The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed consolidated interim financial statements and the related notes to those statements included in this Quarterly Report on Form 10-Q. We also recommend that you read our discussion and analysis of financial condition and results of operations together with our audited financial statements and the notes thereto, which appear in our Annual Report on the Form 10-K for the year ended December 31, 2025 as filed with the Securities and Exchange Commission, or the SEC on March 27, 2026, or the Annual Report.
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 for the three months ended June 30, 2026 and 2025 have been translated from pounds sterling into U.S. dollars at the rate of £1.00 to $1.3414 and £1.00 to $1.3355, respectively. Our unaudited condensed consolidated statements of operations and comprehensive loss and cash flows for the six months ended June 30, 2026 and 2025 have been translated from pounds sterling into U.S. dollars at the rate of £1.00 to $1.3445 and £1.00 to $1.2971, respectively. Our unaudited condensed consolidated balance sheet as of June 30, 2026 and audited consolidated balance sheet as of December 31, 2025 have been translated from pounds sterling into U.S. dollars at the rate of £1.00 to $1.3242 and £1.00 to $1.3455, 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.
The statements in this discussion and analysis of our financial condition and results of operations regarding our expectations regarding our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties set forth in the “Risk Factors” section of our Annual Report, this Quarterly Report and any subsequent reports that we file with the SEC.
Autolus, AUCATZYL and our other trademarks or service marks appearing in this report are our property. Solely for convenience, the trademarks and trade names in this report are referred to without the ® and TM 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. Products or service names of other companies mentioned in this report may be trademarks, trade names or service marks of their respective owners.
Overview
We are a 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.
Since our inception, we have incurred significant operating losses. For the three months ended June 30, 2026 and 2025, we incurred net losses of $39.1 million and $47.9 million, respectively, and had an accumulated deficit of $1,497.5 million and $1,386.8 million as of June 30, 2026 and December 31, 2025, respectively.
As of June 30, 2026, we had cash and cash equivalents of $171.4 million and marketable securities of $30.2 million. Based on our current clinical development and commercialization plans, we believe our existing cash, cash equivalents and marketable securities, together with the $75.0 million received from its Notes Purchase Agreement with Perceptive Advisors, “Perceptive”, 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 Quarterly Report. This forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of our revenues and expenses, which we have based on assumptions that may prove to be wrong and could prove to be significantly higher than we currently anticipate, could vary materially and adversely as a result of a number of factors. Management does not know whether additional financing will be on terms favorable or acceptable to us when needed, if at all. If adequate additional funds are not available when required, or if we are unsuccessful in entering into partnership agreements for further development of our product candidates, management may need to curtail its development efforts and planned operations.
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Recent Developments
AUCATZYL launch:
•We reported net product revenue of $45.7 million for three months ended June 30, 2026, compared to $20.9 million for the same period the prior year and compared to $26.2 million for three months ending March 31, 2026. Net revenues were primarily driven by increasing product demand both within existing treatment centers and expansion into new centers, supplemented by contribution from UK sales in the second quarter of launch in this market.
•Additional data from the FELIX trial focusing on the impact of tumor burden and bridging therapy on safety and efficacy in adult r/r ALL patients treated with obe-cel were presented at the American Society of Clinical Oncology (“ASCO”) and European Hematology Association (“EHA”) annual meetings.
Obe-cel clinical updates:
Obe-cel data in pediatric r/r B-ALL
•Our Phase 2 portion of the ongoing CATULUS trial of obe-cel in pediatric relapsed or refractory (r/r) B-cell precursor ALL (“B-ALL”) patients is on track and data is expected to be reported at the end of 2027.
Obe-cel in lupus nephritis (“LN”)
•Our next data update from the Phase 1 CARLYSLE trial in patients with severe refractory systemic lupus erythematosus (“SLE”) has been submitted for presentation at the American College of Rheumatology (“ACR”) Annual Meeting in the fourth quarter of 2026. LUMINA, the pivotal Phase 2 study of obe-cel in patients with refractory LN continues enrolling in five countries and we expect to report data in 2028.
Obe-cel in progressive multiple sclerosis (“MS”)
•The Phase 1 BOBCAT trial is expected to include up to 18 adult patients and will determine the safety, tolerability, and preliminary efficacy of obe-cel in participants with refractory progressive forms of MS.
•The first preliminary results, including safety, PK/PD and biomarker data are planned to be presented at at the ACTRIMS Forum in the first quarter of 2027. A larger data set with longer follow up will be reported in the second half of 2027.
AUTO8 in Light-Chain Amyloidosis
•The Phase 1 ALARIC trial evaluating AUTO8 in light-chain amyloidosis is ongoing and initial data are expected to be reported at the end of 2026.
