imcr-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended June 30, 2024


o			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: 001-39992


Immunocore Holdings 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.)
92 Park Drive Milton Park Abingdon, Oxfordshire, United Kingdom			OX14 4RY
(Address of principal executive offices)			(Zip Code)


+44 1235 438600
(Registrant’s telephone number, including area code)



(Former name, former address and former fiscal year, if changed since last report)

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, each representing one ordinary share, nominal value £0.002 per share	IMCR	The Nasdaq Stock Market LLC
Ordinary Share, nominal value £0.002 per share*	*	The Nasdaq Stock Market LLC*

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

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. x Yes o 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). x Yes o 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 x			Accelerated filer o
			Non-accelerated filer o			Smaller reporting company o
						Emerging growth company o

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. o

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

Indicate the number of shares outstanding of each of the issuer’s classes of shares, as of the latest practicable date.

As of July 31, 2024, the registrant had 50,018,756 ordinary shares (including ordinary shares in the form of American Depositary Shares) outstanding, par value £0.002, shares consisting of (i) 49,284,359 voting ordinary shares and 734,397 non-voting ordinary shares.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the "Quarterly Report"), contains forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. The forward-looking statements and opinions contained in this Quarterly Report are based upon information available to us as of the date of this Quarterly Report and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Forward-looking statements include, but are not limited to, statements about:

•the therapeutic potential and expected clinical benefits of KIMMTRAK;

•the safety, efficacy and clinical progress of our various ongoing clinical programs and any planned clinical programs, including those for tebentafusp, brenetafusp (previously IMC-F106C), IMC-P115C, IMC-T119C, IMC-R117C, IMC-M113V and IMC-I109V;

•our ability to continue to generate revenues, which is dependent upon maintaining significant market acceptance among physicians, patients and healthcare payors;

•our ability to maintain regulatory approval of KIMMTRAK for metastatic uveal melanoma ("mUM") in the United States, European Union and other territories, as well as our ability to obtain and maintain regulatory approval in additional indications, jurisdictions, and the timing thereof;

•our expectations regarding the continued commercialization and marketing of KIMMTRAK for mUM, including expanding into and the related timing of reaching patients in additional indications and territories;

•our ability to build a sustainable pipeline of new medicine candidates, including but not limited to future generations of KIMMTRAK and additional product candidates identified and developed using our ImmTAX platform;

•our ability to continue successfully executing our sales and marketing strategy of KIMMTRAK in the United States, Europe and elsewhere, including continuing to successfully recruit and retain sales and marketing personnel and to successfully build the market for our medicines;

•the rate and degree of market acceptance of our product candidates among physicians, patients, patient advocacy groups, third-party payors and the medical community and our ability and our distribution and marketing partners’ ability to obtain coverage and adequate reimbursement and pricing for our medicines from government and third-party payors and risks relating to the success of our patient assistance programs;

•the initiation, timing, progress and results of our ongoing clinical trials and any planned clinical trials, including the expansion arms of such trials, for tebentafusp in advanced melanoma and adjuvant uveal (or ocular) melanoma, brenetafusp, IMC-P115C, IMC-T119C, IMC-R117C, IMC-M113V, and IMC-I109V, and our research and development programs, including delays or disruptions in clinical trials, non-clinical experiments and investigational new drug application-enabling studies;

•our estimates regarding the period of time for which our current capital resources will be sufficient to fund our continued operations, our future expenses, including the impact thereon of rising inflation, fluctuating exchange rates and other macroeconomic factors, and our future revenues and our needs for and ability to obtain additional financing;

•our expectations regarding timing of regulatory filings for, or our ability to obtain regulatory approval of, our product candidates other than KIMMTRAK;

•our ability to obtain accelerated approval for current and future product candidates from the U.S. Food and Drug Administration ("FDA"), the European Commission, or other comparable regulatory authorities in other jurisdictions;

•our expectations regarding business disruptions affecting the initiation, patient enrollment, clinical trial site monitoring, development and operation of our current and proposed clinical trials, including as a result of a public health emergency or other global and macroeconomic factors, such as the war in Ukraine, the state of war between Hamas and Israel and the potential for a broader regional conflict in the Middle East, global geopolitical tensions, supply chain disruptions, rising interest rates and rising inflation;

•our business strategies and goals;

