On November 10, 2022 Celularity Inc. (Nasdaq: CELU) (Celularity), a clinical-stage biotechnology company developing placental-derived allogeneic cell therapies and biomaterial products, reported financial results for the quarter ended September 30, 2022, and provided a corporate update (Press release, Celularity, NOV 10, 2022, View Source,%240.40%20per%20share%20(diluted). [SID1234623823]).
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"We are excited about the progress we have made throughout the third quarter, including treating the first patient in our Phase 1/2a clinical trial of CYNK-101 in patients with G/GEJ cancer," said Robert J. Hariri, M.D., Ph.D., Founder, Chair and Chief Executive Officer of Celularity. "Our proprietary placental-derived cell therapy platform is a potent innovation engine that drives our discovery and clinical programs, as well as our commercial biomaterials products. As we work to fulfill our mission to positively impact patients’ lives with placental-derived therapeutic solutions, we have strengthened our leadership team, including the appointment of Dr. Adrian Kilcoyne as Celularity’s Chief Medical Officer and the creation of a new Executive Committee. We look forward to upcoming preliminary data readouts across our pipeline in the fourth quarter of 2022 that we believe will support the clinical rationale for placental-derived cell therapies."
Third Quarter Clinical and Regulatory Highlights
CYNK-001 for the Treatment of Acute Myeloid Leukemia (AML) and Glioblastoma Multiforme (GBM):
CYNK-001 is Celularity’s unmodified cryopreserved human placental hematopoietic stem cell-derived natural killer (NK) cell therapy candidate that is enriched with CD56+/CD3- NK cells and expanded from human placental CD34+ cells. CYNK-001 is currently being investigated in a Phase 1 clinical trial in AML and a Phase 1/2a clinical trial in GBM, with preliminary data readouts In AML expected in December 2022.
Celularity continues to enroll new cohorts in both the minimal residual disease (MRD) and relapsed/refractory (R/R) arms of the Phase 1 AML trial with protocol adjustments communicated in December 2021, including a fourth dose on day 21 that increases in the overall dosage of NK cells.
CYNK-101 for the Treatment of G/GEJ Cancers:
CYNK-101 is a novel allogeneic off-the-shelf human placental CD34+-derived NK cell product candidate that is genetically modified to express high-affinity and cleavage-resistant CD16 (FCGRIIIA) variant to drive antibody-dependent cell-mediated cytotoxicity
Earlier this year, the U.S. Food and Drug Administration (FDA) granted both a Fast Track Designation and an Orphan Drug Designation to CYNK-101 for the treatment of G/GEJ cancers.
In July 2022, Celularity announced that the first patient had been treated with CYNK-101 in the Phase 1 portion of the Phase 1/2a clinical trial in advanced HER2 positive G/GEJ cancers G/GEJ cancers.
A poster presentation of the preclinical data supporting the scientific rationale of CYNK-101 will be presented at the 37th Annual Meeting of the SITC (Free SITC Whitepaper) on November 10 at 6:30 p.m. EST(Abstract #270).
CYCART-19 for the Treatment of B-Cell Malignancies:
CYCART-19 is an allogeneic Chimeric Antigen Receptor (CAR) engineered human placental-derived T cell that is a potential drug candidate in B-cell malignancies.
Celularity submitted an investigational new drug application (IND) for CYCART-19 in the first quarter of 2022, and in May 2022, the FDA requested additional information before Celularity can proceed with the planned first-in-human Phase 1/2 clinical trial of CYCART-19. Celularity is in the process of working with the FDA to resolve the agency’s questions as promptly as possible and, if the IND is cleared, aims to commence a Phase 1/2 clinical trial of CYCART-19 in B-cell malignancies in 2023.
Third Quarter 2022 Corporate Highlights
In September, Celularity entered into a $150 million financing agreement with YA II PN, Ltd (Yorkville) under which Celularity received an initial $39.2 million cash advance. Yorkville may convert pre-paid advances (along with accrued interest) into shares of Celularity’s Class A common stock at its discretion from time to time at discount to market (subject to a floor), or Celularity could be required to repay such advances in cash, subject to certain conditions. Celularity may request up to the remaining balance of the $150 million commitment over the next 18 months from time to time as mutually agreed by the parties.