Q2 2026 operational updates:
•In April 2026, we announced a strategic initiative and plan to improve operational efficiency and reduce operating expenses. As part of this initiative, we implemented a reduction in force affecting approximately 13% of its existing overall workforce, impacting all areas of the business. The actions are expected to reduce operating expenses by approximately $15 million on an annualized basis beginning in 2027. As a result of the reorganization, which includes employee-related actions taken beginning in the second half of 2025, we expect to incur total restructuring charges of approximately $8 million, consisting primarily of employee severance and related costs, the majority of which have been recognized in the first half of 2026. The implementation of the workforce reduction plan is now substantially complete.
Post Q2 2026 events:
•On July 30, 2026, we entered into a strategic financing with Perceptive for the sale of notes of up to $250 million in aggregate principal amount in a five-year, interest-only senior credit facility (the “Credit Facility”), subject to certain conditions. An initial $75 million principal amount of notes has been issued by us to Perceptive on July 30, 2026, and an additional $25 million in aggregate principal amount will be available at our option for up to six months post-closing. An additional $150 million in aggregate principal amount of subsequent capital may become available in separate tranches upon achievement of certain pre-specified revenue milestones. The Credit Facility will bear interest at a rate per annum equal to the one month secured overnight financing rate (“SOFR”) (subject to a SOFR floor of 3.50%), plus 7.25%, and will be interest-only until maturity. Interest margin reductions may become available upon achievement of certain revenue milestones. At closing of the Credit Facility, we issued Perceptive a warrant to purchase up to 3.5 million ADSs, each ADS representing one ordinary share, at an exercise price of $1.9314 per ADS, equal to 125% of the 30-day VWAP immediately preceding the closing date.
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Components of Our Results of Operations
Product Revenue, Net
During the three-month and six-month period ended June 30, 2025, our product revenue, net was solely comprised of sales of AUCATZYL in the U.S. We use Cardinal Health as an agent to deliver our product, AUCATZYL, to ATCs. The ATCs are responsible for the treatment of the patient including infusion of the product which occurs in two separate doses. Cardinal Health is obligated to pay us for the product upon the delivery and acceptance of the product at the ATC within standard payment terms. The ATC is obligated to pay Cardinal Health for the product upon receipt and acceptance of the product and is entitled to a credit in certain circumstances, including when the patient is not administered one or both doses.
We launched AUCATZYL in the U.K. in January 2026. Consequently, our product revenue, net now includes sales of AUCATZYL in the U.S. and U.K.. AUCATZYL is available through the National Health Service (“NHS”) and private treatment centers.
In July 2025, the European Commission granted marketing authorization for AUCATZYL in adult patients (age 26 and older) with r/r B-ALL. Evaluation of potential pricing and the feasibility of market entry opportunities in certain EU countries is ongoing; consequently, the commercial launch in Germany is currently on hold. We did not generate any EU product revenue from AUCATZYL in 2025 and do not anticipate any EU product revenue in 2026.
We have determined that the patient is the customer pursuant to ASC 606 in the arrangement. We have identified a single performance obligation which is satisfied when the patient has received its final dose of the product. We record an accounts receivable on the balance sheet when product sales are invoiced and the final dose of the product has been administered to the patient.
Product revenue, net of gross-to-net deductions, is recognized only to the extent that a significant reversal in the amount of cumulative revenue recognized is not probable of occurring when the uncertainty associated with gross-to-net deductions is subsequently resolved. Product revenue is recognized net of estimated rebates and chargebacks, patient travel assistance and patient co-pay assistance deductions. These deductions to product revenue are referred to as gross-to-net deductions and are estimated and recorded in the period in which the related product revenue occurs. Refer to Note 2, “Summary of Significant Accounting Policies,” for further details on our product revenue, net accounting policy.
Cost of Sales
Cost of sales represents production costs including raw materials, employee-related expenses, including salaries, related benefits, travel and share-based compensation expense for employees engaged in commercial manufacturing functions, external manufacturing costs including outsourced professional expenses services, allocated facilities costs, depreciation and other expenses, royalties payable to third-parties and other costs incurred in bringing inventories to their location and condition prior to sale. Cost of sales also includes the cost of all commercial product which is recognized as cost of goods sold upon final administration to the patient, any cancelled orders, and product related to the patient access program. Cost of sales may also include costs related to excess or obsolete inventory adjustment charges and amortization expense of intangible assets.
Cost of sales for a newly launched product does not include the full cost of manufacturing until the initial pre-launch raw materials inventory is depleted. Thus, the cost of sales as a percentage of net sales of AUCATZYL for the three and six months ended June 30, 2026 was affected by use of the initial pre-launch raw materials inventory, which was previously expensed as research and development expense, and is referred to as zero cost inventories. We estimate cost of sales as a percentage of net product revenue and will continue to be positively impacted as we sell products which includes some raw material inventory that was previously expensed prior to the FDA approval.
