CELU 10-K & 10-Q changes, risk factors and insider trading
Celularity Inc · Nasdaq · Pharmaceutical Preparations · CIK 1752828 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risks Related to Our Reliance on Third Parties”
New heading “Risks Related to Government Regulation”
New heading “Risks Related to Our Intellectual Property”
New heading “Risks Related to Ownership of Our Class A Common Stock”
New heading “Risks Related to Business and Industry”
New heading “We have minimal cash on hand, and we do not generate sufficient cash from operations to operate our business for the next twelve months. We need to raise additional cash through equity or debt sales to provide cash to continue operations. If we are not successful raising cash we will not be able to continue as a going concern.”
New heading “We have incurred net losses in every period since our inception, and anticipate that we will incur substantial net losses in the future. Our historical operating results indicate substantial doubt exists related to our ability to continue as a going concern. In the first quarter of 2026 we reduced headcount and salaries to restructure our business in order to conserve cash and focus on our core sales strategies.”
Removed heading “We have incurred net losses in every period since our inception, have no cellular therapeutics approved for commercial sale and anticipate that we will incur substantial net losses in the future.”
Removed heading “Our historical operating results indicate substantial doubt exists related to our ability to continue as a going concern.”
Removed heading “The gene-editing technology we use is relatively new, and if we are unable to use this technology in our intended therapeutic candidates, our revenue opportunities will be materially limited.”
Removed heading “We may experience difficulties in managing the growth of our business.”
Removed heading “We have substantial indebtedness, which is secured by all of our assets. Payments on our outstanding debt and debt maturities could impact our liquidity, require us to modify our operations to meet any payment obligations and could force us to seek protection under the provisions of the U.S. Bankruptcy Code.”
Removed heading “We have material weaknesses in our internal control over financial reporting, which could adversely affect our business, financial condition and operating results.”
Largest changes
“We previously disclosed material weaknesses in our internal control over financial reporting. Specifically, we have insufficient resources with the appropriate knowledge and expertise to design, implement, and operate effective internal controls over our financial reporting process that contributed to other material weaknesses within our system of internal control over financial reporting at the control activity level. …”see in full comparison
“We have substantial indebtedness, which is secured by all of our assets. Payments on our outstanding debt and debt maturities could impact our liquidity, require us to modify our operations to meet any payment obligations and could force us to seek protection under the provisions of the U.S. Bankruptcy Code.”see in full comparison
“We have incurred net losses in every period since our inception, and anticipate that we will incur substantial net losses in the future. Our historical operating results indicate substantial doubt exists related to our ability to continue as a going concern. In the first quarter of 2026 we reduced headcount and salaries to restructure our business in order to conserve cash and focus on our core sales strategies.”see in full comparison
“We have minimal cash on hand, and we do not generate sufficient cash from operations to operate our business for the next twelve months. We need to raise additional cash through equity or debt sales to provide cash to continue operations. If we are not successful raising cash we will not be able to continue as a going concern.”see in full comparison
“If we are unable to obtain sufficient additional capital, we may be required to significantly curtail or suspend our operations, further reduce workforce and operating expenses, delay or terminate development or commercialization efforts, sell assets, seek strategic alternatives, or pursue protection under the U.S. Bankruptcy Code. Any of these outcomes would materially and adversely affect our business, financial condition, results of operations, and stockholder value, and could result in our inability to continue as a going concern.”see in full comparison
“We have material weaknesses in our internal control over financial reporting, which could adversely affect our business, financial condition and operating results.”see in full comparison
Full comparison: every changed paragraph (113)
You should carefully consider the following risk factors, as well as the other information in this annual report on Form 10-K, and in our other public filings. The occurrence of any of these risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. You should consider all of the risk factors described in our public filings when evaluating our business. Our business is subject to significant risks and uncertainties that make an investment in us speculative and risky. Below we summarize what we believe are the principal risk factors, but these risks are not the only ones we face, and you should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors,” together with the other information included in this Form 10-K. If any of the following risks occurs (or if any of those listed elsewhere in this prospectus occur), our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business.
Risks Related to Our Reliance on Third Parties
Risks Related to Government Regulation
Risks Related to Our Intellectual Property
Risks Related to Ownership of Our Class A Common Stock
Risks Related to Business and Industry
We have minimal cash on hand, and we do not generate sufficient cash from operations to operate our business for the next twelve months. We need to raise additional cash through equity or debt sales to provide cash to continue operations. If we are not successful raising cash we will not be able to continue as a going concern.
As of December 31, 2025, we had limited cash and cash equivalents and continue to incur significant operating losses and negative operating cash flows. Our current revenues, which are primarily derived from our biomaterials and biobanking businesses, are not sufficient to fund our operating expenses, debt service obligations, and working capital needs for the next twelve months. As a result, we expect to require additional capital to continue operations, fund planned activities, and meet our obligations as they become due.