•our plans to collaborate, or statements regarding our current collaborations, and our ability to find future partners and collaborators;

•the performance of our third-party suppliers and manufacturers;

•our expectations regarding our ability to obtain, maintain and enforce intellectual property protection for our product candidates and our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property rights of others;

•our expectations regarding competition with respect to KIMMTRAK or any of our other current or future product candidates, as well as innovations by current and future competitors in our industry;

•our expectations regarding regulatory developments in the United States and other countries, including potential changes in healthcare laws and regulations;

•our financial performance and our ability to effectively manage our anticipated growth;

•our ability to identify, recruit and retain qualified employees, including key commercial or management personnel; and

•whether we are classified as a Passive Foreign Investment Company ("PFIC") for current and future periods.

Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and assumptions that could cause our actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report, if any, our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), on February 28, 2024, and in our other SEC filings. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report.

TABLE OF CONTENTS


	PART I – FINANCIAL INFORMATION	Page
ITEM 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets as of June 30, 2024 an d December 31, 2023	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2024 and 2023	3
	Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	6
	Notes to the Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	30
ITEM 4.	Controls and Procedures	31

	PART II – OTHER INFORMATION
ITEM 1.	Legal Proceedings	33
ITEM 1A.	Risk Factors	33
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	33
	Signatures	35

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Immunocore Holdings plc

Condensed Consolidated Balance Sheets

(Unaudited) (In thousands, except share and per share data)


	June 30, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	504,985	$	442,626
Marketable securities	354,612		—
Accounts receivable, net	60,245		52,093
Prepaid expenses and other current assets	33,555		29,600
Inventory, net	3,462		4,501
Total current assets	956,859		528,820
Property and equipment, net	7,684		9,215
Operating lease right of use assets, net	32,435		33,520
Deferred tax assets, net	10,111		10,973
Other non-current assets	16,276		14,473
Total assets	$	1,023,365	$	597,001
Liabilities and shareholders’ equity
Current liabilities
Accounts payable	$	19,947	$	17,798
Accrued expenses and other current liabilities	163,762		119,835
Operating lease liabilities, current	1,387		1,388
Total current liabilities	185,096		139,021
Accrued expenses, non-current	2,089		978
Deferred revenue, non-current	5,477		5,515
Operating lease liabilities, non-current	33,445		34,633
Interest-bearing loans and borrowings	438,121		48,011
Total liabilities	664,228		228,158

Shareholders’ equity
Ordinary shares (voting and non-voting), £0.002 par value, most recent authority to allot up to a maximum nominal value of £97,454 and £109,355 shares as of June 30, 2024 and December 31, 2023, respectively, and 50,017,606 and 49,725,649 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.	135		134
Deferred shares, £0.0001 par value, 5,793,501 shares authorized, issued and outstanding as of June 30, 2024 and December 31, 2023.	1		1
Additional paid-in capital	1,174,147		1,149,643
Accumulated deficit	(780,726)		(744,674)
Accumulated other comprehensive loss	(34,420)		(36,261)
Total shareholders' equity	359,137		368,843
Total liabilities and shareholders' equity	$	1,023,365	$	597,001

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

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Immunocore Holdings plc

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited) (In thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue:
Product revenue, net	$	75,347	$	56,932	$	145,689	$	108,513
Collaboration revenue	53		2,825		213		5,903
Total revenue	75,400		59,757		145,902		114,416
Cost and operating expenses:
Cost of product revenue	(1,707)		(346)		(1,953)		(562)
Research and development expense	(51,072)		(38,158)		(108,531)		(74,730)
Selling, general and administrative expense	(38,638)		(35,010)		(77,925)		(67,577)
Loss from operations	(16,017)		(13,757)		(42,507)		(28,453)
Other income (expense):
Interest income	6,239		4,278		14,485		7,406
Interest expense	(4,277)		(1,274)		(7,516)		(2,524)
Foreign currency loss	(508)		(5,880)		(2,914)		(11,893)
Other income (expense), net	4,433		(190)		4,243		(515)
Net loss before income taxes	(10,130)		(16,823)		(34,209)		(35,979)
Income tax expense	(1,486)		(191)		(1,843)		(484)
Net loss	$	(11,616)	$	(17,014)	$	(36,052)	$	(36,463)
Other comprehensive income:
Exchange differences on translation of foreign operations	944		6,771		1,841		14,205
Total comprehensive loss	(10,672)		(10,243)		(34,211)		(22,258)