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Research and Development Expenses, Net
Research and development expenses, net (“R&D”) consist of costs incurred in connection with the research and development of our product candidates, which are partially offset by research and development tax credits, including tax credits arising from the U.K. small and medium enterprise (“SME”) regime and research and development expenditure credit (“RDEC”) regime provided by His Majesty's Revenue and Customs (“HMRC”). We expense research and development costs as incurred. These expenses include:
•expenses incurred under agreements with CROs, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services;
•manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial materials;
•employee-related expenses, including salaries, related benefits, travel and share-based compensation expense for employees engaged in research and development functions;
•expenses incurred for outsourced professional scientific development services;
•costs for laboratory materials and supplies used to support our research activities;
•allocated facilities costs, depreciation and other expenses, which include rent and utilities; and
•upfront, milestone and management fees for maintaining licenses under our third-party licensing agreements.
We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers.
Our direct research and development expenses are tracked on a program-by-program basis for our product candidates and consist primarily of external costs, such as fees paid to outside consultants and CROs in connection with our preclinical development, manufacturing and clinical development activities. Our direct research and development expenses by program also include fees incurred under license agreements. We do not allocate employee costs or facility expenses, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to oversee research and development as well as for managing our preclinical development, process development, manufacturing and clinical development activities.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. As a result, we expect that our research and development expenses will increase substantially over the next few years as we initiate and conduct additional clinical trials and prepare regulatory filings related to our product candidates. We also expect to incur additional expenses related to milestone, royalty payments and maintenance fees payable to third parties with whom we have entered into license agreements to acquire the rights related to our product candidates.
The successful development and commercialization of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the clinical development of any of our product candidates or when, if ever, material net cash inflows may commence from sales of any of our product candidates. This uncertainty is due to the numerous risks and uncertainties associated with development and commercialization activities, including the uncertainty of:
•the scope, progress, outcome and costs of our clinical trials and other research and development activities, including establishing an appropriate safety profile with IND-directed studies;
•successful patient enrollment in, and the initiation and completion of, clinical trials;
•the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;
•establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
•development and timely delivery of commercial-grade drug formulations that can be used in our clinical trials and for commercial manufacturing;
•obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;
•significant and changing government regulation;
•launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others;
•maintaining a continued acceptable safety profile of the product candidates following approval; and
•significant competition and rapidly changing technologies within the biopharmaceutical industry.
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We may never succeed in achieving regulatory approval for any of our product candidates other than AUCATZYL. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. Any changes in the outcome of any of these variables with respect to the development of our product candidates in clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. For example, if the European Medicines Agency (“EMA”), the FDA, or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate. Commercialization of our product candidates will take several years and millions of dollars in development costs.
U.K. Research and Development Tax Credits
Research and development expenditure is presented net of reimbursements from reimbursable tax and expenditure credits from the United Kingdom government. As a company that carries out extensive research and development activities, we benefit from the Research and Development tax incentives provided by United Kingdom tax legislation. The specific tax incentives available for us to claim vary year to year and are dependent on the criteria met.
The benefits from United Kingdom research and development tax credits are recognized in the statements of operations and comprehensive loss as a reduction of research and development expenses and represents the sum of the research and development tax credits recoverable in the United Kingdom.
The SME program has been particularly beneficial to us as under such program the tax losses that arise from our qualifying R&D activities can be surrendered for a cash rebate of up to 33.35% of qualifying expenditure incurred prior to April 1, 2023 and decreased to 18.6% after April 1, 2023. The United Kingdom government enacted changes to the SME regime effective from April 1, 2023 which included the introduction of a new rate for R&D intensive companies of 27%. Qualifying expenditures largely comprise of 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 relate 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.
Under the RDEC program, the headline rate for qualifying R&D expenditure is 20% and can generate cash rebates of up to 15% on qualifying R&D expenditure.
Amendments to the current SME and RDEC programs contained in the Finance Act 2024 (unless limited exceptions apply) introduce (i) restrictions on the tax relief that can be claimed for expenditure incurred on sub-contracted R&D activities or externally provided workers, where such activities are not carried out in the United Kingdom or such workers are not subject to United Kingdom payroll taxes, and (ii) merge the SME and RDEC programs into a single scheme which would generate net cash benefit of up to 15% of the qualifying expenditure for profit making companies and up to 16.2% for loss making companies. These changes apply to periods commencing after April 1, 2024.
Selling, General and Administrative Expenses
Selling, 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. Selling, general and administrative expenses also include allocated facility-related costs, patent filing and prosecution costs and professional fees for marketing, insurance, legal, consulting, accounting, termination benefits and related charges, audit services, gains and losses on disposal of property and equipment and impairment of operating lease right of use assets and related property and equipment. Included in selling, general and administrative expenses is historical irrecoverable input VAT previously claimed on selling, general and administrative expenses and subsequently reversed.
