Orchard Therapeutics : Annual Report and Accounts for Year Ended 31 December 2022

Orchard Therapeutics plc

Annual Report and Financial Statements for the Year Ended 31 December 2022

Registered Number: 11494381

UK FINANCIAL DOCUMENTS

INTRODUCTION AND CONTENTS

Orchard Therapeutics plc (the "Company" or the "Parent Company") is a public limited company incorporated under the laws of England and Wales and is listed on the Nasdaq Global Select Market. This section therefore covers the requirements for being a quoted company under the UK Companies Act 2006, as follows:

		Page
•	Company Information	2
•	Independent auditors' reports to the members of Orchard Therapeutics plc	3
•	Statement of Directors' Responsibilities in Respect of the Financial Statements	15
• UK Statutory Strategic Report	17
• UK Statutory Directors' Report	66
•	Directors' Remuneration Report	71
• Orchard Therapeutics plc Consolidated Financial Statements	101
• Orchard Therapeutics plc Parent Company Financial Statements	163

Orchard Therapeutics plc 1

COMPANY INFORMATION

Directors	James Geraghty, Chair of the Board of Directors
	Steven Altschuler
	Joanne Beck
	John Curnutte
	Marc Dunoyer
	Hubert Gaspar
	Charles Rowland
	Alicia Secor
Secretary	Christopher York
Registered Office	245 Hammersmith Road
	3rd Floor
	London
	United Kingdom
Company Number	11494381
Independent Auditors	PricewaterhouseCoopers LLP
	40 Clarendon Road
	Watford WD17 1JJ
	United Kingdom

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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ORCHARD THERAPEUTICS PLC

Report on the audit of the group financial statements

Opinion

In our opinion, Orchard Therapeutics plc's group financial statements:

• give a true and fair view of the state of the group's affairs as at 31 December 2022 and of its loss and cash flows for the year then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Financial Statements (the "Annual Report"), which comprise: the Consolidated Statement of Financial Position as at 31 December 2022; the Consolidated Statement of Profit or Loss, the Consolidated Statement of Comprehensive Loss, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC's Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Our audit approach

Overview

Audit scope

• Of the group's nine components, we identified three which, in our view, required an audit of their complete financial information, either due to their size or their risk characteristics. In addition to the full scope audits, specific audit procedures were performed on selected consolidation adjustments made in relation to individually significant balances. This, together with additional procedures performed at group level, gave us the evidence we needed.

Key audit matters

• Expenses, accruals and prepayments for clinical research arrangements

Materiality

• Overall materiality: $8,096,000 (2021: $7,250,000) based on 5% of loss before taxation.
• Performance materiality: $6,072,000 (2021: $8,000,000).

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.

Orchard Therapeutics plc 3

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ORCHARD THERAPEUTICS PLC

continued

Key audit matters

Key audit matters are those matters that, in the auditors' professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

This is not a complete list of all risks identified by our audit.

Expenses, accruals and prepayments for clinical research arrangements is a new key audit matter this year. Orchard Therapeutics (Europe) Limited Research & Development Tax Credit Receivable, which was a key audit matter last year, is no longer included because of the value of the balance has reduced significantly in the year such that the tax credit receivable and profit and loss account credit is no longer material to the financial statements.

Key audit matter	How our audit addressed the key audit matter
Expenses, accruals and prepayments for clinical
research arrangements
As described in notes 1 and 2 to the consolidated	We have performed the following procedures to
financial statements, the Group has entered into	gain comfort over management's estimate for the
various research and development contracts with	expenses, accruals and prepayments for clinical
clinical research organisations (CROs) and clinical	research arrangements:
manufacturing organisations (CMOs). When billing	- Reviewed contracts with CROs and CMOs to
terms under these contracts do not coincide with
	understand the arrangements and key terms.
the timing of when the work is performed,
- Recalculated the expense to be recognised for
management is first required to make estimates of
the expense to be recognised in respect of the		a sample of contracts in the year based on
contracts such that the expense reflects the		contractual terms, third party evidence and in
pattern of work performed. Subsequently,		some cases, third party confirmation with the
management is required to calculate the		CRO.
associated accrual or prepayment balance for	-	Tested a sample of invoices received in the
each contract, based on the difference between
	year from CROs/CMOs for accuracy, and that
the cumulative amount expensed under the
	they	have	been	correctly	applied to the
contract to date and the cumulative amount
	appropriate	CRO/CMO	in	management's
invoiced to date. Given the difficult in estimating
	accounting model.
the stage of completion of a clinical trial, or with
- Recalculated the prepayment/accrual based
obtaining the required information from the
CRO/CMO, this is considered an area of		on the difference between cumulative expense
estimation uncertainty. The prepayment recorded		and cumulative invoicing, and reconciled this
for these arrangements as at 31 December 2022		to management's workings.
is not material at just $881k, however the accrual	-	Tested the completeness of costs recognised
amounts to $11.2m, with the relevant expense
	through contract reviews, review of publicly
classified within "Research and development
	available information such as press releases
expenses" in the Consolidated Statement of Profit
	and	discussions	with	clinical personnel
or Loss..
	regarding the progress	towards meeting

contractual milestones which could trigger additional expense to be recognised.

No exceptions were noted from our procedures performed over the expenses, accruals and prepayments for clinical research arrangements.

4 Orchard Therapeutics plc