Basic and diluted net loss per share	$	(0.23)	$	(0.35)	$	(0.72)	$	(0.75)
Basic and diluted weighted-average number of shares outstanding	50,014,086		48,694,047		49,944,767		48,440,318

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

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Immunocore Holdings plc

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited) (In thousands, except share data)


	Ordinary Shares			Deferred Shares			Additional Paid-in Capital		Accumulated deficit		Accumulated other comprehensive (loss) income		Total Shareholders' Equity
	Shares	Amount		Shares	Amount
As of March 31, 2024	50,006,085	$	135	5,793,501	$	1	$	1,163,872	$	(769,110)	$	(35,364)	$	359,534
Net loss	—	—		—	—		—		(11,616)		—		(11,616)
Other comprehensive income	—	—		—	—		—		—		944		944
Exercise of share options	11,521	—		—	—		297		—		—		297
Share-based compensation expense	—	—		—	—		9,978		—		—		9,978
As of June 30, 2024	50,017,606	$	135	5,793,501	$	1	$	1,174,147	$	(780,726)	$	(34,420)	$	359,137


	Ordinary Shares			Deferred Shares			Additional Paid-in Capital		Accumulated deficit		Accumulated other comprehensive (loss) income		Total Shareholders' Equity
	Shares	Amount		Shares	Amount
As of March 31, 2023	48,379,409	$	130	5,793,501	$	1	$	1,097,248	$	(708,836)	$	(47,239)	$	341,304
Net loss	—	—		—	—		—		(17,014)		—		(17,014)
Other comprehensive income	—	—		—	—		—		—		6,771		6,771
Exercise of share options	561,940	2		—	—		11,556		—		—		11,558
Share-based compensation expense	—	—		—	—		8,821		—		—		8,821
As of June 30, 2023	48,941,349	$	132	5,793,501	$	1	$	1,117,625	$	(725,850)	$	(40,468)	$	351,440

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

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Immunocore Holdings plc

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited) (In thousands, except share data)


	Ordinary Shares			Deferred Shares			Additional Paid-in Capital		Accumulated deficit		Accumulated other comprehensive (loss) income		Total Shareholders' Equity
	Shares	Amount		Shares	Amount
As of December 31, 2023	49,725,649	$	134	5,793,501	$	1	$	1,149,643	$	(744,674)	$	(36,261)	$	368,843
Net loss	—	—		—	—		—		(36,052)		—		(36,052)
Other comprehensive income	—	—		—	—		—		—		1,841		1,841
Exercise of share options	291,957	1		—	—		5,509		—		—		5,510
Share-based compensation expense	—	—		—	—		18,995		—		—		18,995
As of June 30, 2024	50,017,606	$	135	5,793,501	$	1	$	1,174,147	$	(780,726)	$	(34,420)	$	359,137


	Ordinary Shares			Deferred Shares			Additional Paid-in Capital		Accumulated deficit		Accumulated other comprehensive (loss) income		Total Shareholders' Equity
	Shares	Amount		Shares	Amount
As of December 31, 2022	48,088,346	$	129	5,793,501	$	1	$	1,082,833	$	(689,387)	$	(54,673)	$	338,903
Net loss	—	—		—	—		—		(36,463)		—		(36,463)
Other comprehensive income	—	—		—	—		—		—		14,205		14,205
Exercise of share options	853,003	3		—	—		17,713		—		—		17,716
Share-based compensation expense	—	—		—	—		17,079		—		—		17,079
As of June 30, 2023	48,941,349	$	132	5,793,501	$	1	$	1,117,625	$	(725,850)	$	(40,468)	$	351,440

