Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 15, 2023 | Jun. 30, 2022 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Transition Report | false | ||
Entity File Number | 001-04321 | ||
Entity Registrant Name | CENTESSA PHARMACEUTICALS PLC | ||
Entity Incorporation, State or Country Code | X0 | ||
Entity Tax Identification Number | 98-1612294 | ||
Entity Address, Address Line One | 3rd Floor | ||
Entity Address, Address Line Two | 1 Ashley Road | ||
Entity Address, Address Line Three | Altrincham | ||
Entity Address, City or Town | Cheshire | ||
Entity Address, Postal Zip Code | WA14 2DT | ||
Entity Address, Country | GB | ||
Country Region | +44 | ||
City Area Code | 203 | ||
Local Phone Number | 9206789 | ||
Extension | 9999 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 241,465,000 | ||
Entity Common Stock, Shares Outstanding | 94,961,169 | ||
Entity Central Index Key | 0001847903 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Ordinary shares | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Ordinary shares, nominal value £0.002 per share | ||
Trading Symbol | CNTA | ||
Security Exchange Name | NASDAQ | ||
American Depositary Shares | |||
Document Information [Line Items] | |||
Title of 12(b) Security | American Depositary Shares, each representing one ordinary share, nominal value £0.002 per share | ||
Trading Symbol | CNTA | ||
Security Exchange Name | NASDAQ |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | KPMG LLP |
Auditor Location | Boston, MA |
Auditor Firm ID | 185 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 393,644 | $ 595,082 |
Tax incentive receivable | 24,166 | 15,392 |
Prepaid expenses and other current assets | 19,937 | 18,300 |
Total current assets | 437,747 | 628,774 |
Property and equipment, net | 1,168 | 162 |
Other non-current assets | 5,392 | 699 |
Total assets | 444,307 | 629,635 |
Current liabilities: | ||
Accounts payable | 13,836 | 8,065 |
Accrued expenses and other current liabilities | 24,502 | 16,573 |
Total current liabilities | 38,338 | 24,638 |
Long term debt | 69,800 | 75,700 |
Contingent value rights | 0 | 37,700 |
Other non-current liabilities | 0 | 43 |
Total liabilities | 108,138 | 138,081 |
Commitments and contingencies (Note 7) | ||
Shareholders’ equity | ||
Ordinary shares: £0.002 nominal value: 152,500,000 shares authorized; 94,843,391 shares issued and outstanding at December 31, 2022; 89,988,228 shares issued and outstanding at December 31, 2021 | 265 | 252 |
Additional paid-in capital | 939,261 | 876,267 |
Accumulated other comprehensive (loss) income | (1,497) | 688 |
Accumulated deficit | (601,860) | (385,653) |
Total shareholders’ equity | 336,169 | 491,554 |
Total liabilities and shareholders’ equity | $ 444,307 | $ 629,635 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - £ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, nominal value (in pound sterling per share) | £ 0.002 | £ 0.002 |
Common stock, shares authorized (in shares) | 152,500,000 | 152,500,000 |
Common stock, shares issued (in shares) | 94,843,391 | 89,988,228 |
Common Stock, shares outstanding (in shares) | 94,843,391 | 89,988,228 |
Consolidated and Combined State
Consolidated and Combined Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | |
Operating expenses: | |||
Research and development | $ 662 | $ 95,660 | $ 155,083 |
General and administrative | 121 | 42,888 | 55,200 |
Change in fair value of contingent value rights | 0 | 15,082 | 1,980 |
Acquired in-process research and development | 0 | 220,454 | 0 |
Loss from operations | (783) | (374,084) | (212,263) |
Interest expense, net | (9) | (1,172) | (7,033) |
Amortization of debt discount | (37) | 0 | 0 |
Debt issuance costs | 0 | (1,331) | 0 |
Other income (expense), net | 0 | (4,370) | 2,342 |
Loss before income taxes | (829) | (380,957) | (216,954) |
Income tax (benefit) expense | 0 | 114 | (747) |
Net loss | (829) | (381,071) | (216,207) |
Other comprehensive (loss) income: | |||
Foreign currency translation adjustments | 107 | 778 | (2,185) |
Total comprehensive loss | $ (722) | $ (380,293) | $ (218,392) |
Net loss per ordinary share - basic (in dollars per share) | $ (5.07) | $ (2.31) | |
Net loss per ordinary share - diluted (in dollars per share) | $ (5.07) | $ (2.31) | |
Weighted average ordinary shares outstanding - basic (in shares) | 75,166,456 | 93,400,513 | |
Weighted average ordinary shares outstanding - diluted (in shares) | 75,166,456 | 93,400,513 |
Consolidated Statement of Share
Consolidated Statement of Shareholders' Equity - USD ($) $ in Thousands | Total | IPO | Series A preferred | Series A preferred Series A preferred | Ordinary shares | Ordinary shares IPO | Additional paid-in capital | Additional paid-in capital IPO | Accumulated other comprehensive (loss) income | Accumulated deficit |
Preferred stock, beginning balance (in shares) at Jan. 29, 2021 | 0 | |||||||||
Beginning balance at Jan. 29, 2021 | $ (4,651) | $ 0 | $ 21 | $ 0 | $ (90) | $ (4,582) | ||||
Ordinary shares, beginning balance (in shares) at Jan. 29, 2021 | 7,500,000 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Shares issued (in shares) | 22,272,721 | 18,975,000 | ||||||||
Shares issued | $ 344,136 | $ 241,597 | $ 241,597 | $ 54 | $ 344,082 | |||||
Issuance of Series A convertible preferred shares upon conversion of debt (in shares) | 568,181 | |||||||||
Issuance of Series A convertible preferred shares upon conversion of debt | 6,250 | $ 6,250 | ||||||||
Acquisition of Centessa Subsidiaries (in shares) | 40,308,079 | |||||||||
Acquisition of Centessa Subsidiaries, net | 262,686 | $ 111 | 262,575 | |||||||
Forgiveness of convertible term loan | 6,199 | 6,199 | ||||||||
Conversion of Series A convertible preferred shares into ordinary shares (in shares) | (22,840,902) | 22,840,902 | ||||||||
Conversion of Series A convertible preferred shares into ordinary shares | 0 | $ (247,847) | $ 65 | 247,782 | ||||||
Stock option exercises (in shares) | 133,389 | |||||||||
Stock option exercises | 779 | 779 | ||||||||
Share-based compensation expense | 14,851 | 14,851 | ||||||||
Vesting of ordinary shares (in shares) | 230,858 | |||||||||
Vesting of ordinary shares | 0 | $ 1 | (1) | |||||||
Foreign currency translation adjustments | 778 | 778 | ||||||||
Net loss | (381,071) | (381,071) | ||||||||
Preferred stock, ending balance (in shares) at Dec. 31, 2021 | 0 | |||||||||
Ending balance at Dec. 31, 2021 | $ 491,554 | $ 0 | $ 252 | 876,267 | 688 | (385,653) | ||||
Ordinary shares, ending balance (in shares) at Dec. 31, 2021 | 89,988,228 | 89,988,228 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Shares issued (in shares) | 3,938,423 | |||||||||
Shares issued | $ 37,748 | $ 10 | 37,738 | |||||||
Stock option exercises (in shares) | 205,107 | 205,107 | ||||||||
Stock option exercises | $ 799 | $ 1 | 798 | |||||||
Share-based compensation expense | 24,965 | 24,965 | ||||||||
Vesting of ordinary shares (in shares) | 853,013 | |||||||||
Vesting of ordinary shares | 0 | $ 2 | (2) | |||||||
Shares withheld to pay employee withholding tax on share based compensation (in shares) | (141,380) | |||||||||
Shares withheld to pay employee withholding tax on share based compensation | (505) | (505) | ||||||||
Foreign currency translation adjustments | (2,185) | (2,185) | ||||||||
Net loss | (216,207) | (216,207) | ||||||||
Ending balance at Dec. 31, 2022 | $ 336,169 | $ 265 | $ 939,261 | $ (1,497) | $ (601,860) | |||||
Ordinary shares, ending balance (in shares) at Dec. 31, 2022 | 94,843,391 | 94,843,391 |
Consolidated Statement of Sha_2
Consolidated Statement of Shareholders' Equity (Parenthetical) $ in Millions | 11 Months Ended |
Dec. 31, 2021 USD ($) | |
IPO | |
Debt issuance costs | $ 8.8 |
Series A preferred | |
Debt issuance costs | $ 3.4 |
Combined Statements of Converti
Combined Statements of Convertible Preferred Shares and Combined Deficit - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended |
Jan. 29, 2021 | Dec. 31, 2021 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Combined deficit, beginning balance | $ (22,423) | $ (23,145) |
Foreign currency translation adjustments | 107 | 778 |
Net loss | (829) | $ (381,071) |
Combined deficit, ending balance | $ (23,145) | |
Preferred Stock | Series A preferred | ||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Temporary equity, beginning balance (in shares) | 4,337,282 | 4,337,282 |
Temporary equity, beginning balance | $ 13,329 | $ 13,329 |
Temporary equity, ending balance (in shares) | 4,337,282 | |
Temporary equity, ending balance | $ 13,329 | |
Preferred Stock | Series B preferred | ||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Temporary equity, beginning balance (in shares) | 1,111,923 | 1,111,923 |
Temporary equity, beginning balance | $ 10,840 | $ 10,840 |
Temporary equity, ending balance (in shares) | 1,111,923 | |
Temporary equity, ending balance | $ 10,840 | |
Preferred Stock | Series Seed preferred | ||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Temporary equity, beginning balance (in shares) | 1,100,000 | 1,100,000 |
Temporary equity, beginning balance | $ 1,352 | $ 1,352 |
Temporary equity, ending balance (in shares) | 1,100,000 | |
Temporary equity, ending balance | $ 1,352 |
Consolidated and Combined Sta_2
Consolidated and Combined Statements of Cash Flows - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | |
Cash flows from operating activities: | |||
Net loss | $ (829) | $ (216,207) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Acquired in-process research and development | 0 | $ 220,454 | 0 |
Share-based compensation expense | 0 | 14,851 | 24,965 |
Depreciation and amortization | 0 | 34 | 131 |
Change in fair value of financial instruments | 0 | 15,782 | (3,920) |
Deferred tax | (2,857) | ||
Changes in operating assets and liabilities: | |||
Tax incentive receivable | 74 | (6,796) | (11,711) |
Prepaid expenses and other assets | 681 | (16,164) | (3,732) |
Accounts payable | (358) | 4,157 | 6,351 |
Accrued expenses and other liabilities | (589) | 12,968 | 6,261 |
Other, net | (28) | 676 | 173 |
Net cash used in operating activities | (1,049) | (135,109) | (200,546) |
Cash flows from investing activities: | |||
Cash acquired upon acquisition of Centessa Subsidiaries, net of cash paid | 0 | 63,442 | 0 |
Purchase of property and equipment | 0 | (186) | (1,137) |
Other, net | 0 | 0 | 206 |
Net cash (used in) provided by investing activities | 0 | 63,256 | (931) |
Cash flows from financing activities: | |||
Proceeds from the sale of convertible preferred shares, net of issuance costs | 0 | 241,597 | 0 |
Proceeds from the sale of ordinary shares in connection with initial public offering, net of issuance costs paid in cash | 0 | 344,136 | 0 |
Proceeds from issuance of debt, net of issuance costs | 0 | 73,930 | 0 |
Proceeds from option exercises | 0 | 779 | 718 |
Other, net | 0 | (295) | (261) |
Net cash provided by financing activities | 0 | 660,147 | 457 |
Effect of exchange rate on cash and cash equivalents | 80 | 1,822 | (418) |
Net (decrease) increase in cash and cash equivalents | (969) | 590,116 | (201,438) |
Cash and cash equivalents at beginning of period | 7,227 | 4,966 | 595,082 |
Cash and cash equivalents at end of period | 6,258 | 595,082 | 393,644 |
Supplemental disclosure: | |||
Interest paid | 0 | 1,483 | 7,277 |
Income taxes paid | 0 | 0 | 1,299 |
Non-cash investing and financing activities: | |||
Issuance of ordinary shares to settle outstanding contingent value rights | 0 | 0 | 39,680 |
Issuance of ordinary shares upon acquisition of Centessa Subsidiaries | 0 | 262,698 | 0 |
Issuance of contingent value rights upon acquisition of Centessa Subsidiaries | 0 | 22,618 | 0 |
Issuance of Series A convertible preferred shares | 0 | 6,250 | 0 |
Forgiveness of convertible term loan | 0 | 6,199 | 0 |
Other, net | $ 0 | $ (295) | $ (261) |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of Business Centessa Pharmaceuticals plc (“Centessa” or “the Company”) is a clinical-stage pharmaceutical company that aims to discover, develop and ultimately deliver medicines that are transformational for patients. Centessa was incorporated on October 26, 2020 as a limited liability company under the laws of England and Wales. In connection with the IPO, we re-registered Centessa Pharmaceuticals Limited as an English public limited company and renamed it as Centessa Pharmaceuticals plc. In January 2021, the management and equity holders of ApcinteX Limited, Capella Biosciences Limited, Inexia Limited, Janpix Limited, LockBody Therapeutics Ltd, Morphogen-IX Limited, Orexia Limited, Palladio Biosciences, Inc., PearlRiver Bio GmbH, Pega-One S.A.S., and Z Factor Limited (together, the “Centessa Subsidiaries”), contributed the Centessa Subsidiaries to Centessa, in a share for share exchange, after which these companies became wholly-owned subsidiaries of Centessa. As the Company had no significant operations prior to the contribution of the Centessa Subsidiaries, and the registrant was required to present two years of historical financial statements in its prospectus filed with the SEC on June 2, 2021, the Company’s management (“Management”) sought to identify a predecessor, for which it could include audited historical financial statements, to satisfy the filing requirement. As such, Management sought to identify the predecessor from the population of portfolio companies, which would represent a sizable portion of the historical results of the entities later contributed to Centessa. Entities affiliated with Medicxi manage multiple investment funds, including – Medicxi Ventures I LP, Medicxi Growth I LP, and Medicxi Secondary I LP. In addition, entities affiliated with Medicxi act as sub advisors to Index Ventures Life VI (Jersey) Limited which advises the managing general partner of Index Ventures Life VI (Jersey), L.P. (all funds collectively are referred to as the “Funds”). Management determined the companies owned by Index Ventures Life VI (Jersey), LP individually represent some of the earliest investments by the Funds. These companies (together, the “Centessa Predecessor Group” or the “Group”) are: • Z Factor Limited (“Z Factor”) • LockBody Therapeutics Ltd (“LockBody”) • Morphogen-IX Limited (“Morphogen-IX”) As the above entities that comprise the Centessa Predecessor Group were historically under the common control of Index Ventures Life VI (Jersey), LP, the historical financial statements of the Group for periods prior to January 30, 2021 are presented on a combined basis and are denoted as “Predecessor” within these financial statements. Subsequent to the contribution of the Centessa Subsidiaries to Centessa, the financial activities of Centessa and all Centessa Subsidiaries are being presented on a consolidated basis and are denoted as “Successor” within these financial statements. Initial Public Offering In June 2021, the Company completed an initial public offering (“IPO”) of its ordinary shares through the sale and issuance of 16,500,000 American Depositary Shares (“ADSs”), at an initial price of $20.00 per ADS. Each ADS represents one ordinary share with a nominal value of £0.002 per ordinary share. Following the close of the IPO, the underwriters fully exercised their option to purchase an additional 2,475,000 ADSs at the initial public offering price of $20.00 per ADS. The Company received aggregate net proceeds of $344.1 million in connection with the IPO and subsequent exercise of the underwriter’s options after deducting underwriting discounts, commissions and other offering expenses paid or to be paid. Risks and Liquidity The Company is subject to risks common to other life science companies in early stages of development including, but not limited to, uncertainty of product development and commercialization, lack of marketing and sales history, development by its competitors of new technological innovations, dependence on key personnel, market acceptance of products, product liability, protection of proprietary technology, ability to raise additional financing and compliance with government regulations, in the markets in which the Company is seeking approvals, including FDA regulations. If the Company does not successfully advance its programs, including the Centessa Subsidiaries’ programs, into and through human clinical trials and/or enter into collaborations for its programs and commercialize any of its product candidates, it may be unable to produce product revenue or achieve profitability. The Company has incurred losses and negative cash flows from operations since inception and the Company had an accumulated deficit o f $601.9 million as of December 31, 2022. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of the product candidates currently in development by the Centessa Subsidiaries. Substantial additional capital will be needed by the Company to fund its operations (including those of the Centessa Subsidiaries) and to develop its product candidates. In October 2021, the Company entered into a Note Purchase Agreement with Oberland Capital Management LLC (“Oberland Capital”). Under the terms of the agreement, Oberland Capital will purchase up to $300.0 million of 6-year, interest-only (initial interest rate was 8.0% per annum), senior secured notes (“the Notes”) from the Company including $75.0 million, funded on October 4, 2021, $125.0 million available through 2023 at the Company’s option, and $100.0 million available to fund Mergers and Acquisitions (“M&A”), in-licensing, or other strategic transactions, at the option of the Company and Oberland Capital (See - Note 6 "Debt" ). The Company expects its existing cash and cash equivalents as of December 31, 2022 of $393.6 million will be sufficient to fund its expected operating expenses and capital expenditure requirements for at least the next 12 months from the date of issuance of these consolidated financial statements. Global Pandemic – COVID-19 On March 10, 2020, the WHO characterized the novel COVID-19 virus as a global pandemic. The Company is continuing to proactively monitor the COVID-19 global pandemic, to assess the potential impact on the business, and to seek to avoid any unnecessary potential delays to the Company’s programs. As of December 31, 2022, the clinical programs and research activities remain largely on track, with some modest delays in clinical trial enrollment rates and supply chain activities. While we are unable to fully quantify the potential effects of this pandemic on our future operations, including potential delays to our preclinical and clinical programs, management continues to evaluate and to seek to mitigate risks. The safety and well-being of employees, patients and partners remains our highest priority. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Consolidation/Combination References to the combined financial statements of the Centessa Predecessor Group refer to three of the eleven direct acquired Centessa Subsidiaries that were deemed to represent the predecessor entity prior to the Company’s acquisition of the Centessa Subsidiaries in January 2021. The Centessa Predecessor Group includes the combined financial information of Z Factor, Morphogen-IX and LockBody. The successor includes the consolidated financial information of Centessa and all Centessa subsidiaries subsequent to the acquisition. Accordingly, the accompanying consolidated and combined financial statements are presented in accordance with Securities and Exchange Commission (“SEC”) requirements for predecessor and successor financial statements, which include the financial results of both the Company and the Centessa Predecessor Group. The consolidated balance sheets present the consolidated financial position of the Company as of December 31, 2022 and December 31, 2021. The results of operations and cash flows contained in the consolidated and combined financial statements include the Company’s consolidated financial results and cash flows for the twelve months ended December 31, 2022 and for the period from January 30, 2021 through December 31, 2021; and the Centessa Predecessor Group’s combined financial results and cash flows for the period from January 1, 2021 through January 29, 2021. The accompanying consolidated and combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) promulgated by the Financial Accounting Standards Board (“FASB”). All intercompany accounts and transactions have been eliminated in consolidation and combination. In the opinion of management, the accompanying consolidated and combined financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly: • the Company’s financial position as of December 31, 2022 and December 31, 2021; • the Company’s results of operations and cash flows for the twelve months ended December 31, 2022 and for the period from January 30, 2021 through December 31, 2021; and • the Predecessor’s results of operations and cash flows for the period from January 1, 2021 through January 29, 2021. Emerging Growth Company and Smaller Reporting Company We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”) enacted in April 2012. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. We will remain an emerging growth company until the earlier to occur of (1) the last day of the fiscal year that is five years following the closing of our initial public offering, (2) the last day of the fiscal year in which we have total annual gross revenues of at least $1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer,” under the rules of the U.S. Securities and Exchange Commission, or SEC, which means the market value of our equity securities that is held by non-affiliates exceeds $700 million as of the prior June 30th after we have been subject to the SEC’s periodic reporting requirements for at least twelve calendar months and have filed at least one annual report, and (4) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We are electing to utilize the extended transition period and, as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for emerging growth companies. We are also a “smaller reporting company” as defined in the Securities Exchange Act of 1934 (the “Exchange Act”). Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” if the market value of our ordinary shares held by non-affiliates is below $250 million (or $560 million if our annual revenue is less than $100 million) as of June 30 in any given year. As a smaller reporting company, we are eligible for scaled disclosure relief from certain Regulation S-X and Regulation S-K requirements. The Company adopted the scaled disclosures in this annual report on Form 10-K. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents include cash in readily available checking accounts, certificate of deposits and money market funds. Segments Operating segments are defined as components of an enterprise with separate discrete information available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. We view our operations and manage our business as one segment. Reclassifications Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on previously reported net loss or comprehensive loss. Foreign Currency Translation The Company’s financial statements are presented in U.S. dollars (“USD”), the reporting currency of the Company. The functional currency of Centessa Pharmaceuticals plc is USD and the functional currency of the Centessa Subsidiaries is their respective local currency. Income and expenses have been translated into USD at average monthly exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheets dates and equity accounts at their respective historical rates. The resulting translation gain and loss adjustments are recorded directly as a separate component of shareholders’ equity as other comprehensive (loss) income. Transactions denominated in a currency other than the functional currency are remeasured based upon the exchange rate at the date of remeasurement with the resulting gain or loss included in the accompanying consolidated and combined statements of operations and comprehensive loss within Other income (expense), net. The aggregate foreign currency transaction loss included in the Company (Successor)’s results of operations for the twelve months ended December 31, 2022 and for the period from January 30, 2021 through December 31, 2021 were $2.8 million and $3.6 million, respectively. The functional currency of Centessa Pharmaceuticals plc had previously been British pounds (“GBP”), as Centessa Pharmaceutical plc’s primary activities during formation were mostly denominated in GBP, including related transaction costs, the acquisition of Centessa subsidiaries predominantly with operations in GBP and the issuance of shares with a GBP nominal value as consideration in the acquisition. Beginning in the second quarter of 2021, the functional currency of Centessa Pharmaceuticals plc changed from GBP to USD. The change in functional currency was the result of many factors including the completion of an IPO and receipt of proceeds in USD which resulted in USD denominated assets exceeding GBP denominated assets, the increase in the number of U.S.-based employees, and the increase in costs denominated in USD, following completion of the Company’s IPO on a U.S. stock exchange (“Nasdaq”). Given these significant changes, the Company considered the economic factors outlined in ASC 830, Foreign Currency Matters and concluded that the majority of the factors supported the use of the USD as the functional currency for Centessa Pharmaceutical plc. The change in functional currency for Centessa Pharmaceuticals plc was applied on a prospective basis beginning in the second quarter of 2021 and translation adjustments for prior periods will continue to remain as a component of accumulated other comprehensive loss. The Company reclassified the presentation of foreign currency gains and losses recognized in the first quarter of 2021 from General & administration expense to Other income (expense), net to conform to the current period financial statement presentation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated and combined financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated and combined financial statements in the period they are determined to be necessary. Significant areas that require management’s estimates include accrued research and development expenses, the note purchase agreement, share-based compensation, contingent value rights, and, prior to the IPO, the fair value of the Company’s ordinary shares. Property and Equipment, net Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the respective assets. Property and equipment includes computer equipment, which has a useful life of three years, as well as leasehold improvements under construction, which have useful lives of the lesser of applicable lease terms or their useful lives. The costs of maintenance and repairs are expensed as incurred. Improvements and betterment that add new functionality or extend the useful life of the asset are capitalized. Depreciation expense for the twelve months ended December 31, 2022 and for the period from January 30, 2021 through December 31, 2021 was $131 thousand and $34 thousand, respectively. Capitalized software as a service costs representing costs incurred during the application development stage are included in “Other non-current assets” and the corresponding current portion, in “Prepaid expenses and other current assets” and is amortized using the straight line method over five years. Costs incurred during the preliminary project stage and the post-implementation-operation stage are expensed as incurred. Hosting fees associated with the hosting as a service arrangement are expensed on a straight line basis over the term of the hosting arrangement. Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, then an impairment charge is recognized for the amount by which the carrying value of the asset exceeds the estimated fair value of the asset. As of December 31, 2022, the Company believes that no revision of the remaining useful lives or write-down of long-lived assets is required. Fair Value Measurement Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, prepaid expense and accounts payable, are shown at cost, which approximates fair value due to the short-term nature of these instruments. The Company follows the provisions of FASB ASC Topic 820, Fair Value Measurement , for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities. Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Note Purchase Agreement As described in further detail in Note 6 - "Debt" , in October 2021, the Company entered into a Note Purchase Agreement (the “Notes”) with Oberland Capital Management LLC (“Oberland Capital”). Under the terms of the agreement, Oberland Capital will purchase up to $300.0 million of 6-year, interest-only (initial interest rate was 8.0% per annum), senior secured notes (the Notes) from the Company including $75.0 million, funded on October 4, 2021, $125.0 million available through 2023 at the Company’s option, and $100.0 million available to fund Mergers and Acquisitions (M&A), in-licensing, or other strategic transactions, at the option of the Company and Oberland Capital. In addition, the Company is obligated to pay a Milestone payment equal to 30% of the aggregate principal amount issued under the Notes by the Company upon regulatory approval of any drug candidate. The Company evaluated the Notes and determined that the Notes include embedded derivatives that would otherwise require bifurcation as derivative liabilities. Neither the debt instrument nor any embedded features are required to be classified as equity. Therefore, the hybrid financial instrument comprised of the debt host and the embedded derivative liability may be accounted for under the fair value option. The Company elected to carry the Notes at fair value, and the debt instrument is outside the scope of ASC 480, Distinguishing Liabilities from Equity , and thus will be classified as a liability under ASC 470, Debt , in the Company’s financial statements. As the Company has elected to account for the Notes under the fair value option, debt issuance costs were immediately expensed. The fair value of the Note Purchase Agreement represents the present value of estimated future payments, including interest, principal as well as estimated payments that are contingent upon the achievement of specified milestones. The fair value of the Notes is based on the cumulative probability of the various estimated payments. The fair value measurement is based on significant Level 3 unobservable inputs such as the probability of achieving the milestones, anticipated timelines, probability and timing of an early redemption of all obligations under the agreement and the discount rate. Any changes in the fair value of the liability in each reporting period are recognized in the consolidated statement of operations and comprehensive loss until it is settled. Research and Development Expenses and Accruals All research and development costs are expensed in the period incurred and consist primarily of salaries, payroll taxes, employee benefits, stock-based compensation charges for those individuals involved in research and development efforts, external research and development costs incurred under agreements with contract research organizations and consultants to conduct and support the Company’s ongoing clinical trials. The Company has entered into various research and development contracts with clinical research organizations, clinical manufacturing organizations and other companies. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred. Payments made in advance of performance are reflected in the accompanying balance sheets as prepaid expenses, while payments made after performance are reflected as accrued liabilities in the accompanying balance sheets. The Company records accruals for estimated costs incurred for ongoing research and development activities. When recording accruals for ongoing research and development activities, the Company analyzes progress of the services, including the phase or completion of events, invoices received and contracted costs. Nonrefundable advance payments for goods and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are recognized as expense in the period that the related goods are consumed or services are performed. Milestone payments within the Company (Successor)’s licensing arrangements are recognized when achievement of the milestone is deemed probable to occur. To the extent products are commercialized and future economic benefit has been established, commercial milestones that become probable are capitalized and amortized over the estimated remaining useful life of the intellectual property. Significant judgments and estimates may be made in determining the prepaid or accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. Research and Development Tax Incentives The Company participates in research tax incentive programs that are granted to companies by the United Kingdom and certain European tax authorities in order to encourage them to conduct technical and scientific research. Expenditures that meet the required criteria are eligible to receive a tax credit that is reimbursed in cash. Estimates of the amount of the cash refund expected to be received are determined at each reporting period and recorded as reductions to research and development expenses. The Company recorded research and development tax incentives of $12.6 million and $13.8 million during the twelve months ended December 31, 2022 and the period from January 30, 2021 through December 31, 2021, respectively. The Company may not be able to continue to claim the most beneficial payable research and development tax credits in the future if it ceased to qualify as a small or medium enterprise, based on size criteria concerning employee headcount, turnover and gross assets. In addition, unless its subsidiaries qualify for an exemption, there are limitations to how much tax incentive can be claimed. This limitation is calculated as the total of the Company's relevant expenditure on employees in the period, multiplied by 300%, plus £20,000. Acquired In-Process Research and Development Expenses Acquired in-process research and development (“IPR&D”) consists of the initial up-front payments incurred in connection with the acquisition or licensing of products or technologies in transactions that do not meet the definition of a business under FASB ASC Topic 805, Business Combinations. Leases On January 1, 2022, the Company adopted ASU No. 2016-02, Leases (“ASC 842”) , which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. As of January 1, 2022, the Company was not party to any significant leases and therefore the adoption of this standard did not have a significant impact as of this adoption date. As permitted in the standards, the Company is reflecting the adoption of ASC 842 in its annual report on Form 10-K for the year ended December 31, 2022, and in interim periods within the fiscal year ended December 31, 2023. In accordance with ASC 842, the Company assesses whether an arrangement is a lease, or contains a lease at the inception of the arrangement. When an arrangement contains a lease, the Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in “Property and equipment, net.” All other leases are categorized as operating leases. The Company records right-of use ("ROU") assets and lease obligations for its finance and operating leases, which are initially recognized based on the discounted future lease payments over the term of the lease. As the rate implicit in the Company's leases may not be easily determinable, the Company uses its incremental borrowing rate to calculate the present value of the sum of the lease payments. Lease terms may include options to extend or terminate the lease. The Company will include such options in determining the lease term when it is reasonably certain that the Company will exercise such options. Operating and finance lease ROU assets are recognized net of any lease prepayments and incentives. The Company elected the practical expedient to not separate lease and non-lease components and, accordingly, accounts for them as a single component. Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense is recognized based on the effective-interest method over the lease term. The Company elected not to recognize ROU assets and lease obligations for any short-term leases, which are defined as leases with an initial term of 12 months or less. On February 7, 2022, the Company entered into a 10-year office lease (the “Boston Lease”) for its new corporate headquarters in Boston, Massachusetts. The Boston Lease contains 18,922 square feet with a fixed annual rent of approximately $1.6 million in 2023, escalating to approximately $1.9 million by Year 10. The Company may, at its discretion, extend the Boston Lease for one extension term of five years. The Company will recognize an operating lease right-of-use asset and lease liability for this facility upon lease commencement, expected in early 2023 after the construction of the leased space. The Company intends to sublet a portion of the Boston Lease after the commencement of the lease. Collaborative Arrangements The Company enters into collaborative arrangements to develop and commercialize intellectual property. These arrangements typically involve two (or more) parties who are active participants in the collaboration and are exposed to significant risks and rewards dependent on the commercial success of the activities. These collaborations usually involve various activities by one or more parties, including research and development, marketing and selling and distribution. Often, these collaborations require upfront, milestone and royalty or profit share payments, contingent upon the occurrence of certain future events linked to the success of the asset in development. Amounts due to collaborative partners related to development activities are generally reflected as research and development expense. Share-Based Compensation The Company measures share-based awards, including restricted shares, restricted stock units and stock options, at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards. Subsequent to the IPO, the Company determines the fair value of share-based compensation awards using the market closing price of the Company’s ADSs on the date of grant. F orfeitures of stock options are recognized in the period the forfeiture occurs. The Company uses the Black-Scholes option pricing model to value its stock option awards. The expected life of the stock options is estimated using the “simplified method,” as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The simplified method is the midpoint between the vesting period and the contractual term of the option. For share price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected life of the option. The estimated annual dividend yield is 0% because the Company has not historically paid and does not expect for the foreseeable future to pay a dividend on its ordinary shares. Prior to its IPO in June 2021, the fair value of the Company’s ordinary shares was determined by the Company’s board of directors with assistance from management and an independent third-party valuation firm. As discussed in further detail in Note 3 - "Acquisitions and Dispositions" , the estimated fair value of its ordinary shares was based on the Hybrid Method outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation , (“Practice Guide”). Subjective factors considered by the Company’s board of directors and management included the addition of new executive members and the election of new independent directors to the Company’s board of directors, as well as definitive plans to undertake an IPO. The assumptions used in estimating the fair value of share-based awards represented management’s estimate and involved inherent uncertainties and the application of management’s judgment. As a result, if factors changed and management used different assumptions, share-based compensation expense would have been materially different. Retirement Plans The Company provided defined contribution plans to its employees beginning in 2021 and continuing in 2022. In the US, the primary plan sponsored by the Company is a safe harbor, 401k plan with a 4% employer match, no waiting period and immediate vesting on the match. In the UK, the primary plan sponsored by the Company is a money purchase plan, which requires a minimum 8% contribution, including a minimum employer contributio n of 4% and employee contribution of 4% in 2022. The Company recorded charges of $0.7 million and $0.2 million under these plans during the twelve months ended December 31, 2022 and the period from January 30, 2021 through December 31, 2021, respectively. Income Taxes The Company follows the asset and liability method of accounting for income taxes under ASC 740, Income Taxes . Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. Net Loss Per Ordinary Share Basic loss per ordinary share is computed by dividing net loss by the aggregate weighted-average number of ordinary shares outstanding. Diluted loss per ordinary share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred shares, stock options, unvested restricted ordinary shares and convertible debt which would result in the issuance of incremental ordinary shares. For diluted net loss per ordinary share, the weighted-average number of ordinary shares is the same for basic net loss per ordinary share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities have been excluded from the computation of diluted weighted-average ordinary shares outstanding, as they would be anti-dilutive. Twelve months ended December 31, 2022 Period from January 30, 2021 through December 31, 2021 Unvested ordinary shares 599,421 982,944 Restricted stock units 1,804,760 — Stock options 14,688,996 11,730,382 17,093,177 12,713,326 Recently Issued Accounting Pronouncements In March 2022, the FASB issued ASU No 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method. The amendments in this Update expand the current last-of-layer method of hedge accounting that permits only one hedged layer to allow multiple hedged layers of a single closed portfolio. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method. This ASU is the final version of Proposed Accounting Standards Update 2021-002-Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method, which has been deleted. The amendments in this Update apply to all entities that elect to apply the portfolio layer method of hedge accounting in accordance with Topic 815. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted on any date on or after the issuance of this Update for any entity that has adopted the amendments in Update 2017-12 for the corresponding period. We do not have any hedging instruments that would be subject to this guidance. Therefore, we do not expect any related impact on the Company's consolidated financial statements and related disclosures. In June 2022, the FASB issued ASU No 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this Update affect all entities that have investments in equity securities measured at fair value that are subject to a contractual sale restriction. The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This Accounting Standards Update is the final version of Proposed Accounting Standards Update |
Acquisitions and Dispositions
Acquisitions and Dispositions | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions and Dispositions | Acquisitions and Dispositions Dispositions In December 2022, the Company sold its wholly-owned subsidiary based in Germany, PearlRiver Bio GmbH (“PearlRiver) for a nominal amount of proceeds. In addition, as of December 31, 2022, the Company was in the process of selling Pega-One S.A.S. (“Pega-One”), a wholly owned subsidiary based in France. This sale was consummated on January 9, 2023 for a nominal amount of upfront proceeds. Both sales include future consideration if certain developmental and commercial milestones are met. The assets and liabilities of Pega-One, which were insignificant, were classified as held-for-sale as of December 31, 2022 and were included in “Prepaid expenses and other current assets” and “Accrued expenses and other current liabilities,” respectively. A loss of $0.2 million related to the dispositions, including corresponding cumulative translation adjustment balances, was recognized in “Other income (expenses), net” in the accompanying Consolidated and Combined Statements of Operations and Comprehensive Loss for the twelve months ended December 31, 2022. Acquisition of Centessa Subsidiaries in 2021 In January 2021, the Company entered into a contribution or merger agreement with each Centessa Subsidiary whereby the Company acquired 100% of the outstanding Centessa Subsidiaries’ shares in exchange for, in aggregate, 44,758,079 ordinary shares of the Company. In addition, the Company issued certain contingent value rights to the selling shareholders of Palladio Biosciences, Inc. As part of the acquisition, the Company issued replacement equity awards to select employees and consultants of certain Centessa Subsidiaries. The awards consisted of options and restricted shares with vesting provisions generally consistent with the original awards prior to the acquisition. The Company determined that a portion of the fair value of the replacement awards should be a component of consideration paid to acquire the Centessa Subsidiaries, with the remaining value of the award accounted for as post-combination share-based compensation expense. The acquisition of each Centessa Subsidiary has been treated as a separate asset acquisition as the Company determined that none of the Centessa Subsidiaries meet the definition of a business due to substantially all of the fair value of each entity being concentrated in a single asset or group of assets which represent the IPR&D or the entity did not have the requisite inputs and substantive processes to be considered a business. The Company’s acquired IPR&D expense of $223.6 million, of which $3.1 million was in connection with transaction costs recognized prior to January 30, 2021, and reflects the fair value of consideration ascribed to the product candidates in each subsidiary, as the Company determined the assets had no alternative future use. The total purchase price for the asset acquisitions was calculated as follows (amounts in thousands): Estimated fair value of Centessa ordinary shares issued $ 261,387 Estimated fair value of replacement equity awards allocated to consideration paid 1,310 Estimated fair value of contingent value rights 22,618 Transaction costs 4,597 Total consideration given $ 289,912 The following table summarizes the assets acquired and liabilities assumed as of the acquisition date for the asset acquisitions (amounts in thousands): Assets acquired: Cash and cash equivalents $ 68,038 Tax incentive receivable 8,752 Prepaid expenses and other current assets 2,551 Other assets 203 In-process research and development assets 223,593 Total assets acquired $ 303,137 Liabilities assumed: Accounts payable $ 3,607 Accrued expenses and other current liabilities 3,128 Convertible notes 6,199 Loan with related party 291 Total liabilities assumed $ 13,225 Net assets acquired $ 289,912 The Company’s determinations of the fair value of the ordinary shares were performed using methodologies, approaches and assumptions in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation , (“Practice Guide”). In accordance with the Practice Guide, the Company considered the following methods for allocating the enterprise value across its classes and series of capital shares to determine the fair value of its ordinary shares at each valuation date. • Option Pricing Method (“OPM”). The OPM estimates the value of the ordinary equity of the Company using the various inputs in the Black-Scholes option pricing model. The OPM treats the rights of the holders of ordinary shares as equivalent to that of call options on any value of the enterprise above certain break points of value based upon the liquidation preferences of the holders of the Company’s convertible preferred shares, as well as their rights to participation, and the share prices of the outstanding options. Thus, the value of the ordinary shares can be determined by estimating the value of its portion of each of these call option rights. Under this method, the ordinary shares have value only if the funds available for distribution to shareholders exceed the value of the liquidation preference at the time of a liquidity event, such as a merger or sale. Given the ordinary shares represents a non-marketable equity interest in a private enterprise, an adjustment to the preliminary value estimates had to be made to account for the lack of liquidity that a shareholder experiences. This adjustment is commonly referred to as a discount for lack of marketability (“DLOM”). • Probability-Weighted Expected Return Method (“PWERM”). The PWERM is a scenario-based analysis that estimates the value per share based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes considered by the Company, as well as the economic and control rights of each share class. • Hybrid Method. The Hybrid Method is a hybrid between the PWERM and OPM, estimating the probability-weighted value across multiple scenarios, but using the OPM to estimate the allocation of value within one or more of those scenarios. Weighting allocations are assigned to the OPM and PWERM methods factoring possible future liquidity events. The Company estimated the fair value of its ordinary shares based on the Hybrid Method. Subjective factors considered by the Company’s board of directors and management included the pending addition of new executive members and the election of new independent directors to the Company’s board of directors, as well as definitive plans to undertake an IPO. There are significant judgments and estimates inherent in the determination of the fair value of ordinary shares. These judgments and estimates included assumptions regarding the Company’s future operating performance, the time to complete an initial public offering or other liquidity event and the determination of the appropriate valuation methods. If the Company had made different assumptions, its ordinary shares could have been significantly different. At the time of the acquisitions, all outstanding unvested share-based awards of the Centessa Predecessor Group vested immediately. The unrecognized compensation expense of $4.1 million was recognized at the time of the acquisitions. In connection with the acquisition of the Centessa Subsidiaries, the Company issued contingent value rights (“CVR”), to former shareholders and option holders of Palladio. The CVR represented the contractual rights to receive shares valued, in aggregate, at $39.7 million upon the first patient dosed in a Phase 3 pivotal study of lixivaptan for the treatment of autosomal dominant polycystic kidney disease (“ADPKD”) in any of the United States, France, Germany, Italy, Spain, the United Kingdom and Japan (designated the ACTION Study). The Company determined that the CVR should be accounted for as a liability in accordance with ASC 480, Distinguishing Liabilities from Equity . Accordingly, the fair value of the contingent consideration was assessed quarterly until it was ultimately settled in the first quarter of 2022. The cumulative probability of dosing the first patient in th e ACTION Study was applied to the CVR payout to arrive at a fair value of $22.6 million as of the acquisition date of the Centessa Subsidiaries. Thereafter, the Company recognized a fair value adjustment (a charge of $15.1 million) in its consolidated statement of operations and comprehensive loss in 2021 and a remaining adjustment of fair value (a charge of $2.0 million) in its consolidated statement of operations and comprehensive loss in its first quarter of 2022. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The following fair value hierarchy table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis (amounts in thousands): Fair value measurement at reporting date using Quoted prices Significant Significant December 31, 2022 (Successor) Liabilities Note Purchase Agreement $ — $ — $ 69,800 Fair value measurement at reporting date using Quoted prices Significant Significant December 31, 2021 (Successor) Liabilities Note Purchase Agreement $ — $ — $ 75,700 Contingent Value Rights $ — $ — $ 37,700 The fair value of the Note Purchase Agreement represents the present value of estimated future payments, including interest, principal as well as estimated payments that are contingent upon the achievement of specified milestones. The fair value of the notes is based on the cumulative probability of the various estimated payments. The fair value measurement is based on significant Level 3 unobservable inputs such as the probability of achieving the milestones, anticipated timelines, probability and timing of an early redemption of all obligations under the agreement and discount rate. Any changes in the fair value of the liability are recognized in the consolidated statement of operations and comprehensive loss until it is settled. For the twelve months ended December 31, 2022 and the period beginning on January 30, 2021 through December 31, 2021, the Company recorded an unrealized gain of $5.9 million and an unrealized loss of $0.7 million, respectively, for the estimated change in fair value of the Note Purchase Agreement, which were recorded in Other Income (Expense), net in the consolidated statement of operations and comprehensive loss. The unrealized gain in 2022 was largely driven by a higher discount rate due to a higher risk free rate and an increase in credit spreads in 2022. The acquisition-date fair value of the contingent valuation rights liability represented the estimated future payments that are contingent upon the achievement of a specified development for Palladio’s product candidate. The fair value of the contingent value rights was based on the cumulative probability of achieving the specified milestone, which wa s expected by the first quarter of 2022. The fair value measurement at December 31, 2021 was based on significant Level 3 unobservable inputs such as the probability of achieving the milestone, anticipated timelines, and discount rate. Changes in the fair value of the liability were recognized in the statement of operations and comprehensive loss until it was settled in the first quarter of 2022. The Centessa Predecessor Group evaluated a redemption feature within the convertible term notes and determined bifurcation of the redemption feature was required. The redemption feature was classified as a liability on the combined balance sheets prior to settlement upon completion of the acquisition of the Centessa Subsidiaries in January 2021. The derivative liability was considered a Level 3 liability because its fair value measurement was based, in part, on significant inputs not observed in the market. The fair value of the derivative was estimated primarily on the probability of the next fund raising occurring and the timing of such event. The reconciliation of the redemption feature measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows (amounts in thousands): Contingent Value Rights Note Purchase Agreement Derivative Liability Balance at January 1, 2021 (Predecessor) $ — $ — $ 913 Additions — — — Change in fair value — — — Settlements — — (913) Balance at January 29, 2021 (Predecessor) $ — $ — $ — Balance at January 30, 2021 (Successor) $ — $ — $ — Additions 22,618 75,000 — Change in fair value 15,082 700 — Balance at December 31, 2021 (Successor) 37,700 75,700 — Change in fair value 1,980 (5,900) — Settlements (39,680) — — Balance at December 31, 2022 (Successor) $ — $ 69,800 $ — |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Components | Balance Sheet Components Prepaid expenses and other current assets consist of the following (amounts in thousands): Successor December 31, December 31, Research and development costs $ 11,321 $ 11,224 Insurance related costs 2,788 4,661 Value added tax receivable 2,557 1,422 Other 3,271 993 $ 19,937 $ 18,300 Accrued expenses and other current liabilities consist of the following (amounts in thousands): Successor December 31, December 31, Research and development costs $ 10,795 $ 9,323 Personnel related expenses 7,264 4,865 Professional fees 4,171 1,514 Income tax liability 1,582 769 Other 690 102 $ 24,502 $ 16,573 Property and equipment, net consisted of the following (amounts in thousands): Successor December 31, December 31, Computer equipment $ 442 $ 196 Construction in progress 890 — Property and equipment, at cost 1,332 196 Less: Accumulated depreciation (164) (34) Property and equipment, net $ 1,168 $ 162 Foreign Currency Translation Adjustments consisted of the following (amounts in thousands): Successor Twelve months ended December 31, 2022 Period from Foreign currency translation adjustments $ (1,382) $ 778 Reclassifications to net loss (803) — Foreign Currency Translation Adjustments $ (2,185) $ 778 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt (Amounts in thousands) Successor December 31, December 31, Note Purchase Agreement $ 69,800 $ 75,700 $ 69,800 $ 75,700 Note Purchase Agreement On October 1, 2021 (the “Signing Date”), the Company, as issuer, and certain of the Company’s wholly owned subsidiaries, as guarantors (the “Guarantors”), entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with Oberland Capital Management LLC (the “Purchasers”) and Cocoon SA LLC (the “Agent”), an affiliate of Oberland Capital Management LLC, as agent for the Purchasers. Under the Note Purchase Agreement, since amended on February 11, 2022, the Purchasers agreed to purchase, and the Company agreed to sell, tranches of secured notes in the aggregate principal amount of up to $300,000,000 as follows: (a) a secured note in the aggregate principal amount of $75,000,000 (the “First Purchase Note”), which was funded on October 4, 2021, (b) on and after the Signing Date until September 30, 2023, at the Company’s option, a secured note in the aggregate principal amount of $75,000,000 (the “Second Purchase Note”), (c) on and after the Signing Date until December 31, 2023, at the Company’s option, a secured note in the aggregate principal amount of $50,000,000 (the “Third Purchase Note”), and (d) one or more secured notes in the aggregate principal amount of up to $100,000,000 at any time at the Company’s and Purchasers’ option, to be used to finance certain permitted acquisitions as described in the Note Purchase Agreement (the “Fourth Purchase Notes” and collectively with the First Purchase Note, the Second Purchase Note and the Third Purchase Note, the “Notes”). The obligations of the Purchasers to purchase the Notes are subject to certain conditions precedent. The Notes will mature on the six-year anniversary of the First Purchase Date, unless earlier accelerated under the terms of the Note Purchase Agreement. At maturity, the Company must repay the outstanding principal amount of the Notes, together with any accrued and unpaid interest thereon and other outstanding obligations thereunder. Interest is payable quarterly during the term of the Notes at a rate per annum equal to the sum of (a) the greater of (i) LIBOR (which may be subject to replacement as contemplated by the Note Purchase Agreement) and (ii) 0.25% and (b) 7.75% (which percentage is subject to adjustment as described in the Note Purchase Agreement); provided that the interest rate shall never be less than 8.00%. The average interest rate over the twelve months ended December 31, 2022 was 9.6%. The Company’s obligations under the facility are secured by a first priority security interest in all assets of the Company and Guarantors, subject to variation in accordance with local law with respect to assets held by the Company and the Guarantors outside of the United States. Upon the first regulatory approval of any of the Company’s product candidates by either the FDA or the European Medicines Agency (“EMA”), the Company is obligated to pay the Purchasers an amount equal to 30% of the aggregate principal amount issued under the Notes by the Company (the “Milestone Payment”). The Milestone Payment shall be paid in quarterly installments over five years beginning on the earlier of (i) the date of the first commercial sale following such regulatory approval; and (ii) the six-month anniversary of such regulatory approval. The Milestone Payment is triggered one time only, and applies only to the Company’s first product to obtain regulatory approval. The Company may redeem all, but not less than all, of the outstanding Notes (if any) and pay all other outstanding obligations under the Note Purchase Agreement. On the applicable date, the Company shall repurchase the Notes by paying an amount of up to (i) 175% of the principal amount issued under the Notes if such repurchase occurs on or prior to the third anniversary of the First Purchase Date, (ii) 185% of the principal amount issued under the Notes if such repurchase occurs between the third and sixth anniversaries of the First Purchase Date, and (iii) 205% of the principal amount issued under the Notes if such repurchase occurs thereafter, in each case less specified deductions and exclusions described in the Note Purchase Agreement, including amounts paid by the Company to the Purchasers in respect of certain asset sale or strategic transactions, the interest payments and the Milestone Payments (the “Final Payment Amount”). As of December 31, 2022, the cumulative payments under the Note Purchase Agreement, including interest payments, totaled $8.8 million. Conversely, the Purchasers may require the Company to redeem any outstanding Notes by payment of the Final Payment Amount upon a sale, divestment or transfer of all or substantially all assets of the Company in a transaction or series of transactions or a change of control of the Company, a material breach of the Note Purchase Agreement and related transaction documents, an event of default under the Note Purchase Agreement or the tenth anniversary of the First Purchase Date (or such earlier date as described in the Note Purchase Agreement). In addition, upon certain asset sales and similar strategic transactions by the Company with respect to its own or its subsidiaries’ assets or businesses as described in the Note Purchase Agreement (other than a change of control described above), the Purchasers may require the Company to pay an amount in cash equal to up to 75% of the Net Proceeds (as defined in the Note Purchase Agreement) received from such asset sales, subject to such reduced amounts as described in the Note Purchase Agreement. The Note Purchase Agreement contains customary affirmative and negative covenants, including with respect to notice obligations, limitations on new indebtedness, liens, investments and transactions with affiliates of the Company, restrictions on the payment of dividends, maintenance of collateral accounts, maintenance of insurance and addition of new subsidiaries as obligors. The Note Purchase Agreement also contains customary representations and warranties in favor of the Purchasers and the Agent. The Note Purchase Agreement contains customary events of default, which may cause the obligations of the Company to be accelerated. Such events include among others, failure to make payments when due, breach of covenants, insolvency, a cross-default to other indebtedness, a judgment event of default, and delisting of the Company’s securities from Nasdaq. On February 11, 2022, Centessa Pharmaceuticals plc, as issuer, and certain of the Company’s wholly owned subsidiaries, as guarantors (the “Guarantors”), entered into an Amendment to the Note Purchase Agreement (the “Amendment”) with Oberland Capital to modify the Note Purchase Agreement, dated as of October 1, 2021 by and among the Company, the Guarantors, the Purchaser and the Purchaser Agent. Under the terms of the Amendment, the Company acknowledged the existence of certain Events of Default, including the delivery by the Company of a landlord consent after the required delivery date of October 31, 2021 and the entry by a subsidiary of the Company into a Research Collaboration and License Agreement without the prior consent of Purchaser Agent; as well as other non-financial, administrative-related defaults. Under the Note Purchase Agreement, Events of Default may entitle the lenders to default interest, penalties and the ability to terminate the facility and to accelerate repayment of any outstanding loans in full. Pursuant to the Amendment, the lenders agreed to waive such Events of Default. Pursuant to the Amendment, the Purchaser and the Purchaser Agent have also agreed to waive the requirement to obtain the consent of a certain licensee and waive certain of the insurance requirements contained in the Note Purchase Agreement. The Amendment also provides that the Company is required to maintain a cash balance in an amount equal to 75% of the aggregate outstanding principal amount of all issued Notes, as defined in the Note Purchase Agreement, that have been issued on and from February 11, 2022. Also pursuant to the Amendment, the date for the Third Purchase Date, as defined in the Note Purchase Agreement, and the Commitment Termination Date were extended to December 31, 2023. The Amendment also provides that upon the sale of any of the Company’s or any of its subsidiary’s assets, if the Purchaser Agent elects to have the Company repurchase the notes, such repurchase amounts will be subject to a $100 million deductible such that the Purchaser Agent will not collect any repurchase amounts until $100 million has been received by the Company from such sale event. In addition, the reduced payment cap that is triggered by the Purchaser Agent opting into a repayment in the event of an asset sale, extends to the second loan tranche, if drawn. The effectiveness of the Amendment is subject to certain conditions precedent and conditions subsequent. On November 7, 2022, the Company and certain of the Company’s wholly owned subsidiaries, as guarantors (the “Guarantors”), entered into an Amendment No. 2 to Note Purchase Agreement (the “Second Amendment”) with the Purchaser, and the Purchaser Agent to modify the Note Purchase Agreement. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments As of December 31, 2022, the Company had non-cancellable commitments for purchase of clinical materials, contract manufacturing, maintenance, and committed funding of up to $42.8 million, of which the Company expects to pay $36.0 million within one year and the remaining $6.8 million over one to four years. The amount and timing of these payments vary depending on the rate of progress of development. Future clinical trial expenses have not been included within the purchase commitments because they are contingent on enrollment in clinical trials and the activities required to be performed by the clinical sites. On February 7, 2022, the Company entered into a 10-year office lease for its new corporate headquarters in Boston, Massachusetts, which required the issuance of a letter of credit of $0.7 million. The fixed annual rent will be approximately $1.6 million, commencing in the first quarter of 2023 and will escalate each subsequent year to approximately $1.9 million in Year 10. The Company expects to have a right of use of the office space in early 2023. Licensing and Collaborative Arrangements The Company is party to licensing and collaboration arrangements to develop and commercialize intellectual property. In aggregate, the Company may be obligated to make up to $43.7 million and $42.0 million in related development and commercial milestone payments, respectively, predominately related to agreements with Orexia Therapeutics Limited and collaboration partners. As of December 31, 2022, the Company had no licensing and collaborative arrangement milestone obligations recorded on its balance sheet. Included in research and development expense in the Company’s consolidated statement of operations and comprehensive loss for the twelve months ended December 31, 2022 and for the period from January 30, 2021 through December 31, 2021 were aggregate incurred expenses of $2.2 million and $1.7 million, respectively, primarily reflecting the amortization of upfront costs in 2022 and 2021 as well as a payment of a developmental milestone in 2021. The Company expects that payments related to its licensing and collaboration arrangements in the next twelve months would not be material to the Company’s consolidated financial statements. Contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. Legal charges incurred in connection with contingencies and litigation are expensed as incurred. Litigation On September 28, 2022 (“ Original Complaint ”), the Company and certain of its current and former officers were named as defendants in a proposed class-action lawsuit. The complaint generally alleges that the Company violated Sections 10(b) and 20(a) and Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts relating to the safety profile and future clinical and commercial prospects of each of its lixivaptan and ZF874 programs, which caused the Company’s securities to trade at artificially inflated prices. On February 10, 2023, an amended complaint was filed (“ Amended Complaint ”). A number of the complaints set forth in the Original Complaint have been abandoned including with respect to intentional fraud theory and claims pursuant to Sections 10(b) or 20(a) of the Securities Exchange Act of 1934. The only claims alleged in the Amended Complaint are violations of Sections 11 and 15 of the Securities Act based on alleged misstatements in the S-1 filed by the Company in connection with its Initial Public Offering. The complaint also abandons any claims concerning ZF874 and focuses entirely on lixivaptan. The Company believes this lawsuit is without merit and intends to defend the case vigorously. Litigation is subject to inherent uncertainty and a court could ultimately rule against the Company. In addition, the defense of litigation and related matters are costly and may divert the attention of the Company’s management and other resources that would otherwise be engaged in other activities. The Company has not recorded an estimate of the possible loss associated with this legal proceeding due to the uncertainties related to both the likelihood and the amount of any possible loss or range of loss. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Compensation | Share-based Compensation Centessa Pharmaceuticals plc (Successor) Stock Option and Incentive Plan In January 2021, the Company’s board of directors approved the 2021 Stock Option and Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the granting of ordinary shares, incentive stock options, non-qualified stock options, restricted share awards, and/or share appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The number of shares authorized under the 2021 Plan was increased in May 2021 at the time of the IPO, whereby the total number of shares authorized under the 2021 Plan was 20,026,816. Beginning on January 1, 2022 and each January 1 thereafter, the number of Shares reserved and available for issuance under the 2021 Plan shall be cumulatively increased by 5% of the number of Shares issued and outstanding on the immediately preceding December 31, or such lesser number as the board of directors may determine. Remaining shares available for future grants as of December 31, 2022 were 6,010,683. Share-based Compensation Expense The Company and the Centessa Predecessor Group recorded share-based compensation expense in the following expense categories in the consolidated and combined statements of operations and comprehensive loss (amounts in thousands): Successor Predecessor Twelve Months Ended Period from January 30, 2021 through December 31, 2021 Period from January 1, 2021 through Research and development $ 11,954 $ 5,896 $ — General and administrative 13,011 8,956 — $ 24,965 $ 14,852 $ — Centessa Pharmaceuticals plc (Successor) Stock Options The following table summarizes stock option activity for the period from January 1, 2022 through December 31, 2022: Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Balance at January 1, 2022 11,730,382 $ 8.07 9.2 Granted 5,553,985 8.02 Exercised (205,107) 3.89 Forfeited (2,390,264) 9.44 Balance at December 31, 2022 14,688,996 $ 7.88 8.5 — Exercisable at December 31, 2022 5,002,044 $ 7.79 8.2 — Vested and expected to vest at December 31, 2022 14,688,996 $ 7.88 8.5 — The weighted-average grant date fair value of options granted was $5.38 per share for the period from January 1, 2022 through December 31, 2022. The Company’s stock options vest based on the terms in each award agreement, generally over four-year periods, and have a contractual term of ten years. As of December 31, 2022, the total unrecognized compensation expense related to unvested stock option awards was $46.7 million, which the Company expects to recognize over a weighted-average period of 2.6 years. Based on the trading price of $3.10 per ADS, which was the closing price as of December 31, 2022, the aggregate intrinsic value of options as of December 31, 2022 was zero. During the twelve months ended December 31, 2022, the fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below: Expected term (in years) 6.01 Expected stock price volatility 76.4 % Risk-free interest rate 2.2 % Expected dividend yield 0% The Company uses the Black-Scholes option pricing model to value its stock option awards. The expected life of the stock options is estimated using the “simplified method,” as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The simplified method is the midpoint between the vesting period and the contractual term of the option. For share price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected life of the option. Forfeitures of stock options are recognized in the period the forfeiture occurs. Centessa Pharmaceuticals plc (Successor) Restricted Share Awards and Units In connection with the acquisition of the Centessa Subsidiaries, the Company issued 379,905 ordinary shares subject to future vesting under its Restricted Stock Awards program. For the period subsequent to the acquisition through December 31, 2022, the Company issued an additional 833,897 ordinary shares subject to future vesting to an employee. The fair value of the awards are based upon the estimated fair value of the Company’s ordinary shares at the time of grant. During the twelve month period ended December 31, 2022, 383,523 share awards vested. On July 1, 2022, the board of directors of the Company (the “Board”) approved the grant of restricted stock unit awards under the Company’s Amended and Restated 2021 Stock Option and Incentive Plan to certain executive officers and employees of the Company. The grant date fair market value of each award was $5.17. The bulk of the restricted stock unit awards vest in ten equal quarterly installments. The Board, following the recommendations of the Company’s Compensation Committee, approved the restricted stock unit awards as a retention grant to incentivize and encourage retention of certain officers and employees. The following table summarizes ordinary share activity related to the restricted stock programs for the twelve months ended December 31, 2022: Restricted Stock Awards Restricted Stock Units Number of Shares Weighted-Average Grant Date Fair Value Per Share Number of Shares Weighted-Average Grant Date Fair Value Per Share Unvested at January 1, 2022 982,944 — Granted — n/a 2,458,950 $ 5.17 Vested (383,523) (469,490) Forfeited — (184,700) Unvested at December 31, 2022 599,421 1,804,760 Unrecognized compensation expense at December 31, 2022 ($ in thousands) $ 10,221 $ 9,331 Expected weighted average recognition period (in years) 2.4 2.0 In January 2021, the Company’s board of directors approved the 2021 Employee Share Purchase Plan (the “2021 ESPP”). The initial number of shares reserved for issuance under the 2021 ESPP was 860,000. On January 1, 2022 and each January 1 thereafter, the number of Shares reserved and available for issuance under the ESPP shall be cumulatively increased by a number of shares equal to the lesser of: (i) 1% of the number of Shares issued and outstanding on the immediately preceding December 31; (ii) two times the initial number of shares reserved or (iii) such number of Shares as determined by the board of directors. Remaining shares reserved as of December 31, 2022 were 1,759,882. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Master Services agreements with drug discovery companies affiliated with David Grainger The Company has entered into Master Services agreements with certain drug discovery companies affiliated with David Grainger, who was appointed as the Company’s Chief Innovation Officer in October 2021. These companies include RxCelerate Limited, RxBiologics Limited and The Foundry (Cambridge) Limited, of which David Grainger is a director and shareholder. The Company and the Centessa Predecessor Group incurred research and development costs associated with these contracts as follows in the consolidated and combined statements of operations and comprehensive loss (amounts in thousands): Successor Predecessor Twelve Months Ended Period from January 30, 2021 through Period from January 1, 2021 through Research and development $ 7,373 $ 7,148 $ 418 Cost Reimbursements During the period from January 30, 2021 through December 31, 2021, the Company (Successor) reimbursed an aggregate of $1.4 million to several shareholders for costs paid on behalf of the Company (Successor) in connection with acquisition of the Centessa Subsidiaries and the sale of the Company (Successor) Series A preferred shares. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows (amounts in thousands): Successor December 31, December 31, Deferred tax assets Tax loss carryforwards $ 73,097 $ 32,983 Capitalized research and development 15,624 8,734 Research and development credits 7,174 6,967 Other 1,467 1,016 Total deferred tax assets $ 97,362 $ 49,700 Valuation allowance (93,850) (49,045) Deferred tax assets, net of allowance (*) $ 3,512 $ 655 (*) Included in Other non-current assets in the Consolidated Balance Sheets as of the respective periods. The Company regularly assesses its ability to realize its deferred tax assets. Assessing the realization of deferred tax assets requires significant judgment. In determining whether its deferred tax assets are more likely than not realizable, the Company evaluated all available positive and negative evidence, and weighed the evidence based on its objectivity. After consideration of the evidence, including the Company's history of cumulative net losses in the U.K., France and the USA, the Company has concluded that it is more likely than not that the Company will not realize the benefits of its U.K., and French deferred tax assets and accordingly the Company has provided a valuation allowance for the full amount of the net deferred tax assets in those territories. The Company has also concluded that it is more likely than not it will not realize the benefits of the deferred tax assets in its principal operating entity in the United States and has provided a valuation allowance for the full amount of the net deferred tax asset in that entity. The Company has considered the Company's history of cumulative net profits in its other operating entity in the United States, which carries out services for other entities in the group, estimated that entity’s future taxable income and concluded that it is more likely than not that the Company will realize the benefits of the deferred tax assets in that entity, and has not provided a valuation allowance against the net deferred tax assets in that entity. For the twelve months ended December 31, 2022 , the valuation allowance increased by $44.8 million . For the period from January 30, 2021 to December 31, 2021, the valuation allowance increased by $30.5 million. Components of the Company’s pre-tax loss are as follows (amounts in thousands): Successor Twelve months ended December 31, 2022 Period from January 30, 2021 through December 31, 2021 Loss before tax: UK $ (173,476) $ (331,423) Non-UK (43,478) (49,534) Total $ (216,954) $ (380,957) The income tax (benefit) expense consists of the following (amounts in thousands): Successor December 31, December 31, Federal Current $ 1,575 $ 581 Deferred (2,464) (495) State Current 534 188 Deferred (392) (160) Foreign Current — — Deferred — — Income tax (benefit) expense $ (747) $ 114 A reconciliation of the United Kingdom (“UK”) income tax rate to the Company’s effective tax rate is as follows: Successor Twelve Months Ended Period from January 30, 2021 through Statutory tax rate benefit 19 % 19 % Non-deductible write-off of in-process R&D — % (11) % Other non-deductible expenses (3) % (2) % Enhanced research and development expenses 7 % 3 % Losses surrendered for tax incentive (7) % (5) % Non-taxable research and development incentive 1 % 2 % Research & development tax credits 1 % — % Change in tax rate 2 % 1 % Effect of overseas tax rates 3 % 1 % Change in valuation allowance (23) % (8) % Effective income tax rate — % — % The following table summarizes carryforwards of federal and local net operating losses (NOL) and research tax credits (amounts in thousands): Successor December 31, December 31, UK $ 225,662 $ 82,156 US $ 48,523 $ 34,059 France $ 25,474 $ 19,710 Germany $ — $ 11,062 The Company will recognize interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2022, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s Consolidated Statements of Operations and Comprehensive Loss. UK income tax returns from 2021 remain open for examination and UK NOLs do not expire. In the US, income tax returns from 2019 and later remain open for examination and unutilized US NOLs and credit carryforwards are subject to examination until utilized. If not utilized prior to the specified dates, US federal NOLs totaling $3.2 million and a US R&D tax credit carryforward of $7.2 million would expire starting in 2036 and $41.3 million of US state NOLs would expire beginning in 2036. The NOL in France will not be utilized as Centessa’s French subsidiary, Pega-One, was sold on January 9, 2023. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsThe Company filed a shelf registration statement on Form S-3 (“the Shelf”) with the Securities and Exchange Commission (SEC), which covers the offering, issuance and sale of an amount up to $350.0 million in the aggregate of the Company’s ordinary shares, American Depository Shares representing ordinary shares, debt securities, warrants, and/or units or any combination thereof. On July 12, 2022, the Shelf became effective. The Company entered into a Sales Agreement, dated January 27, 2023, by and between Centessa Pharmaceuticals plc and SVB Securities LLC (“SVB”). As sales agent, SVB will provide for the issuance and sale by the Company of up to $125.0 million of its ordinary shares represented by American Depository Shares from time to time in “at-the-market” offerings under the Shelf, which we refer to as the ATM Program. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation/Combination | Basis of Presentation and Consolidation/Combination References to the combined financial statements of the Centessa Predecessor Group refer to three of the eleven direct acquired Centessa Subsidiaries that were deemed to represent the predecessor entity prior to the Company’s acquisition of the Centessa Subsidiaries in January 2021. The Centessa Predecessor Group includes the combined financial information of Z Factor, Morphogen-IX and LockBody. The successor includes the consolidated financial information of Centessa and all Centessa subsidiaries subsequent to the acquisition. Accordingly, the accompanying consolidated and combined financial statements are presented in accordance with Securities and Exchange Commission (“SEC”) requirements for predecessor and successor financial statements, which include the financial results of both the Company and the Centessa Predecessor Group. The consolidated balance sheets present the consolidated financial position of the Company as of December 31, 2022 and December 31, 2021. The results of operations and cash flows contained in the consolidated and combined financial statements include the Company’s consolidated financial results and cash flows for the twelve months ended December 31, 2022 and for the period from January 30, 2021 through December 31, 2021; and the Centessa Predecessor Group’s combined financial results and cash flows for the period from January 1, 2021 through January 29, 2021. The accompanying consolidated and combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) promulgated by the Financial Accounting Standards Board (“FASB”). All intercompany accounts and transactions have been eliminated in consolidation and combination. In the opinion of management, the accompanying consolidated and combined financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly: • the Company’s financial position as of December 31, 2022 and December 31, 2021; • the Company’s results of operations and cash flows for the twelve months ended December 31, 2022 and for the period from January 30, 2021 through December 31, 2021; and • the Predecessor’s results of operations and cash flows for the period from January 1, 2021 through January 29, 2021. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents include cash in readily available checking accounts, certificate of deposits and money market funds. |
Segments | Segments Operating segments are defined as components of an enterprise with separate discrete information available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. We view our operations and manage our business as one segment. |
Reclassifications | Reclassifications Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on previously reported net loss or comprehensive loss. |