We anticipate that our selling, general and administrative expenses will increase in the future as we maintain the headcount necessary to support the commercialization of AUCATZYL and the planned development of our product candidates. We anticipate an increase in salaries and related benefits as a result of our commercial operations, especially as they relate to the sales and marketing of AUCATZYL and our other product candidates. In addition, we anticipate an increase in termination benefits and related charges arising from the reduction in force approved and announced in April 2026, with a significant portion of these termination benefits and related charges expected to be recognized in the first half of 2026.
We have experienced, and expect to continue to experience, increased expense with being a public company, including increased accounting, audit, legal, regulatory and compliance costs associated with maintaining compliance with Nasdaq listing rules and the SEC requirements, director and officer insurance premiums, as well as higher investor and public relations costs. Additionally, should we fail to maintain our status as a foreign private issuer, we would expect to incur increased expenses to remain compliant with the applicable SEC and Nasdaq requirements.
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Other income, net
Other income, net consists primarily of sublease income.
Foreign Exchange Gains (Losses), Net
Foreign exchange (losses) gains, net consist of foreign currency transaction gains and losses arising from transactions denominated in foreign currencies.
Interest Income
Interest income primarily relates to interest on cash, cash equivalents and available-for-sale debt securities and is presented net of amortization or accretion of the premium or discount on purchase and sales of the debt securities.
Interest Expense, Net
Interest expense, net consists primarily of interest expense arising from amortization of the liabilities related to future royalties and milestones, pursuant to our collaboration agreements with BXLS V - Autobahn L.P, (“Blackstone”) and BioNTech SE (“BioNTech”), using the effective interest rate method. On a quarterly basis, we assess the expected present value of the future Blackstone and BioNTech payments under the Blackstone Collaboration Agreement and BioNTech Agreements which may be received by us and future royalties and sales milestone payments to Blackstone and BioNTech which may be paid by us. To the extent the amount or timing of such receipts or payments is materially different than our previous estimates we record a cumulative catch-up adjustment to the liabilities related to future royalties and milestones. Adjustments to increase or decrease the carrying amount are recognized as an adjustment to interest expense, net in the period in which the change in estimate occurred.
Income Tax Expense
We are subject to corporate taxation in the United Kingdom, United States, Germany and Switzerland. Due to the nature of our business, we have generated losses since inception. Our income tax (expense) benefit recognized represents the sum of income tax payable or receivable in the United Kingdom, in the United States, in Germany and in Switzerland.
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 United Kingdom taxable profits. After accounting for tax credits receivable, we had accumulated tax losses for carry forward in the United Kingdom of $953.6 million at December 31, 2025. No deferred tax assets are recognized on our U.K. losses and tax credit carryforwards because there is currently no indication that we will make sufficient taxable profits to utilize these tax losses and tax credit carryforwards. We carry a $2.8 million deferred tax asset balance related to the U.S. entity at June 30, 2026 for which a valuation allowance of $2.4 million was applied. We have recorded a valuation allowance against the net deferred tax asset where the recoverability due to future taxable profits is 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).
In the event we generate profits in the future, we may benefit from the U.K. “patent box” regime that allows profits attributable to revenues from patents or patented products to be taxed at an effective rate of 10%.
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Results of Operations
Comparison of Three Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations for the three months ended June 30, 2026, and 2025 (in thousands):
Three Months Ended June 30, Change Change
2026 2025 (in thousands) (in percentage)
Revenue:
Product revenue, net $ 45,672 $ 20,923 $ 24,749 118 %
License revenue 17 — 17 100 %
Total revenue, net 45,689 20,923 24,766 118 %
Cost and operating expenses:
Cost of sales (20,468) (24,445) 3,977 (16) %
Research and development expenses, net (27,898) (27,430) (468) 2 %
Selling, general and administrative expenses (41,161) (30,265) (10,896) 36 %
Loss from operations (43,838) (61,217) 17,379 (28) %
Other income (expense):
Other income, net 181 135 46 34 %
Foreign exchange gains, net 460 1,499 (1,039) (69) %
Interest income 1,877 5,234 (3,357) (64) %
Interest expense, net 2,674 6,829 (4,155) (61) %
Total other income, net 5,192 13,697 (8,505) (62) %
Net loss before income tax (38,646) (47,520) 8,874 (19) %
Income tax expense (465) (397) (68) 17 %
Net loss $ (39,111) $ (47,917) $ 8,806 (18) %
Product Revenue, Net
We began recognizing product revenue, net arising from the commercial sales of AUCATZYL in the United States and United Kingdom in January 2025 and January 2026, respectively. Product revenue, net increased by $24.7 million to $45.7 million for the three months ended June 30, 2026 from $20.9 million for the three months ended June 30, 2025. The increase is primarily due to an increase in the number of AUCATZYL doses administered to patients in the territories where we commercialize AUCATZYL.