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

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Immunocore Holdings plc

Condensed Consolidated Statements of Cash Flows

(Unaudited) (In thousands)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities
Net loss	$	(36,052)	$	(36,463)
Adjustments for:
Share-based compensation expense	18,964		17,079
Depreciation	2,003		1,981
Unrealized foreign exchange losses	1,404		11,444
Unrealized gains on marketable securities	(4,613)		—
Non-cash lease expense	864		808
Other	951		—
Changes in assets and liabilities:
Increase in accounts receivable	(8,861)		(7,176)
(Increase) decrease in prepayments and other current assets	(4,058)		15,704
Increase in accounts payable	2,164		2,962
Increase in accrued expenses	46,031		11,878
Decrease in deferred revenue	—		(3,993)
Decrease in operating lease liabilities	(1,136)		(906)
Decrease (increase) in other operating assets	92		(3,571)
Increase in other operating liabilities	1,132		837
Net cash provided by operating activities	18,885		10,584
Cash flows from investing activities
Purchase of marketable securities	(350,000)		—
Purchase of property and equipment	(761)		(4,396)
Net cash used in investing activities	(350,761)		(4,396)
Cash flows from financing activities
Proceeds from issue of convertible senior notes	402,500		—
Payments for debt issuance costs	(13,358)		—
Proceeds from exercise of share options	6,052		17,716
Net cash provided by financing activities	395,194		17,716
Increase in net cash and cash equivalents	63,318		23,904
Net foreign exchange difference on cash held	(959)		5,619
Cash and cash equivalents at beginning of period	442,626		402,472
Cash and cash equivalents at end of period	$	504,985	$	431,995
Supplemental disclosure of cash flow and non-cash information
Cash received for interest, net	$	12,117	$	4,451
Cash paid for income taxes, net	$	(59)	$	(220)
Purchases of property and equipment in accrued expenses and other current liabilities	$	—	$	239

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

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Immunocore Holdings plc

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. Description of business

Immunocore Holdings plc (collectively with its subsidiaries, the “Company”) is a public limited company incorporated in England and Wales and has the following wholly owned subsidiaries: Immunocore Limited, Immunocore LLC, Immunocore Commercial LLC, Immunocore Ireland Limited, Immunocore GmbH, and Immunocore Nominees Limited with operations based primarily in the United Kingdom and United States. The Company is pioneering and delivering transformative immunomodulating medicines to radically improve outcomes for patients with cancer, infectious diseases, and autoimmune diseases. Leveraging its proprietary, flexible, off-the-shelf ImmTAX (Immune mobilizing monoclonal TCRs Against X disease) platform, the Company’s pipeline includes nine active clinical and preclinical programs in oncology, infectious diseases, and autoimmune diseases.

In January and April 2022, the Company received approval from the U.S. Food and Drug Administration ("FDA") and European Commission, ("EC"), respectively, for its lead product, KIMMTRAK, for the treatment of unresectable or metastatic uveal melanoma and has subsequently received approvals in further territories, and the Company continues to launch and seek approvals in additional territories. KIMMTRAK is now approved in 38 countries and the Company has commercially launched the product in the United States, Germany and France, among other territories.

2. Summary of significant accounting policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"), for interim financial reporting and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information required for the full annual financial statements and should be read in conjunction with the annual consolidated financial statements of the Company for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC"), on February 28, 2024 ("Annual Report"). The accompanying condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods reported. In the opinion of management, all adjustments considered necessary to present fairly the results of the interim periods have been included and consist only of normal and recurring adjustments. Certain information and footnote disclosures have been condensed or omitted as permitted under U.S. GAAP. The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period.

Use of estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions. These judgments, estimates and assumptions affect the reported assets and liabilities as well as income and expenses in the financial period.

The estimates and associated assumptions are based on information available when the condensed consolidated financial statements are prepared, historical experience and various other factors which are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the Company’s control. Actual results could differ from those estimates. Estimates are primarily made in relation to revenue recognition, estimation of operating lease incremental borrowing rates, share-based compensation expense, clinical accruals, and deferred tax asset valuation allowances.

Significant accounting policies

With the exception of the below polices, the significant accounting policies used in the preparation of these condensed consolidated financial statements as of and for the three and six months ended June 30, 2024 are consistent with those described in Note 2. "Summary of Significant Accounting Policies" in the Company’s Annual Report.