Foreign Currency Translation | Foreign Currency Translation The Company’s financial statements are presented in U.S. dollars (“USD”), the reporting currency of the Company. The functional currency of Centessa Pharmaceuticals plc is USD and the functional currency of the Centessa Subsidiaries is their respective local currency. Income and expenses have been translated into USD at average monthly exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheets dates and equity accounts at their respective historical rates. The resulting translation gain and loss adjustments are recorded directly as a separate component of shareholders’ equity as other comprehensive (loss) income. Transactions denominated in a currency other than the functional currency are remeasured based upon the exchange rate at the date of remeasurement with the resulting gain or loss included in the accompanying consolidated and combined statements of operations and comprehensive loss within Other income (expense), net. The aggregate foreign currency transaction loss included in the Company (Successor)’s results of operations for the twelve months ended December 31, 2022 and for the period from January 30, 2021 through December 31, 2021 were $2.8 million and $3.6 million, respectively. The functional currency of Centessa Pharmaceuticals plc had previously been British pounds (“GBP”), as Centessa Pharmaceutical plc’s primary activities during formation were mostly denominated in GBP, including related transaction costs, the acquisition of Centessa subsidiaries predominantly with operations in GBP and the issuance of shares with a GBP nominal value as consideration in the acquisition. Beginning in the second quarter of 2021, the functional currency of Centessa Pharmaceuticals plc changed from GBP to USD. The change in functional currency was the result of many factors including the completion of an IPO and receipt of proceeds in USD which resulted in USD denominated assets exceeding GBP denominated assets, the increase in the number of U.S.-based employees, and the increase in costs denominated in USD, following completion of the Company’s IPO on a U.S. stock exchange (“Nasdaq”). Given these significant changes, the Company considered the economic factors outlined in ASC 830, Foreign Currency Matters and concluded that the majority of the factors supported the use of the USD as the functional currency for Centessa Pharmaceutical plc. The change in functional currency for Centessa Pharmaceuticals plc was applied on a prospective basis beginning in the second quarter of 2021 and translation adjustments for prior periods will continue to remain as a component of accumulated other comprehensive loss. The Company reclassified the presentation of foreign currency gains and losses recognized in the first quarter of 2021 from General & administration expense to Other income (expense), net to conform to the current period financial statement presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated and combined financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated and combined financial statements in the period they are determined to be necessary. Significant areas that require management’s estimates include accrued research and development expenses, the note purchase agreement, share-based compensation, contingent value rights, and, prior to the IPO, the fair value of the Company’s ordinary shares. |
Property and Equipment, net | Property and Equipment, net Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the respective assets. Property and equipment includes computer equipment, which has a useful life of three years, as well as leasehold improvements under construction, which have useful lives of the lesser of applicable lease terms or their useful lives. The costs of maintenance and repairs are expensed as incurred. Improvements and betterment that add new functionality or extend the useful life of the asset are capitalized. Depreciation expense for the twelve months ended December 31, 2022 and for the period from January 30, 2021 through December 31, 2021 was $131 thousand and $34 thousand, respectively. Capitalized software as a service costs representing costs incurred during the application development stage are included in “Other non-current assets” and the corresponding current portion, in “Prepaid expenses and other current assets” and is amortized using the straight line method over five years. Costs incurred during the preliminary project stage and the post-implementation-operation stage are expensed as incurred. Hosting fees associated with the hosting as a service arrangement are expensed on a straight line basis over the term of the hosting arrangement. |
Long-Lived Assets | Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, then an impairment charge is recognized for the amount by which the carrying value of the asset exceeds the estimated fair value of the asset. As of December 31, 2022, the Company believes that no revision of the remaining useful lives or write-down of long-lived assets is required. |
Fair Value Measurement | Fair Value Measurement Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, prepaid expense and accounts payable, are shown at cost, which approximates fair value due to the short-term nature of these instruments. The Company follows the provisions of FASB ASC Topic 820, Fair Value Measurement , for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities. Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). |
Note Purchase Agreement | Note Purchase Agreement As described in further detail in Note 6 - "Debt" , in October 2021, the Company entered into a Note Purchase Agreement (the “Notes”) with Oberland Capital Management LLC (“Oberland Capital”). Under the terms of the agreement, Oberland Capital will purchase up to $300.0 million of 6-year, interest-only (initial interest rate was 8.0% per annum), senior secured notes (the Notes) from the Company including $75.0 million, funded on October 4, 2021, $125.0 million available through 2023 at the Company’s option, and $100.0 million available to fund Mergers and Acquisitions (M&A), in-licensing, or other strategic transactions, at the option of the Company and Oberland Capital. In addition, the Company is obligated to pay a Milestone payment equal to 30% of the aggregate principal amount issued under the Notes by the Company upon regulatory approval of any drug candidate. The Company evaluated the Notes and determined that the Notes include embedded derivatives that would otherwise require bifurcation as derivative liabilities. Neither the debt instrument nor any embedded features are required to be classified as equity. Therefore, the hybrid financial instrument comprised of the debt host and the embedded derivative liability may be accounted for under the fair value option. The Company elected to carry the Notes at fair value, and the debt instrument is outside the scope of ASC 480, Distinguishing Liabilities from Equity , and thus will be classified as a liability under ASC 470, Debt , in the Company’s financial statements. As the Company has elected to account for the Notes under the fair value option, debt issuance costs were immediately expensed. The fair value of the Note Purchase Agreement represents the present value of estimated future payments, including interest, principal as well as estimated payments that are contingent upon the achievement of specified milestones. The fair value of the Notes is based on the cumulative probability of the various estimated payments. The fair value measurement is based on significant Level 3 unobservable inputs such as the probability of achieving the milestones, anticipated timelines, probability and timing of an early redemption of all obligations under the agreement and the discount rate. Any changes in the fair value of the liability in each reporting period are recognized in the consolidated statement of operations and comprehensive loss until it is settled. |
Research and Development Expenses and Accruals and Tax Incentives | Research and Development Expenses and Accruals All research and development costs are expensed in the period incurred and consist primarily of salaries, payroll taxes, employee benefits, stock-based compensation charges for those individuals involved in research and development efforts, external research and development costs incurred under agreements with contract research organizations and consultants to conduct and support the Company’s ongoing clinical trials. The Company has entered into various research and development contracts with clinical research organizations, clinical manufacturing organizations and other companies. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred. Payments made in advance of performance are reflected in the accompanying balance sheets as prepaid expenses, while payments made after performance are reflected as accrued liabilities in the accompanying balance sheets. The Company records accruals for estimated costs incurred for ongoing research and development activities. When recording accruals for ongoing research and development activities, the Company analyzes progress of the services, including the phase or completion of events, invoices received and contracted costs. Nonrefundable advance payments for goods and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are recognized as expense in the period that the related goods are consumed or services are performed. Milestone payments within the Company (Successor)’s licensing arrangements are recognized when achievement of the milestone is deemed probable to occur. To the extent products are commercialized and future economic benefit has been established, commercial milestones that become probable are capitalized and amortized over the estimated remaining useful life of the intellectual property. Significant judgments and estimates may be made in determining the prepaid or accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. Research and Development Tax Incentives The Company participates in research tax incentive programs that are granted to companies by the United Kingdom and certain European tax authorities in order to encourage them to conduct technical and scientific research. Expenditures that meet the required criteria are eligible to receive a tax credit that is reimbursed in cash. Estimates of the amount of the cash refund expected to be received are determined at each reporting period and recorded as reductions to research and development expenses. The Company recorded research and development tax incentives of $12.6 million and $13.8 million during the twelve months ended December 31, 2022 and the period from January 30, 2021 through December 31, 2021, respectively. The Company may not be able to continue to claim the most beneficial payable research and development tax credits in the future if it ceased to qualify as a small or medium enterprise, based on size criteria concerning employee headcount, turnover and gross assets. In addition, unless its subsidiaries qualify for an exemption, there are limitations to how much tax incentive can be claimed. This limitation is calculated as the total of the Company's relevant expenditure on employees in the period, multiplied by 300%, plus £20,000. |
Acquired In-Process Research and Development Expenses | Acquired In-Process Research and Development Expenses Acquired in-process research and development (“IPR&D”) consists of the initial up-front payments incurred in connection with the acquisition or licensing of products or technologies in transactions that do not meet the definition of a business under FASB ASC Topic 805, Business Combinations. |
Leases | Leases On January 1, 2022, the Company adopted ASU No. 2016-02, Leases (“ASC 842”) , which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. As of January 1, 2022, the Company was not party to any significant leases and therefore the adoption of this standard did not have a significant impact as of this adoption date. As permitted in the standards, the Company is reflecting the adoption of ASC 842 in its annual report on Form 10-K for the year ended December 31, 2022, and in interim periods within the fiscal year ended December 31, 2023. In accordance with ASC 842, the Company assesses whether an arrangement is a lease, or contains a lease at the inception of the arrangement. When an arrangement contains a lease, the Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in “Property and equipment, net.” All other leases are categorized as operating leases. The Company records right-of use ("ROU") assets and lease obligations for its finance and operating leases, which are initially recognized based on the discounted future lease payments over the term of the lease. As the rate implicit in the Company's leases may not be easily determinable, the Company uses its incremental borrowing rate to calculate the present value of the sum of the lease payments. Lease terms may include options to extend or terminate the lease. The Company will include such options in determining the lease term when it is reasonably certain that the Company will exercise such options. Operating and finance lease ROU assets are recognized net of any lease prepayments and incentives. The Company elected the practical expedient to not separate lease and non-lease components and, accordingly, accounts for them as a single component. Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense is recognized based on the effective-interest method over the lease term. The Company elected not to recognize ROU assets and lease obligations for any short-term leases, which are defined as leases with an initial term of 12 months or less. |
Collaborative Arrangement | Collaborative Arrangements The Company enters into collaborative arrangements to develop and commercialize intellectual property. These arrangements typically involve two (or more) parties who are active participants in the collaboration and are exposed to significant risks and rewards dependent on the commercial success of the activities. These collaborations usually involve various activities by one or more parties, including research and development, marketing and selling and distribution. Often, these collaborations require upfront, milestone and royalty or profit share payments, contingent upon the occurrence of certain future events linked to the success of the asset in development. Amounts due to collaborative partners related to development activities are generally reflected as research and development expense. |
Share-Based Compensation | Share-Based Compensation The Company measures share-based awards, including restricted shares, restricted stock units and stock options, at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards. Subsequent to the IPO, the Company determines the fair value of share-based compensation awards using the market closing price of the Company’s ADSs on the date of grant. F orfeitures of stock options are recognized in the period the forfeiture occurs. The Company uses the Black-Scholes option pricing model to value its stock option awards. The expected life of the stock options is estimated using the “simplified method,” as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The simplified method is the midpoint between the vesting period and the contractual term of the option. For share price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected life of the option. The estimated annual dividend yield is 0% because the Company has not historically paid and does not expect for the foreseeable future to pay a dividend on its ordinary shares. Prior to its IPO in June 2021, the fair value of the Company’s ordinary shares was determined by the Company’s board of directors with assistance from management and an independent third-party valuation firm. As discussed in further detail in Note 3 - "Acquisitions and Dispositions" , the estimated fair value of its ordinary shares was based on the Hybrid Method outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation , (“Practice Guide”). Subjective factors considered by the Company’s board of directors and management included the addition of new executive members and the election of new independent directors to the Company’s board of directors, as well as definitive plans to undertake an IPO. The assumptions used in estimating the fair value of share-based awards represented management’s estimate and involved inherent uncertainties and the application of management’s judgment. As a result, if factors changed and management used different assumptions, share-based compensation expense would have been materially different. |
Retirement Plans | Retirement Plans The Company provided defined contribution plans to its employees beginning in 2021 and continuing in 2022. In the US, the primary plan sponsored by the Company is a safe harbor, 401k plan with a 4% employer match, no waiting period and immediate vesting on the match. In the UK, the primary plan sponsored by the Company is a money purchase plan, which requires a minimum 8% contribution, including a minimum employer contributio n of 4% and employee contribution of 4% in |
Income Taxes | Income Taxes The Company follows the asset and liability method of accounting for income taxes under ASC 740, Income Taxes . Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. |
Net Loss Per Ordinary Share | Net Loss Per Ordinary Share Basic loss per ordinary share is computed by dividing net loss by the aggregate weighted-average number of ordinary shares outstanding. Diluted loss per ordinary share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred shares, stock options, unvested restricted ordinary shares and |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2022, the FASB issued ASU No 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method. The amendments in this Update expand the current last-of-layer method of hedge accounting that permits only one hedged layer to allow multiple hedged layers of a single closed portfolio. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method. This ASU is the final version of Proposed Accounting Standards Update 2021-002-Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method, which has been deleted. The amendments in this Update apply to all entities that elect to apply the portfolio layer method of hedge accounting in accordance with Topic 815. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted on any date on or after the issuance of this Update for any entity that has adopted the amendments in Update 2017-12 for the corresponding period. We do not have any hedging instruments that would be subject to this guidance. Therefore, we do not expect any related impact on the Company's consolidated financial statements and related disclosures. In June 2022, the FASB issued ASU No 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this Update affect all entities that have investments in equity securities measured at fair value that are subject to a contractual sale restriction. The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2021-005-Fair Value (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which has been deleted. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. We do not have any equity securities subject to contractual sale restrictions that would be subject to this guidance. Therefore, we do not expect any related impact on the Company's consolidated and combined financial statements and related disclosures. In September 2022, the FASB issued ASU No 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. Subtopic 405-50 requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The amendments in this Update require qualitative and quantitative disclosures about supplier finance programs and thereby allow financial statement users to better understand the effect of those programs on an entity’s working capital, liquidity, and cash flows. This Accounting Standard Update applies to all entities that use supplier finance programs in connection with the purchase of goods and services. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2021-007- Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which has been deleted. We do not participate in any supplier finance programs that would be subject to this guidance. Therefore, we do not expect any related impact on the Company's consolidated financial statements and related disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Diluted Weighted-Average Ordinary Shares Outstanding | The following potentially dilutive securities have been excluded from the computation of diluted weighted-average ordinary shares outstanding, as they would be anti-dilutive. Twelve months ended December 31, 2022 Period from January 30, 2021 through December 31, 2021 Unvested ordinary shares 599,421 982,944 Restricted stock units 1,804,760 — Stock options 14,688,996 11,730,382 17,093,177 12,713,326 |