In September, Celularity also initiated a $150 million ATM facility with three sales agents under which Celularity may sell shares of its Class A common stock from time to time directly into the market at prevailing market prices. The timing of any sales related to the ATM will depend on a variety of factors.
In October, Celularity appointed industry veteran, Adrian Kilcoyne, M.D., M.P.H., M.B.A., as Chief Medical Officer to lead the development of clinical programs. Dr. Kilcoyne brings over 15 years of clinical experience to bear on the task of advancing Celularity’s clinical pipeline toward FDA approval.
In October, Celularity broadened its management capabilities by promoting two senior executives to new roles. John R. Haines was named Senior Executive Vice President, General Manager and Chief Administrative Officer, having served previously as Chief Operating Officer. Brad Glover, Ph.D., was named Executive Vice President and Chief Operating Officer, having served previously as Executive Vice President and Chief Technical Officer. Both Mr. Haines and Dr. Glover will serve on a newly formed Executive Committee under Robert J. Hariri, M.D., Ph.D., Celularity’s Chair, Chief Executive Officer and Founder.
Third Quarter and Year to Date 2022 Financial Results
Cash and Cash Equivalents
Cash and cash equivalents were $42.6 million as of September 30, 2022, compared to $37.2 million as of December 31, 2021. In September 2022, Celularity received cash proceeds net of discount of approximately $39.2 million as a pre-paid advance from Yorkville. Also in September 2022, Celularity received net proceeds of $4.1 million from the sale of 1,817,830 shares of its Class A common stock pursuant to the ATM program.
Net revenues
Net revenues for the three months ended September 30, 2022, decreased by approximately $6.5 million compared to the prior year period. The decrease was primarily due to a decrease in license, royalty, and other revenues as the prior year period included recognition of $6.8 million of previously deferred revenue as a result of the termination of a license agreement.
Net revenues for the nine months ended September 30, 2022, decreased by approximately $2.6 million, compared to the prior year period. The decrease was primarily due to a decrease in license, royalty, and other revenues as the prior year period included recognition of $6.8 million of previously deferred revenue as a result of the termination of a license agreement partially offset by increased product sales to distribution partners.
Research and Development
Research and development expenses for the three months ended September 30, 2022, decreased by approximately $3.4 million compared to the prior year period. The decrease was primarily due to a reduction in allocated costs.
Research and development expenses for the nine months ended September 30, 2022, increased by approximately $3.7 million, compared to the prior year period. The increase was primarily due to higher personnel costs, technology platform fees, clinical trial costs, and laboratory supplies to support cell therapy process development offset by a reduction in allocated costs.
Selling, General and Administrative
Selling, general and administrative expenses for the three months ended September 30, 2022, decreased by approximately $6.7 million compared to the prior year period. The decrease was primarily due to a legal settlement in the prior year period.
Selling, general and administrative expenses for the nine months ended September 30, 2022, decreased by approximately $11.2 million compared to the prior year period. The decrease was primarily due to a reduction in stock-based compensation expense of $27.8 million related to prior year awards granted to its board of directors and senior management, a portion of which was allocated to research and development expense, a prior year period charge related to a legal settlement offset by higher personnel, professional services, and insurance costs to support operations of a public company.
Net Income (Loss)
Net income for the three months ended September 30, 2022, was $4.8 million, or $0.03 per share (basic and diluted). Net income for the three months ended September 30, 2021, was $49.9 million, or $0.47 per share (basic) and $0.40 per share (diluted). The decrease in net income was primarily related to changes in the fair value of the warrant liabilities and contingent consideration liability.
Net loss for the nine months ended September 30, 2022, was $10.2 million, or ($0.07) per share (basic and diluted). Net loss for the nine months ended September 30, 2021, was $96.1 million, or $(2.00) per share (basic and diluted). The decrease in net loss was primarily related to gain recognized from the change in the fair value of the warrant liabilities and contingent consideration liability.