenses. As of September 30, 2024, the company had an accumulated deficit of $469.2 million. While the company believes it is capitalized into the second half of 2026 with $202.1 million in cash, cash equivalents, and short-term investments, additional funding will be required to continue operations beyond this point.
• Dependence on Key Product Candidates: The company's business is highly dependent on the success of ADI-001 and ADI-270. Failure to obtain regulatory approval or effectively commercialize these candidates could significantly harm the business. The company faces challenges in developing these novel therapies, including potential negative or inconclusive clinical trial results, manufacturing difficulties, and regulatory hurdles.
• Novel Technology Risks: The company's gamma delta T cell therapy represents a novel approach, creating significant challenges such as manufacturing complexities, regulatory uncertainties, and potential adverse side effects. The success of the business depends on demonstrating the safety, efficacy, and durability of these therapies in clinical trials.
• Regulatory and Compliance Risks: The company may be required to obtain approval for companion diagnostics in connection with its product candidates. Delays or failures in obtaining such approvals could impair commercialization efforts. Compliance with evolving regulations in China, including the Foreign Investment Law and data security laws, may impact the company's operations and ability to transfer scientific data abroad.
• Operational and Market Risks: The company faces significant competition from other biotechnology and pharmaceutical companies. Failure to compete effectively could adversely affect operating results. The company relies on third-party suppliers and manufacturers, which increases the risk of supply chain disruptions and manufacturing delays. The company is highly dependent on key personnel and may face challenges in attracting and retaining qualified staff in a competitive market.
• Financial and Strategic Risks: The company will need substantial additional financing to develop its product candidates and implement its operating plans. Failure to obtain additional funding could delay or discontinue development and commercialization efforts. The company may seek strategic alliances or licensing arrangements, which may not realize the anticipated benefits and could disrupt operations.
• International Operations and Geopolitical Risks: Conducting research and clinical trials abroad, particularly in China, presents additional risks such as regulatory changes, political instability, and compliance with local laws. Geopolitical tensions, such as those between the U.S. and China, could impact the company's ability to operate and raise capital.

Management is focused on advancing its clinical trials and obtaining regulatory approvals for its key product candidates, ADI-001 and ADI-270. Efforts are being made to secure additional funding and strategic partnerships to support ongoing and future development activities. The company is enhancing its internal manufacturing capabilities and working closely with third-party suppliers to mitigate supply chain risks. Management is actively recruiting and retaining key personnel to support the company's growth and development objectives.

SEC Filing: Adicet Bio, Inc. [ ACET ] - 10-Q - Nov. 06, 2024