Acquisitions and Dispositions (
Acquisitions and Dispositions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Asset Acquisition | The total purchase price for the asset acquisitions was calculated as follows (amounts in thousands): Estimated fair value of Centessa ordinary shares issued $ 261,387 Estimated fair value of replacement equity awards allocated to consideration paid 1,310 Estimated fair value of contingent value rights 22,618 Transaction costs 4,597 Total consideration given $ 289,912 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the assets acquired and liabilities assumed as of the acquisition date for the asset acquisitions (amounts in thousands): Assets acquired: Cash and cash equivalents $ 68,038 Tax incentive receivable 8,752 Prepaid expenses and other current assets 2,551 Other assets 203 In-process research and development assets 223,593 Total assets acquired $ 303,137 Liabilities assumed: Accounts payable $ 3,607 Accrued expenses and other current liabilities 3,128 Convertible notes 6,199 Loan with related party 291 Total liabilities assumed $ 13,225 Net assets acquired $ 289,912 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following fair value hierarchy table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis (amounts in thousands): Fair value measurement at reporting date using Quoted prices Significant Significant December 31, 2022 (Successor) Liabilities Note Purchase Agreement $ — $ — $ 69,800 Fair value measurement at reporting date using Quoted prices Significant Significant December 31, 2021 (Successor) Liabilities Note Purchase Agreement $ — $ — $ 75,700 Contingent Value Rights $ — $ — $ 37,700 |
Reconciliation of the Redemption Feature Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs | The reconciliation of the redemption feature measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows (amounts in thousands): Contingent Value Rights Note Purchase Agreement Derivative Liability Balance at January 1, 2021 (Predecessor) $ — $ — $ 913 Additions — — — Change in fair value — — — Settlements — — (913) Balance at January 29, 2021 (Predecessor) $ — $ — $ — Balance at January 30, 2021 (Successor) $ — $ — $ — Additions 22,618 75,000 — Change in fair value 15,082 700 — Balance at December 31, 2021 (Successor) 37,700 75,700 — Change in fair value 1,980 (5,900) — Settlements (39,680) — — Balance at December 31, 2022 (Successor) $ — $ 69,800 $ — |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following (amounts in thousands): Successor December 31, December 31, Research and development costs $ 11,321 $ 11,224 Insurance related costs 2,788 4,661 Value added tax receivable 2,557 1,422 Other 3,271 993 $ 19,937 $ 18,300 |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following (amounts in thousands): Successor December 31, December 31, Research and development costs $ 10,795 $ 9,323 Personnel related expenses 7,264 4,865 Professional fees 4,171 1,514 Income tax liability 1,582 769 Other 690 102 $ 24,502 $ 16,573 |
Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following (amounts in thousands): Successor December 31, December 31, Computer equipment $ 442 $ 196 Construction in progress 890 — Property and equipment, at cost 1,332 196 Less: Accumulated depreciation (164) (34) Property and equipment, net $ 1,168 $ 162 |
Schedule of Foreign Currency Translation Adjustments | Foreign Currency Translation Adjustments consisted of the following (amounts in thousands): Successor Twelve months ended December 31, 2022 Period from Foreign currency translation adjustments $ (1,382) $ 778 Reclassifications to net loss (803) — Foreign Currency Translation Adjustments $ (2,185) $ 778 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | (Amounts in thousands) Successor December 31, December 31, Note Purchase Agreement $ 69,800 $ 75,700 $ 69,800 $ 75,700 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Share-based Compensation Expense | The Company and the Centessa Predecessor Group recorded share-based compensation expense in the following expense categories in the consolidated and combined statements of operations and comprehensive loss (amounts in thousands): Successor Predecessor Twelve Months Ended Period from January 30, 2021 through December 31, 2021 Period from January 1, 2021 through Research and development $ 11,954 $ 5,896 $ — General and administrative 13,011 8,956 — $ 24,965 $ 14,852 $ — |
Summary of Stock Option Activity | The following table summarizes stock option activity for the period from January 1, 2022 through December 31, 2022: Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Aggregate Balance at January 1, 2022 11,730,382 $ 8.07 9.2 Granted 5,553,985 8.02 Exercised (205,107) 3.89 Forfeited (2,390,264) 9.44 Balance at December 31, 2022 14,688,996 $ 7.88 8.5 — Exercisable at December 31, 2022 5,002,044 $ 7.79 8.2 — Vested and expected to vest at December 31, 2022 14,688,996 $ 7.88 8.5 — |
Schedule of Assumptions Used to Estimate Fair Value of Stock Option Awards | During the twelve months ended December 31, 2022, the fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below: Expected term (in years) 6.01 Expected stock price volatility 76.4 % Risk-free interest rate 2.2 % Expected dividend yield 0% |
Summary of Replacement Equity Award Activity | The following table summarizes ordinary share activity related to the restricted stock programs for the twelve months ended December 31, 2022: Restricted Stock Awards Restricted Stock Units Number of Shares Weighted-Average Grant Date Fair Value Per Share Number of Shares Weighted-Average Grant Date Fair Value Per Share Unvested at January 1, 2022 982,944 — Granted — n/a 2,458,950 $ 5.17 Vested (383,523) (469,490) Forfeited — (184,700) Unvested at December 31, 2022 599,421 1,804,760 Unrecognized compensation expense at December 31, 2022 ($ in thousands) $ 10,221 $ 9,331 Expected weighted average recognition period (in years) 2.4 2.0 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The Company and the Centessa Predecessor Group incurred research and development costs associated with these contracts as follows in the consolidated and combined statements of operations and comprehensive loss (amounts in thousands): Successor Predecessor Twelve Months Ended Period from January 30, 2021 through Period from January 1, 2021 through Research and development $ 7,373 $ 7,148 $ 418 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows (amounts in thousands): Successor December 31, December 31, Deferred tax assets Tax loss carryforwards $ 73,097 $ 32,983 Capitalized research and development 15,624 8,734 Research and development credits 7,174 6,967 Other 1,467 1,016 Total deferred tax assets $ 97,362 $ 49,700 Valuation allowance (93,850) (49,045) Deferred tax assets, net of allowance (*) $ 3,512 $ 655 (*) Included in Other non-current assets in the Consolidated Balance Sheets as of the respective periods. |
Schedule of Income before Income Tax, Domestic and Foreign | Components of the Company’s pre-tax loss are as follows (amounts in thousands): Successor Twelve months ended December 31, 2022 Period from January 30, 2021 through December 31, 2021 Loss before tax: UK $ (173,476) $ (331,423) Non-UK (43,478) (49,534) Total $ (216,954) $ (380,957) |
Schedule of Components of Income Tax Provision | The income tax (benefit) expense consists of the following (amounts in thousands): Successor December 31, December 31, Federal Current $ 1,575 $ 581 Deferred (2,464) (495) State Current 534 188 Deferred (392) (160) Foreign Current — — Deferred — — Income tax (benefit) expense $ (747) $ 114 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the United Kingdom (“UK”) income tax rate to the Company’s effective tax rate is as follows: Successor Twelve Months Ended Period from January 30, 2021 through Statutory tax rate benefit 19 % 19 % Non-deductible write-off of in-process R&D — % (11) % Other non-deductible expenses (3) % (2) % Enhanced research and development expenses 7 % 3 % Losses surrendered for tax incentive (7) % (5) % Non-taxable research and development incentive 1 % 2 % Research & development tax credits 1 % — % Change in tax rate 2 % 1 % Effect of overseas tax rates 3 % 1 % Change in valuation allowance (23) % (8) % Effective income tax rate — % — % |
Summary of Operating Loss Carryforwards and Research Tax Credits | The following table summarizes carryforwards of federal and local net operating losses (NOL) and research tax credits (amounts in thousands): Successor December 31, December 31, UK $ 225,662 $ 82,156 US $ 48,523 $ 34,059 France $ 25,474 $ 19,710 Germany $ — $ 11,062 |
Organization and Description _2
Organization and Description of Business (Details) | 1 Months Ended | 12 Months Ended | ||||||||
Feb. 11, 2022 USD ($) | Oct. 31, 2021 USD ($) | Jun. 30, 2021 USD ($) shares | Dec. 31, 2022 USD ($) | Dec. 31, 2022 £ / shares | Dec. 31, 2021 USD ($) | Dec. 31, 2021 £ / shares | Oct. 04, 2021 USD ($) | Jun. 30, 2021 £ / shares shares | Jun. 30, 2021 $ / shares shares | |
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Number of ordinary shares per American Depositary Shares (ADSs) (in shares) | shares | 1 | 1 | ||||||||
Common stock, nominal value (in pound sterling per share) | £ / shares | £ 0.002 | £ 0.002 | £ 0.002 | |||||||
Aggregate net proceeds in connection with the IPO and subsequent exercise of the underwriter's options | $ 344,100,000 | |||||||||
Accumulated deficit | $ 601,860,000 | $ 385,653,000 | ||||||||
Note purchase agreement, value | $ 300,000,000 | |||||||||
Debt instrument, term | 6 years | |||||||||
Note purchase agreement, amount available for funding at the option of the Company and counterparty | $ 100,000,000 | |||||||||
Cash and cash equivalents | $ 393,644,000 | $ 595,082,000 | ||||||||
Sufficient funding term (at least) | 12 months | |||||||||
Oberland Capital | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Note purchase agreement, value | $ 300,000,000 | $ 75,000,000 | ||||||||
Note purchase agreement, amount available for funding at the option of the Company | 125,000,000 | |||||||||
Note purchase agreement, amount available for funding at the option of the Company and counterparty | $ 100,000,000 | |||||||||
Oberland Capital | Senior Notes | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Debt instrument, term | 6 years | |||||||||
Oberland Capital | Interest Only, Senior Secured Notes | Senior Notes | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Debt instrument, term | 6 years | |||||||||
Stated interest rate | 8% | |||||||||
IPO | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Shares sold in offering (in shares) | shares | 16,500,000 | |||||||||
Share price (in dollars per share) | $ / shares | $ 20 | |||||||||
Over-Allotment Option | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Shares sold in offering (in shares) | shares | 2,475,000 | |||||||||
Share price (in dollars per share) | $ / shares | $ 20 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Basis of Presentation and Consolidation/Combination (Details) | 12 Months Ended |
Dec. 31, 2022 subsidiary | |
Accounting Policies [Abstract] | |
Number of business acquired | 11 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Segments (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Foreign Currency Translation (Details) - USD ($) $ in Millions | 11 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
Aggregate foreign currency transaction loss | $ 3.6 | $ 2.8 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Property and Equipment, net (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended | |
Jan. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation and amortization | $ 0 | $ 34 | $ 34 | $ 131 |
Computer equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment useful life | 3 years | |||
Capitalized software | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment useful life | 5 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Note Purchase Agreement (Details) - USD ($) | 1 Months Ended | ||
Feb. 11, 2022 | Oct. 31, 2021 | Oct. 04, 2021 | |
Debt Instrument [Line Items] | |||
Note purchase agreement, value | $ 300,000,000 | ||
Debt instrument, term | 6 years | ||
Note purchase agreement, amount available for funding at the option of the Company and counterparty | $ 100,000,000 | ||
Note purchase agreement, milestone payment, percent of aggregate principal amount issued | 30% | ||
Oberland Capital | |||
Debt Instrument [Line Items] | |||
Note purchase agreement, value | $ 300,000,000 | $ 75,000,000 | |
Note purchase agreement, amount available for funding at the option of the Company | 125,000,000 | ||
Note purchase agreement, amount available for funding at the option of the Company and counterparty | $ 100,000,000 | ||
Oberland Capital | Senior Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, term | 6 years | ||
Oberland Capital | Senior Notes | Interest Only, Senior Secured Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, term | 6 years | ||
Stated interest rate | 8% |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Research and Development Tax Incentives (Details) € in Thousands, $ in Millions | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2021 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 EUR (€) | |
Accounting Policies [Abstract] | |||
Research and development tax credit | $ | $ (13.8) | $ (12.6) | |
Research and development tax credit limitation, expenditure on employees multiple | 300% | 300% | |
Research and development tax credit limitation, expenditure on employees additional Value | € | € 20 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Leases (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Feb. 07, 2022 ft² extension_term | Dec. 31, 2021 USD ($) | |
Property, Plant and Equipment [Line Items] | ||||
Lease term | 10 years | |||
Area of real estate property | ft² | 18,922 | |||
Number of options to extend | extension_term | 1 | |||
Lease, renewal term | 5 years | |||
Property and equipment, at cost | $ 1,332 | $ 196 | ||
Forecast | ||||
Property, Plant and Equipment [Line Items] | ||||
Rent expense | $ 1,600 | |||
Rent expense, year 10 | $ 1,900 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Share-Based Compensation (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected dividend yield | 0% |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Retirement Plans (Details) - USD ($) $ in Millions | 11 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
Defined contribution plan, employer matching contribution, percent of match | 4% | |
Defined contribution plan, minimum contribution, percent | 8% | |
Defined contribution plan, minimum employer contribution, percent | 4% | |
Defined contribution plan, minimum employee contribution, percent | 4% | |
Defined contribution plan, charges | $ 0.2 | $ 0.7 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Diluted Weighted-Average Ordinary Shares Outstanding (Details) - shares | 11 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Dec. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted weighted-average ordinary shares outstanding (in shares) | 12,713,326 | 17,093,177 |
Ordinary shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted weighted-average ordinary shares outstanding (in shares) | 982,944 | 599,421 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted weighted-average ordinary shares outstanding (in shares) | 0 | 1,804,760 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted weighted-average ordinary shares outstanding (in shares) | 11,730,382 | 14,688,996 |
Acquisitions and Dispositions -
Acquisitions and Dispositions - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | |
Jan. 29, 2021 | Jan. 29, 2021 | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | |
Asset Acquisition [Line Items] | |||||