Cost of Sales
Cost of sales decreased by $4.0 million to $20.4 million for the three months ended June 30, 2026 from $24.4 million for the three months ended June 30, 2025. The decrease was primarily attributable to the benefits of the ongoing operational efficiency initiatives announced in April 2026, improved utilization of manufacturing capacity, and lower inventory write-downs, partially offset by higher product volumes and the associated increase in third-party royalties. Cost of sales for the three months ended June 30, 2025 included inventory write-downs of $2.5 million and third-party royalties of $0.6 million. Cost of sales for the three months ended June 30, 2026 included inventory write-downs of $1.2 million and third-party royalties of $1.6 million.
Cost of sales as a percentage of revenue decreased from 117% to 45% from the three months ended June 30, 2025 to June 30, 2026. The decrease is primarily the result of higher product volumes and operational changes at the Nucleus facility in the three months ended June 30, 2026 resulting in a lower cost per batch manufactured, including the benefits of the ongoing operational efficiency initiatives announced in April 2026.
Certain manufacturing expenses incurred prior to AUCATZYL receiving the FDA approval were classified as research and development expenses, resulting in zero cost inventory. If cost of sales included previously expensed inventories, the total cost of sales with these manufacturing costs included would have increased by approximately $0.4 million and $1.9 million for the three months ended June 30, 2026 and 2025 respectively.
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Research and Development Expenses, Net
The following tables provide additional detail on our research and development expenses, net (in thousands):
Three Months Ended June 30, Change (in thousands) Change (in percentage)
2026 2025
Direct research and development expenses
B cell malignancies (Obe-cel) $ 3,234 $ 6,803 $ (3,569) (52) %
Other projects (AUTO4, AUTO5, AUTO6, AUTO7 & AUTO8) 1,209 578 631 109 %
Total direct research and development expense $ 4,443 $ 7,381 $ (2,938) (40) %
Indirect research and development expenses and unallocated costs:
Personnel related (including share-based compensation) $ 12,047 $ 15,635 (3,588) (23) %
Indirect research and development expense* 11,408 4,414 6,994 158 %
Total research and development expenses, net $ 27,898 $ 27,430 $ 468 2 %
* Indirect research and development expense is net of United Kingdom research and development tax credits
Research and development expenses, net increased by $0.5 million to $27.9 million for the three months ended June 30, 2026 from $27.4 million for the three months ended June 30, 2025 primarily due to:
•a decrease of $2.6 million in United Kingdom R&D tax credits (resulting in an increase in R&D expense) due to no longer being eligible for the SME scheme and moving to the merged RDEC from January 1, 2025, as well as lower qualifying spend; offset by:
•an increase of $1.5 million in clinical trial costs, clinical manufacturing supply costs and related support costs; offset by
•a decrease of $3.6 million in salaries and other employment related costs including share-based compensation expense relating to research and development activities,
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $10.9 million to $41.2 million for the three months ended June 30, 2026 from $30.3 million for the three months ended June 30, 2025 primarily due to:
•an increase of $7.4 million in salaries and other employment related costs including share-based compensation expenses, which was mainly driven by termination and severance costs related to the reduction in workforce initiative announced in April 2026 and an increase in the number of employees engaged in selling, general and administrative activities;
•an increase of $2.1 million in information technology infrastructure and support for information systems and facility costs relating to the conduct of corporate and commercial operations, including increase in space utilized for these activities;
•an increase of $1.1 million in professional fees primarily related to commercialization activities in the U.S. and U.K; and
•a loss on impairment of fixed assets amounting to $0.3 million.
Foreign Exchange Gains (Losses), Net
Foreign exchange gains (losses), net decreased to a gain of $0.5 million for the three months ended June 30, 2026 as compared to a gain of $1.5 million for the three months ended June 30, 2025 primarily due to gains and losses on a variety of items, including on U.S. dollar monetary assets and liabilities held by our main operating subsidiary in the United Kingdom, as well as our cash and cash equivalents and liabilities related to future royalties and milestones.
Interest Income
Interest income decreased to $1.9 million for the three months ended June 30, 2026, as compared to $5.2 million for the three months ended June 30, 2025. The decrease in interest income of $3.3 million was primarily driven by lower aggregate balances and yield associated with our cash, cash equivalents and marketable securities during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.
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Interest Expense, Net
Interest expense, net decreased to negative $2.7 million for the three months ended June 30, 2026 as compared to negative $6.8 million for the three months ended June 30, 2025. Interest expense, net decreased by $4.2 million primarily due to changes in the assumptions used in the valuation of the Collaboration Agreement with Blackstone and the BioNTech License and Option Agreement. These assumption changes during the three months ended June 30, 2026 and June 30, 2025 respectively, resulted in a negative cumulative catch-up adjustment which exceeded the interest expense accrued relating to Blackstone Collaboration Agreement (“Blackstone Collaboration Agreement Liability”) and the BioNTech Obe-cel Product Revenue Interest (“BioNTech Liability”).