Our ability to continue as a going concern is dependent on our ability to raise additional capital in the near term through equity financings, debt financings, strategic transactions, asset sales, licensing arrangements, or other sources of financing. There can be no assurance that such financing will be available when needed or on terms acceptable to us, if at all. Market conditions, our stock price, existing debt obligations, operating performance, and broader macroeconomic factors may further limit our ability to access capital.
If we are unable to obtain sufficient additional capital, we may be required to significantly curtail or suspend our operations, further reduce workforce and operating expenses, delay or terminate development or commercialization efforts, sell assets, seek strategic alternatives, or pursue protection under the U.S. Bankruptcy Code. Any of these outcomes would materially and adversely affect our business, financial condition, results of operations, and stockholder value, and could result in our inability to continue as a going concern.
We have incurred net losses in every period since our inception, and anticipate that we will incur substantial net losses in the future. Our historical operating results indicate substantial doubt exists related to our ability to continue as a going concern. In the first quarter of 2026 we reduced headcount and salaries to restructure our business in order to conserve cash and focus on our core sales strategies.
We have incurred net losses in every period
since our inception, have no cellular therapeutics approved for commercial sale and anticipate that we will incur substantial net losses
in the future.
We are a clinical-stage biopharmaceutical
company, have no cellular therapeutics approved for commercial sale, have not generated any revenue from cellular therapeutic sales to
date, and will continue to incur research and development and other expenses related to our ongoing operations. Investment in
biopharmaceutical biopharmaceutical
product development is highly speculative because it entails substantial upfront expenditure and significant risk
that any potential therapeutic
candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory
approval and become commercially
viable. As a result, we are not profitable and have incurred net losses in each period since our
inception. We reported a net loss of
$57.9 million and $196.3$91.7 million for the yearsyear ended
December 31, 20242025 and 2023, respectively. Wewe had an accumulated deficit of $899.7
million$991.5 atmillion, December 31, 2024 and $0.7 million ofour cash
and cash equivalents were $6.2 million at suchDecember 31, 2025, which is less than will be required to fund operations for a period of 12 months beyond the issuance date.
Even after significant reductions
in headcount in 2023, our strategic review to refocus our pipeline, and capital raises in 2024, weWe expect to incur significant expenditures
for the
foreseeable future, and we expect these expenditures to increase as we continue production of our commercial products that have
seen strong demand.future. We will continue to incur research and development and other expenditures to develop and market therapeutic candidates.may
We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The
The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue from
from our current and future biomaterial products. Our prior losses and expected future losses have had and will continue to have an adverse
effect on our stockholders’ equity and working capital.
Our historical operating results indicate
substantial doubt exists related to our ability to continue as a going concern.
We have incurred net losses
and used significant cash in operating activities since inception, have no cellular therapeutic candidates approved for commercial sale
and we anticipate that we will incur substantial net losses in the future. We had an accumulated deficit of $899.7 million and have cash
and cash equivalents of $0.7 million as of December 31, 2024, and as of the date of this filing, had no available additional sources of
outside capital to sustain our operations for a period of six months beyond the issuance date. Accordingly, there is substantial doubt about
about our ability to continue as a going concern, which may affect our ability to obtain future financing and may require us to further curtail
curtail our operations and our independent registered public accounting firm included in its opinion for the year ended December 31, 2024
an explanatory paragraph referring to our recurring losses, and net cash outflows from operations and outstanding debt and expressing
substantial doubt in our ability to continue as a going concern without additional capital becoming available. For additional details,
see the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations –
Overview - Going Concern.”operations. We will need to raise additional capital to support our operations. This additional funding may not
be available on acceptable
terms or at all. Failure to obtain this necessary capital or address our liquidity needs may force us to delay,
limit or terminate our
operations, make further reductions in our workforce, discontinue our commercialization efforts for our biomaterials
products as well
as other clinical trial programs, liquidate all or a portion of our assets or pursue other strategic alternatives, and/or
seek protection
under the provisions of the U.S. Bankruptcy Code.
As of December 31, 2024 and
2023, we had $0.7 million and $0.2 million in cash and cash equivalents, respectively. We will need to raise additional capital to implement
our plans. Further, changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may
need to spend more money than currently expected because of circumstances beyond our control. We may also need to raise a large amount
of capital sooner than currently anticipated if we choose to expand more rapidly than our present plans. In any event, we will require
additional capital for the further development and commercialization of our therapeutic candidates, including funding our internal manufacturing
capabilities and growth of our degenerative disease business.
We cannot be certain that
additional funding will be available on acceptable terms, or at all. We have no committed source of additional capital and if we are unable
to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue
the development or commercialization of our therapeutic candidates or other research and development initiatives. We could be required
to seek collaborators for our therapeutic candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable
than might otherwise be available or relinquish or license on unfavorable terms our rights to our therapeutic candidates in markets where
we otherwise would seek to pursue development or commercialization ourselves. Any of the above events could significantly harm our business,
prospects, financial condition and results of operations and cause the price of our securities to decline.