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Collaboration and supply agreements

In February 2024, the Company entered into a clinical trial collaboration and supply agreement with Bristol Myers Squibb ("BMS"), to investigate the Company’s ImmTAC bispecific TCR candidate targeting PRAME HLA-A02, brenetafusp (IMC-F106C), in combination with BMS’s nivolumab, in first-line advanced cutaneous melanoma (the "BMS Agreement"). Under the terms of the BMS Agreement, the Company is sponsoring and funding the registrational Phase 3 clinical trial of brenetafusp in combination with nivolumab in first-line advanced cutaneous melanoma (PRISM-MEL-301), and BMS is providing nivolumab. Both parties will own the study data produced in the clinical trial, other than study data related solely to nivolumab, which will belong solely to BMS, or study data related solely to brenetafusp, which will belong solely to the Company. Given the terms of the BMS Agreement, the Company concluded that it is not within the scope of ASC 808 or ASC 606. Any relevant costs arising from the clinical trial are expensed as incurred and recorded in research and development expenses. The Company has announced the randomization of the first patient in the PRISM-MEL 301 trial in June 2024. There has been no impact to the condensed consolidated financial statements as of June 30, 2024 relating to the Company’s collaboration with BMS.

Convertible senior notes

The Company issued 2.5% Convertible Senior Notes due in 2030 in February 2024 (the "Notes"), and evaluated to determine whether they contain features that qualify as embedded derivatives in accordance with ASC 815. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives. In accounting for the issuance of the Notes, the Company treats the instrument wholly as a liability, in accordance with ASC 470, as the conversion features do not require bifurcation as a derivative in accordance with ASC 815 and the Notes were not issued at a substantial premium. Costs directly associated with the borrowing have been capitalized and are netted against the corresponding debt liabilities in the Company’s Condensed Consolidated Balance Sheets at issuance and amortized over the contractual term of the convertible debt instrument using the effective interest rate method.

See Note 5. “Non-current interest-bearing loans and borrowings” for additional information.

Foreign currencies

The reporting currency of the Company is the U.S. dollar. Effective January 1, 2024, the Company’s ultimate parent adopted the U.S. dollar as its functional currency. Prior to January 1, 2024, the functional currency of the Company’s ultimate parent was the British pound sterling. The functional currency of the Company’s ultimate parent and each subsidiary is based on the currency of the economic environment in which they operate. The change in functional currency of the Company’s ultimate parent is due to a change in the economic facts and circumstances of the entity due to the increased exposure to the U.S. dollar primarily as a result of the increased cash flows related to financing and investing activities that are now expected to occur going forward in this entity. The effect of the change in functional currency for the Company’s ultimate parent was applied prospectively in the Condensed Consolidated Financial Statements effective January 1, 2024.

Upon consolidation, assets and liabilities of each subsidiary with a functional currency that differs to the Company’s ultimate parent are translated into U.S. dollars at period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates for each reporting period. Translation adjustments are reflected as other comprehensive income (loss).

Marketable securities

Marketable securities consist of investment funds which are measured and reported at fair value determined using quoted market prices. The investment funds are primarily invested in U.S. investment-grade debt securities, including asset-backed and mortgage-backed securities. Marketable securities are available to the Company for use in current operations and are classified as current assets. Gains and losses from marketable securities are recognized in Other income (expense), net.

Fair value measurements

Where financial and non-financial assets and liabilities are measured at fair value, the Company uses appropriate valuation techniques for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

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As of June 30, 2024 and December 31, 2023, the Company held $383.1 million and $331.0 million, respectively, of money market funds required to be measured at fair value on a recurring basis within cash and cash equivalents. In addition, as of June 30, 2024, and December 31, 2023, the Company held $354.6 million and $0 of marketable securities, respectively, including unrealized gains of $4.6 million and $0, respectively. The fair value of these cash equivalents and marketable securities is based on quoted prices from active markets (Level 1 inputs). Other financial instruments, although not recorded at fair value on a recurring basis, include cash, accounts receivable, accounts payable and debt obligations.

The fair value of borrowings under the Notes and Pharmakon Loan Agreement (disclosed in Note 5. “Non-current interest-bearing loans and borrowings”) were based on Level 2 inputs, which include observable inputs estimated using discounted cash flows and market-based expectations for interest rates, credit risk, and the contractual terms of debt instruments. After initial recognition, borrowings are measured at amortized cost using the effective interest method.

Recently issued and recently adopted accounting pronouncements

In March 2024, the SEC issued Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. The final rule requires registrants to provide climate-related disclosures in their annual reports and registration statements, beginning with annual reports for the year ending December 31, 2025, for calendar-year-end large accelerated filers. In April 2024, the SEC issued an order staying the final rule pending the completion of legal challenges to the final rule. The Company is currently assessing the impact of this final rule and the order to stay the rule on its disclosures.