Income Tax Expense
Income tax expense increased to $0.5 million for the three months ended June 30, 2026 as compared to $0.4 million for the three months ended June 30, 2025. Income tax expenses increased by $0.1 million primarily due the mix of pre-tax income and losses incurred in various tax jurisdictions during the three months ended June 30, 2026 compared to the three months ended June 30, 2025.
Comparison of Six Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations for the six months ended June 30, 2026, and 2025 (in thousands):
Six Months Ended June 30, Change (in thousands) Change (in percentage)
2026 2025
Revenue
Product revenue, net $ 71,890 $ 29,905 $ 41,985 140 %
License revenue 17 — 17 100 %
Total revenue, net 71,907 29,905 42,002 140 %
Cost and operating expenses:
Cost of sales (45,036) (42,396) (2,640) 6 %
Research and development expenses, net (49,108) (54,164) 5,056 (9) %
Selling, general and administrative expenses (81,114) (59,802) (21,312) 36 %
Loss from operations (103,351) (126,457) 23,106 (18) %
Other income (expense):
Other income, net 281 262 19 7 %
Foreign exchange (losses) gains, net (2,207) 2,680 (4,887) (182) %
Interest income 4,346 11,371 (7,025) (62) %
Interest expense, net (8,450) (3,314) (5,136) 155 %
Total other (expense) income, net (6,030) 10,999 (17,029) (155) %
Net loss before income tax (109,381) (115,458) 6,077 (5) %
Income tax expense (1,328) (2,623) 1,295 (49) %
Net loss $ (110,709) $ (118,081) $ 7,372 (6) %
Product Revenue, Net
We began recognizing product revenue, net arising from the commercial sales of AUCATZYL in the United States and United Kingdom in January 2025 and January 2026, respectively. Product revenue, net increased by $42.0 million to $71.9 million for the six months ended June 30, 2026 from $29.9 million for the six months ended June 30, 2025. The increase is primarily due to an increase in the number of AUCATZYL doses administered in the territories where we commercialize AUCATZYL.
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Cost of Sales
Cost of sales increased by $2.6 million to $45.0 million for the six months ended June 30, 2026 from $42.4 million for the six months ended June 30, 2025. The increase was primarily attributable to higher product volumes and the associated increase in third-party royalties, partially offset by the benefits of the ongoing operational efficiency initiatives announced in April 2026 and improved utilization of manufacturing capacity. Cost of sales for the six months ended June 30, 2025 included inventory write-downs of $3.2 million and third-party royalties of $0.7 million. Cost of sales for the six months ended June 30, 2026 included inventory write-downs of $3.1 million and third-party royalties of $2.5 million.
Cost of sales as a percentage of revenue decreased from 142% to 63% from the six months ended June 30, 2025 to June 30, 2026. The decrease is primarily the result of higher product volumes and operational changes at the Nucleus facility in the six months ended June 30, 2026 resulting in a lower cost per batch manufactured, including the benefits of the ongoing operational efficiency initiatives announced in April 2026.
Certain manufacturing expenses incurred prior to AUCATZYL receiving the FDA approval were classified as research and development expenses, resulting in zero cost inventory. If cost of sales included previously expensed inventories, the total cost of sales with these manufacturing costs included would have increased by approximately $0.5 million and $4.3 million for the six months ended June 30, 2026 and 2025, respectively.