Contingent value rights | $ 37,700 | $ 0 | |||
Change in fair value of contingent value rights | $ 0 | 15,082 | 1,980 | ||
Centessa Subsidiaries | |||||
Asset Acquisition [Line Items] | |||||
Percentage of outstanding shares acquired | 100% | 100% | |||
Acquisition of Centessa Subsidiaries (in shares) | 44,758,079 | ||||
In-process research and development assets | $ 223,593 | ||||
Transaction costs | 4,597 | $ 3,100 | |||
Unrecognized compensation expense | 4,100 | 4,100 | |||
Contingent consideration arrangements, range of outcomes, high | 39,700 | ||||
Contingent value rights | $ 22,600 | $ 22,600 | |||
Change in fair value of contingent value rights | $ 2,000 | $ 15,100 | |||
Pega-One | Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | |||||
Asset Acquisition [Line Items] | |||||
Loss on disposition of business | $ 200 |
Acquisitions and Dispositions_2
Acquisitions and Dispositions - Asset Acquisition (Details) - Centessa Subsidiaries - USD ($) $ in Thousands | 1 Months Ended | |
Jan. 29, 2021 | Jan. 29, 2021 | |
Asset Acquisition [Line Items] | ||
Estimated fair value of Centessa ordinary shares issued | $ 261,387 | |
Estimated fair value of replacement equity awards allocated to consideration paid | 1,310 | |
Estimated fair value of contingent value rights | 22,618 | |
Transaction costs | 4,597 | $ 3,100 |
Total consideration given | $ 289,912 |
Acquisitions and Dispositions_3
Acquisitions and Dispositions - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - Centessa Subsidiaries $ in Thousands | Jan. 29, 2021 USD ($) |
Assets acquired: | |
Cash and cash equivalents | $ 68,038 |
Tax incentive receivable | 8,752 |
Prepaid expenses and other current assets | 2,551 |
Other assets | 203 |
In-process research and development assets | 223,593 |
Total assets acquired | 303,137 |
Liabilities assumed: | |
Accounts payable | 3,607 |
Accrued expenses and other current liabilities | 3,128 |
Convertible notes | 6,199 |
Loan with related party | 291 |
Total liabilities assumed | 13,225 |
Net assets acquired | $ 289,912 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Quoted prices in active markets for identical assets (Level 1) | ||
Liabilities | ||
Note Purchase Agreement | $ 0 | $ 0 |
Contingent Value Rights | 0 | |
Significant other observable inputs (Level 2) | ||
Liabilities | ||
Note Purchase Agreement | 0 | 0 |
Contingent Value Rights | 0 | |
Significant unobservable inputs (Level 3) | ||
Liabilities | ||
Note Purchase Agreement | $ 69,800 | 75,700 |
Contingent Value Rights | $ 37,700 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | |
Derivative Financial Instruments, Liabilities [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Gain (loss) from fair value adjustment | $ 0 | $ (700) | $ 5,900 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Reconciliation of the Redemption Feature Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | |
Contingent Value Rights | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | $ 0 | $ 37,700 | |
Additions | 22,618 | ||
Change in fair value | 15,082 | 1,980 | |
Settlements | (39,680) | ||
Ending balance | $ 0 | 37,700 | 0 |
Note Purchase Agreement | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | 0 | 75,700 | |
Additions | 75,000 | ||
Change in fair value | 700 | (5,900) | |
Settlements | 0 | ||
Ending balance | 0 | 75,700 | 69,800 |
Derivative Liability | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | 913 | 0 | |
Additions | 0 | ||
Change in fair value | 0 | $ (700) | $ 5,900 |
Settlements | 913 | ||
Ending balance | $ 0 |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Research and development costs | $ 11,321 | $ 11,224 |
Insurance related costs | 2,788 | 4,661 |
Value added tax receivable | 2,557 | 1,422 |
Other | 3,271 | 993 |
Prepaid expenses and other current assets | $ 19,937 | $ 18,300 |
Balance Sheet Components - Sc_2
Balance Sheet Components - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Research and development costs | $ 10,795 | $ 9,323 |
Personnel related expenses | 7,264 | 4,865 |
Professional fees | 4,171 | 1,514 |
Income tax liability | 1,582 | 769 |
Other | 690 | 102 |
Accrued expenses and other current liabilities | $ 24,502 | $ 16,573 |
Balance Sheet Components - Sc_3
Balance Sheet Components - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 1,332 | $ 196 |
Less: Accumulated depreciation | (164) | (34) |
Property and equipment, net | 1,168 | 162 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 442 | 196 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 890 | $ 0 |
Balance Sheet Components - Sc_4
Balance Sheet Components - Schedule of Foreign Currency Translation Adjustments (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Foreign currency translation adjustments | $ 778 | $ (1,382) | |
Reclassifications to net loss | 0 | (803) | |
Foreign currency translation adjustments | $ 107 | $ 778 | $ (2,185) |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Long term debt | $ 69,800 | $ 75,700 |
Note Purchase Agreement | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 69,800 | $ 75,700 |
Debt - Note Purchase Agreement
Debt - Note Purchase Agreement (Details) - USD ($) | 12 Months Ended | |||
Nov. 07, 2022 | Feb. 11, 2022 | Dec. 31, 2022 | Oct. 04, 2021 | |
Debt Instrument [Line Items] | ||||
Note purchase agreement, value | $ 300,000,000 | |||
Note purchase agreement, amount available for funding at the option of the Company and counterparty | $ 100,000,000 | |||
Debt instrument, term | 6 years | |||
Debt instrument, reference rate | 7.75% | |||
Debt instrument, interest rate floor | 8% | |||
Weighted average interest rate | 9.60% | |||
Milestone payment, percent of aggregate principal amount issued under the notes | 30% | |||
Milestone payment, period | 5 years | |||
Cumulative payments under note purchase agreement, including interest | $ 8,800,000 | |||
Note purchase agreement, percent of aggregate outstanding principal amount, cash balance required | 90% | 75% | ||
Note purchase agreement, deductible amount due to company | $ 100,000,000 | $ 100,000,000 | ||
Deposits | $ 25,000,000 | |||
London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 0.25% | |||
First Purchase Note | ||||
Debt Instrument [Line Items] | ||||
Note purchase agreement, value | $ 75,000,000 | |||
Second Purchase Note | ||||
Debt Instrument [Line Items] | ||||
Note purchase agreement, value | $ 75,000,000 | |||
Third Purchase Note | ||||
Debt Instrument [Line Items] | ||||
Note purchase agreement, value | $ 50,000,000 | |||
Note Purchase Agreement | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, redemption price, percentage of principal amount redeemed | 75% | |||
Note Purchase Agreement | Debt Instrument, Redemption, Period One | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, redemption price, percentage | 175% | |||
Note Purchase Agreement | Debt Instrument, Redemption, Period Two | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, redemption price, percentage | 185% | |||
Note Purchase Agreement | Debt Instrument, Redemption, Period Three | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, redemption price, percentage | 205% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 11 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | Feb. 07, 2022 | |
Lessee, Lease, Description [Line Items] | ||||
Purchase obligation | $ 42,800,000 | |||
Purchase obligation, to be paid within one year | 36,000,000 | |||
Purchase obligation, to be paid, over one to four years | 6,800,000 | |||
Lease term | 10 years | |||
Letter of credit outstanding | $ 700,000 | |||
Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | ||||
Lessee, Lease, Description [Line Items] | ||||
Maximum aggregate development and regulatory milestone payments | 0 | |||
Research and development expense | $ 1,700,000 | 2,200,000 | ||
Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | Orexia | ||||
Lessee, Lease, Description [Line Items] | ||||
Maximum aggregate development milestone payments | 43,700,000 | |||
Maximum aggregate commercial milestone payments | $ 42,000,000 | |||
Forecast | ||||
Lessee, Lease, Description [Line Items] | ||||
Rent expense | $ 1,600,000 | |||
Rent expense, year 10 | $ 1,900,000 |
Share-based Compensation - Addi
Share-based Compensation - Additional Information (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | 23 Months Ended | ||||
Jan. 01, 2022 | Jan. 29, 2021 shares | Dec. 31, 2022 USD ($) installment $ / shares shares | Dec. 31, 2022 USD ($) installment $ / shares shares | May 31, 2021 shares | Jan. 31, 2021 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares authorized for equity incentive plan (in shares) | 20,026,816 | |||||
Percent of additional shares authorized each year | 5% | |||||
Shares available for grant (in shares) | 6,010,683 | 6,010,683 | ||||
Weighted-average grant date fair value of options granted (in dollars per share) | $ / shares | $ 5.38 | |||||
Unrecognized compensation expense related to unvested stock option awards | $ | $ 46,700 | $ 46,700 | ||||
Share price (in dollars per share) | $ / shares | $ 3.10 | $ 3.10 | ||||
Aggregate intrinsic value of options | $ | $ 0 | $ 0 | ||||
Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 4 years | |||||
Contractual term | 10 years | |||||
Unrecognized compensation expense recognition period | 2 years 7 months 6 days | |||||
Restricted Stock Awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unrecognized compensation expense recognition period | 2 years 4 months 24 days | |||||
Share-based payment awards issued in period (in shares) | 379,905 | 383,523 | ||||
Restricted Stock Awards | Share-based Payment Arrangement, Employee | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based payment awards issued in period (in shares) | 833,897 | |||||
Restricted stock units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unrecognized compensation expense recognition period | 2 years | |||||
Granted (in dollars per share) | $ / shares | $ 5.17 | |||||
Number of installments | installment | 10 | 10 | ||||
Employee Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Common stock, shares reserved for future issuance (in shares) | 1,759,882 | 1,759,882 | 860,000 | |||
Share-based compensation, percentage of outstanding stock maximum | 1% | |||||
Multiplier for initial number of shares reserved | 2 |
Share-based Compensation - Summ
Share-based Compensation - Summary of Share-Based Compensation Expense (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Compensation expense recognized | $ 0 | $ 14,852 | $ 24,965 |
Research and development | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Compensation expense recognized | 0 | 5,896 | 11,954 |
General and administrative | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Compensation expense recognized | $ 0 | $ 8,956 | $ 13,011 |
Share-based Compensation - Su_2
Share-based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Number of Shares | ||
Beginning balance (in shares) | 11,730,382 | |
Granted (in shares) | 5,553,985 | |
Exercised (in shares) | (205,107) | |
Forfeited (in shares) | (2,390,264) | |
Ending balance (in shares) | 14,688,996 | 11,730,382 |
Exercisable at end of period (in shares) | 5,002,044 | |
Vested and expected to vest at end of period (in shares) | 14,688,996 | |
Weighted-Average Exercise Price Per Share | ||
Beginning balance (in dollars per share) | $ 8.07 | |
Granted (in dollars per share) | 8.02 | |
Exercised (in dollars per share) | 3.89 | |
Forfeited (in dollars per share) | 9.44 | |
Ending balance (in dollars per share) | 7.88 | $ 8.07 |
Exercisable at end of period (in dollars per share) | 7.79 | |
Vested and expected to vest as end of period (in dollars per share) | $ 7.88 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Options outstanding, weighted-average remaining contractual term | 8 years 6 months | 9 years 2 months 12 days |
Options exercisable, weighted-average remaining contractual term | 8 years 2 months 12 days | |
Options vested and expected to vest, weighted-average remaining contractual term | 8 years 6 months | |
Options outstanding, aggregate intrinsic value | $ 0 | |
Options exercisable, aggregate intrinsic value | 0 | |
Options vested and expected to vest, aggregate intrinsic value | $ 0 |
Share-based Compensation - Sche
Share-based Compensation - Schedule of Assumptions Used to Estimate Fair Value of Stock Option Awards (Details) - Stock options | 12 Months Ended |
Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 6 years 3 days |
Expected stock price volatility | 76.40% |
Risk-free interest rate | 2.20% |
Expected dividend yield | 0% |
Share-based Compensation - Su_3
Share-based Compensation - Summary of Replacement Equity Award Activity (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 $ / shares | |
Restricted Stock Awards | ||
Number of Shares | ||
Unvested beginning balance (in shares) | 982,944 | |
Granted (in shares) | 0 | |
Vested (in shares) | (383,523) | |
Forfeited (in shares) | 0 | |
Unvested ending balance (in shares) | 599,421 | |
Unrecognized compensation expense excluding options | $ | $ 10,221 | |
Unrecognized compensation expense recognition period | 2 years 4 months 24 days | |
Restricted stock units | ||
Number of Shares | ||
Unvested beginning balance (in shares) | 0 | |
Granted (in shares) | 2,458,950 | |
Vested (in shares) | (469,490) | |
Forfeited (in shares) | (184,700) | |
Unvested ending balance (in shares) | 1,804,760 | |
Unrecognized compensation expense excluding options | $ | $ 9,331 | |
Unrecognized compensation expense recognition period | 2 years | |
Weighted-Average Grant Date Fair Value Per Share | ||
Unvested beginning balance (in dollars per share) | $ / shares | ||
Granted (in dollars per share) | $ / shares | 5.17 | |
Unvested ending balance (in dollars per share) | $ / shares |
Related Party Transactions - Su
Related Party Transactions - Summary of Related Party Transaction (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | |
Master Service Agreements | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Expenses from transactions with related party | $ 418 | $ 7,148 | $ 7,373 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) $ in Millions | 11 Months Ended |
Dec. 31, 2021 USD ($) | |
Investor | |
Related Party Transaction [Line Items] | |
Payments to shareholders as reimbursement | $ 1.4 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets | ||
Tax loss carryforwards | $ 73,097 | $ 32,983 |
Capitalized research and development | 15,624 | 8,734 |
Research and development credits | 7,174 | 6,967 |
Other | 1,467 | 1,016 |
Total deferred tax assets | 97,362 | 49,700 |
Valuation allowance | (93,850) | (49,045) |
Deferred tax assets, net of allowance | $ 3,512 | $ 655 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 11 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Dec. 31, 2022 | |
Operating Loss Carryforwards [Line Items] | ||
Valuation allowance increase | $ 30.5 | $ 44.8 |
Research Tax Credit Carryforward | ||
Operating Loss Carryforwards [Line Items] | ||
Tax credit carryforwards | 7.2 | |
Domestic Tax Authority | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards, subject to expiration | 3.2 | |
State and Local Jurisdiction | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards, subject to expiration | $ 41.3 |
Income Taxes - Components of In
Income Taxes - Components of Income (Loss) before Income Tax (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Jan. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||
UK | $ (331,423) | $ (173,476) | |
Non-UK | (49,534) | (43,478) | |
Loss before income taxes | $ (829) | $ (380,957) | $ (216,954) |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Income Tax Provision (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended | |
Jan. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Federal | ||||
Current | $ 1,575 | $ 581 | ||
Deferred | (2,464) | (495) | ||
State | ||||
Current | 534 | 188 | ||
Deferred | (392) | (160) | ||
Foreign | ||||
Current | 0 | 0 | ||
Deferred | 0 | 0 | ||
Income tax (benefit) expense | $ 0 | $ 114 | $ (747) | $ 114 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) | 11 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Statutory tax rate benefit | 19% | 19% |
Non-deductible write-off of in-process R&D | (11.00%) | 0% |
Other non-deductible expenses | (2.00%) | (3.00%) |
Enhanced research and development expenses | 3% | 7% |
Losses surrendered for tax incentive | (5.00%) | (7.00%) |
Non-taxable research and development incentive | 2% | 1% |
Research & development tax credits | 0% | 1% |
Change in tax rate | 1% | 2% |
Effect of overseas tax rates | 1% | 3% |
Change in valuation allowance | (8.00%) | (23.00%) |
Effective income tax rate | 0% | 0% |
Income Taxes - Summary of Opera
Income Taxes - Summary of Operating Loss Carryforwards and Research Tax Credits (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
UK | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards and research tax credits | $ 225,662 | $ 82,156 |
US | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards and research tax credits | 48,523 | 34,059 |
France | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards and research tax credits | 25,474 | 19,710 |
Germany | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards and research tax credits | $ 0 | $ 11,062 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Millions | Mar. 30, 2023 | Jan. 27, 2023 |
Subsequent Event | At-the-market | ||
Subsequent Event [Line Items] | ||
Sale of stock, maximum consideration receivable | $ 350 | $ 125 |