3. Revenue

During the three and six months ended June 30, 2024, the Company recognized $75.3 million and $145.7 million, respectively, (2023: $56.9 million and $108.5 million, respectively) of net product revenue relating to the sale of KIMMTRAK primarily in the United States and Europe after estimated deductions for rebates, chargebacks and returns, which are recognized in Accrued expenses and other current liabilities as set out in the Company’s accounting policies included in the Annual Report.

Product revenue, net from the sale of KIMMTRAK is presented by country / region based on the location of the end customer below (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
United States	$	55,606	$	41,056	$	105,632	$	77,281
Europe	15,404		15,232		34,356		30,356
International	4,337		644		5,701		876
Total product revenue, net	$	75,347	$	56,932	$	145,689	$	108,513

Product revenue, net for the three and six months ended June 30, 2024 includes $5.0 million and $7.2 million respectively (2023: $2.0 million and $1.1 million, respectively), of partnered revenue under the Company's agreement with Medison Pharma Ltd ("Medison"), and such revenue is split between its European and international markets.

Accounts receivable from contracts with customers

Accounts receivable as of June 30, 2024 and December 31, 2023 was $60.2 million and $52.1 million, respectively. An allowance for lifetime expected credit losses on accounts receivable is measured using historical credit loss experience, conditions at the end of each reporting period, and reasonable and supportable forecasts that affect collectability. Expected credit losses as of June 30, 2024 and December 31, 2023 were immaterial.

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Accruals for rebates, chargebacks and returns

Current and non-current accruals for rebates, chargebacks and returns as of June 30, 2024 were as follows (in thousands):


	Rebates		Chargebacks		Returns		Total
As of December 31, 2023	$	63,957	$	2,031	$	738	$	66,726
Provisions related to sales in the period	41,003		15,516		549		57,068
Adjustments related to sales in prior periods	11,208		—		—		11,208
Credits and payments made	(11,717)		(15,590)		(672)		(27,979)
As of June 30, 2024	$	104,451	$	1,957	$	615	$	107,023

Included in the above are non-current accruals for rebates, chargebacks and returns of $1.5 million and $0 as of June 30, 2024 and December 31, 2023, respectively, which are not expected to be paid in the twelve months from the balance sheet date.

For accruals for rebates, chargebacks and returns reported as of December 31, 2023 where the uncertainty remains unresolved, additional information in the three and six months ended June 30, 2024 resulted in a change in estimate of $5.8 million and $11.2 million, respectively, net increase to the Company’s total accrued revenue deductions as of June 30, 2024.

Deferred revenue

Non-current deferred revenue as of June 30, 2024 and December 31, 2023 relates to $5.0 million received from Medison in the year ended December 31, 2023. The Company expects to recognize revenue for this combined performance obligation of supplying KIMMTRAK and granting Medison the exclusive right to distribute KIMMTRAK in South America with the sale of products following potential regulatory approvals in South America. The Company estimates that product revenue recognition of this non-current deferred revenue will commence later than June 30, 2025.

4. Accrued expenses and other current liabilities

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


	June 30, 2024		December 31, 2023
Rebates, chargebacks and returns	$	105,547	$	66,726
Clinical accruals	29,447		22,459
Employee related expenses	8,626		11,598
Commercial services	5,930		6,900
Contract manufacturing	5,327		4,356
Other taxation and social security	992		1,807
Other accruals	7,893		5,989
	$	163,762	$	119,835

See Note 3. “Revenue” for a detailed breakdown of rebates, chargebacks, other customer fees and returns.

Clinical accruals primarily represent unbilled work undertaken by contract research organizations ("CROs") as part of the advancement of the Company's clinical programs.

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5. Non-current interest-bearing loans and borrowings

Non-current interest-bearing loans and borrowings consists of the following as of June 30, 2024 (in thousands):


							Fair Value
	Principal Amount		Unamortized Debt Issuance Costs		Net Carrying Amount		Amount		Level
Convertible senior notes	$	402,500	$	(12,527)	$	389,973	$	333,712	Level 2
Pharmakon loan

SEC Form 10-Q filed by Immunocore Holdings plc