Research and Development Expenses, Net
The following tables provide additional detail on our research and development expenses, net (in thousands):
Six Months Ended June 30, Change (in thousands) Change (in percentage)
2026 2025
Direct research and development expenses
B cell malignancies (Obe-cel) $ 4,774 $ 17,446 $ (12,672) (73) %
Other projects (AUTO4, AUTO5, AUTO6, AUTO7 & AUTO8) 2,417 746 1,671 224 %
Total direct research and development expense $ 7,191 $ 18,192 $ (11,001) (60) %
Indirect research and development expenses and unallocated costs:
Personnel related (including share-based compensation) 24,769 29,031 (4,262) (15) %
Indirect research and development expense 17,148 6,941 10,207 147 %
Total research and development expenses, net $ 49,108 $ 54,164 $ (5,056) (9) %
* Indirect research and development expense is net of U.K. research and development tax credits
Research and development expenses, net decreased by $5.1 million to $49.1 million for the six months ended June 30, 2026 from $54.2 million for the six months ended June 30, 2025 primarily due to:
•a decrease of $4.3 million in salaries and other employment related costs including share-based compensation expense relating to research and development activities;
•a decrease of $2.8 million which is primarily due to decreases in information technology infrastructure and support for information systems and contractor costs relating to research and development activities;
•a decrease of $1.0 million in clinical trial costs, clinical manufacturing costs, material transportation costs and utilization of raw materials and consumables relating to research and development activities; offset by:
•a decrease of $3.0 million in United Kingdom R&D tax credits (increase in R&D expense) due to no longer being eligible for the SME scheme and moving to the merged RDEC from January 1, 2025, as well as lower qualifying spend.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $21.3 million to $81.1 million for the six months ended June 30, 2026 from $59.8 million for the six months ended June 30, 2025 primarily due to:
•an increase of $14.7 million in salaries and other employment related costs including share-based compensation expenses, which was mainly driven by termination and severance costs related to the reduction in workforce initiative announced in April 2026 and an increase in the number of employees engaged in selling, general and administrative activities;
•an increase of $3.7 million in information technology infrastructure and support for information systems and facility costs relating to the conduct of corporate and commercial operations including increase in space utilized for these activities;
•an increase of $2.6 million in commercial costs including legal and professional fees and marketing costs associated with market access activities; and
•a loss on impairment of fixed assets amounting to $0.3 million.
Foreign Exchange Gains (Losses), Net
Foreign exchange gains (losses), net decreased to a loss of $2.2 million for the six months ended June 30, 2026 from a gain of $2.7 million for the six months ended June 30, 2025. The gains and losses rises on a variety of items, including on U.S. dollar monetary assets and liabilities held by our main operating subsidiary in the United Kingdom, including our cash and cash equivalents and liabilities related to future royalties and milestones.
Interest Income
Interest income decreased to $4.3 million for the six months ended June 30, 2026, as compared to $11.4 million for the six months ended June 30, 2025. The decrease in interest income of $7.1 million primarily relates to lower aggregate balances and yield associated with our cash, cash equivalents and available-for-sale securities during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.
Interest Expense, net
Interest expense, net increased to $8.5 million for the six months ended June 30, 2026 as compared to $3.3 million for the six months ended June 30, 2025. Interest expense, net decreased by $5.1 million primarily due to cumulative catch up adjustments as a result of changes in the assumptions used in the valuation of the Collaboration Agreement with Blackstone and the BioNTech License and Option Agreement for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Income Tax Expenses
Income tax expense decreased to $1.3 million for the six months ended June 30, 2026 as compared to $2.6 million for the six months ended June 30, 2025. Income tax expenses, net decreased by $1.3 million primarily due to the mix of pre-tax income and losses incurred in various tax jurisdictions during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Liquidity and Capital Resources
Since our inception, we have incurred operating losses and negative cash flows from our operations. We expect to incur significant expenses and operating losses for the foreseeable future as we market AUCATZYL and advance our other product candidates through preclinical and clinical development and seek regulatory approval and pursue commercialization of any additional approved products. As a result, we will need significant additional capital to fund our operations until such time as we can generate significant revenue from sales of AUCATZYL or other products.
We have one product approved for commercial sale in the United States and United Kingdom, AUCATZYL, of which the first commercial sale of AUCATZYL in the United States and United Kingdom was made during January 2025 and January 2026, respectively. We have funded our operations to date primarily with proceeds from government grants, sales of our equity securities including ADSs, through public offerings and pursuant to our at-the-market equity facility, through U.K. research and development tax credits and receipts from the SME and RDEC schemes, out-licensing arrangements, strategic collaboration agreements and sale of our commercial product. We have an accumulated deficit of $1,497.5 million as of June 30, 2026.
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We expect to incur significant expenses and operating losses for the foreseeable future as we market and continue commercialization of AUCATZYL and advance our other product candidates through preclinical and clinical development and seek regulatory approval and pursue commercialization of any additional approved products. As a result, we will need significant additional capital to fund our operations until such time as we can generate significant revenue from sales of AUCATZYL or other products for which we may obtain regulatory approval.
We have funded our operations to date primarily with proceeds from product revenue, government grants, sales of our equity securities, through public offerings and pursuant to our at-the-market equity facility, United Kingdom research and development tax credits and receipts from the SME and RDEC schemes, out-licensing arrangements and strategic collaboration and financing agreements. From our inception in 2014 through June 30, 2026, we have generated an aggregate of $1.9 billion from these capital sources.
As of June 30, 2026, we had cash and cash equivalents of $171.4 million and available-for-sale debt securities of $30.2 million.
Cash Flows
The following table summarizes our cash flows for each of the periods presented (in thousands):
Six Months Ended June 30,
2026 2025
Net cash used in operating activities $ (90,386) $ (148,346)
Net cash provided by investing activities 164,051 36,368
Net cash used in financing activities (4,203) (768)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (2,188) 9,273
Net increase (decrease) in cash, cash equivalents and restricted cash $ 67,274 $ (103,473)
Net Cash Used in Operating Activities
Net cash used in our operating activities was $90.4 million for the six months ended June 30, 2026, compared to net cash used in operating activities of $148.3 million for the six months ended June 30, 2025. The decrease of $58.0 million in net cash used in our operating activities was primarily driven by increases in accounts receivable, inventories net, operating lease liability and working capital movements, reflecting the timing of payments, partially offset by prepaid expenses, accounts payable and accrued expenses working capital movements.
Net Cash Provided by Investing Activities
During the six months ended June 30, 2026 and 2025, net cash provided by investing activities amounted to $164.1 million and $36.4 million, respectively. Net cash provided by investing activities during the six months ended June 30, 2026 primarily reflected by $182.4 million in proceeds from maturity and redemption of marketable securities, offset by purchases of marketable securities totaling $14.7 million, and purchases of property and equipment totaling $3.6 million. Net cash provided by investing activities during the six months ended June 30, 2025 consisted of $171.2 million in proceeds from maturity and redemption of marketable securities, offset by $119.3 million related to purchases of marketable securities and $15.5 million purchases of property and equipment.
Net Cash Used in Financing Activities
During the six months ended June 30, 2026, net cash used in financing activities totaled $4.2 million, primarily due to revenue share payments to Blackstone and BioNTech. During the six months ended June 30, 2025, there were revenue share payments to Blackstone and BioNTech amounting to $0.8 million.
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Funding Requirements
We expect to continue incurring significant expenses in connection with our ongoing activities, particularly as we continue to market and sell AUCATZYL, operate our commercial manufacturing facility and advance the preclinical activities and clinical trials of our other product candidates. Our expenses may increase as we:
•maintain our sales, marketing and distribution infrastructure in connection with commercializing AUCATZYL and other product candidates for which we may obtain marketing approval and intend to commercialize on our own or jointly;
•initiate new preclinical activities and clinical trials for our product candidates;
•seek regulatory approvals for any product candidates that successfully complete preclinical and clinical trials;
•retain our manufacturing, clinical, medical and development personnel;
•expand our infrastructure and facilities to accommodate our employee base; and
•maintain, expand and protect our intellectual property portfolio.
Our primary uses of capital are compensation and related expenses, clinical costs, external research and development services, laboratory and related supplies, legal and other regulatory expenses, manufacturing and selling AUCATZYL, and administrative and overhead costs. Our future funding requirements will be heavily determined by the resources needed to support the development of our product candidates and commercialization of AUCATZYL. We also expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize. We may also require additional capital to pursue in-licenses or acquisitions of other product candidates.
Based on our current clinical development and commercialization plans, we believe our existing cash and cash equivalents of $171.4 million, marketable securities of $30.2 million as of June 30, 2026 together with the $75.0 million received from its Notes Purchase Agreement with Perceptive, and the expected proceeds from the sale of AUCATZYL, will enable us to fund our current and planned operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of this Quarterly Report. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If we receive regulatory approval for our other product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize. We may also require additional capital to pursue in-licenses or acquisitions of other product candidates.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including:
•our ability to continue to execute our commercialization strategies for AUCATZYL and, if approved, any of our other product candidates for which we may receive regulatory approval;
•the scope, progress, outcome and costs of our clinical trials and other research and development activities;
•the costs, timing, receipt and terms of any marketing approvals from applicable regulatory authorities;
•the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for AUCATZYL or any of our product candidates for which we receive marketing approval;
•the revenue, if any, received from commercial sale of AUCATZYL or our other product candidates, should any receive marketing approval;
•the costs and timing of hiring new employees to support our continued growth;
•the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; and
•the extent to which we in-license or acquire additional product candidates or technologies.
Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of public or private equity and debt offerings, reimbursable United Kingdom research and development tax credits and receipts from the SME and RDEC schemes, out-licensing agreements, or strategic collaboration agreements. To the extent that we raise additional capital through the sale of equity, the ownership interest of existing shareholders will be diluted. If we raise additional funds through other third-party funding, collaborations agreements, strategic alliances, out-licensing agreements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.
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Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated interim financial statements, which we have prepared in accordance with U.S. GAAP. The preparation of our unaudited condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our unaudited condensed consolidated interim financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting estimates and significant judgments during the six months ended June 30, 2026.
Contractual Obligations
As of June 30, 2026, other than disclosed in Notes 15 to 17 to our unaudited condensed consolidated interim financial statements included in this Quarterly Report, there have been no material changes to our contractual obligations and commitments from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report.
Recent Accounting Pronouncements Not Yet Adopted
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, “Summary of Significant Accounting Policies,” to our unaudited condensed consolidated interim financial statements included in this Quarterly Report.