Due to the significant resources required for
the development of our product candidates, we must focus on specific treatment pathways and decide which product candidates to pursue
and the amount of resources to allocate to each such product candidate. Specifically, we are focused on the development of cellular therapeutic
candidates, targeting indications across cancer, infectious and degenerative diseases.candidates. Our decisions concerning the allocation of research,
development, collaboration, management and financial resources toward particular product candidatesproducts may not lead to the development
of of
any viable product and may divert resources away from better opportunities. Similarly, any decision to delay, terminate or collaborate
with third parties in respect of certain programs may subsequently also prove to be suboptimal and could cause us to miss valuable opportunities.
If we make incorrect determinations regarding the viability or market potential of any of our programs or product candidates or misinterpret
trends in the pharmaceutical, biopharmaceutical or biotechnology industry, our business, financial condition and results of operations
could be materially adversely affected. As a result, we may fail to capitalize on viable commercial products or profitable market opportunities,
be required to forego or delay pursuit of opportunities with other product candidates that may later prove to have greater commercial
potential than those we choose to pursue, or relinquish valuable rights to such product candidates through collaboration, licensing or
other royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain development
and commercialization rights.
Our placental-derived cellular therapy candidates
candidates represent a novel approach to cancer, infectious and degenerative disease treatments that creates significant challenges.
The
gene-editing technology we use is relatively new, and if we are unable to use this technology in our intended therapeutic candidates,
our revenue opportunities will be materially limited.
We
use gene editing techniques to modify certain of the placental-derived cell types. We use these technologies to either reduce the risk
of toxicity or improve the potential for efficacy. These technologies are relatively new and may not be shown to be effective at achieving
the expected effect in clinical studies, or may be associated with safety issues, either in our clinical development programs or those
of others using these novel technologies. Any issues with the novel gene editing technologies, even if not experienced by us, could negatively
affect our development programs. Genetic modifications may create unintended changes to the DNA of the edited cell, such as a non-target
site gene-editing, a large deletion, or a DNA translocation, any of which could lead to unwanted side-effects. The gene-editing of our
therapeutic candidates may also not be successful in limiting the risk of GvHD or thrombosis or in increasing affinity.
Some
competitors in the allogeneic cell therapy space and more broadly in the gene therapy space have had clinical trials put on hold by the
FDA. Based on findings in those clinical trials, the FDA may request additional testing, request different types of testing or even substantially
revise the methodology used to evaluate clinical trials for other companies pursuing similar therapeutic avenues. We cannot control the
actions of our competitors, cannot influence the results of their clinical trials and cannot know how FDA may react to a specific fact
pattern arising in another clinical trial. Additional testing, different types of testing or a revised regulatory approach may delay
our future clinical trials, increase costs in our future trials or otherwise preclude our trial from being given permission to proceed
absent substantial time, effort and resources on our part.
The
gene-editing industry is rapidly developing, and our competitors may introduce new technologies that render the technologies that we
employ for our therapeutic candidates obsolete or less attractive. New technology could emerge at any point in the development cycle
of our therapeutic candidates. As competitors use or develop new technologies, any failures of such technology could adversely impact
our programs. We also may be placed at a competitive disadvantage, and competitive pressures may force us to implement new technologies
at a substantial cost. In addition, our competitors may have greater financial, technical and personnel resources that allow them to
enjoy technological advantages and may in the future allow them to implement new technologies before we can. We cannot be certain that
we will be able to implement technologies on a timely basis or at an acceptable cost. If we are unable to maintain technological advancements
consistent with industry standards, our operations and financial condition may be adversely affected.
We
will may rely on licensed gene editing technology
for future cell therapy product candidates.
We
aremay be dependent on patents, know-how and proprietary
technology, both our own and licensed from others.
We
will be concentrating our research, development
and manufacturing efforts on our placental-derived allogeneic T cell, NK cell and MLASC
therapeutic candidates. We have developed our
Celularity IMPACT platform, which covers biosourcing through manufacturing of cryopacked
cells, and continues to invest in optimizing
and improving our technologies. There can be no assurance that any development problems
we experience in the future will not cause significant
delays or unanticipated costs, or that such development problems can be overcome.
We may also experience delays in scaling our manufacturing
process when appropriate for commercialization, which may prevent us from
completing future clinical studies or commercializing our therapeutics
on a timely or profitable basis, if at all. Finding a suitable
dose for our cell therapeutic candidates may delay our anticipated clinical
development timelines. In addition, our expectations with
regard toabout our scalability and costs of manufacturing may vary significantly
as we develop our therapeutic candidates and understand these
critical factors.
The
clinical study requirements of the FDA, European
Medicines Agency, and other regulatory agencies and the criteria these regulators use
to determine the safety and efficacy of a therapeutic
candidate are determined according to the type, complexity, novelty and intended
use and market of the potential therapeutics. The regulatory
approval process for novel therapeutics candidates such as ours can be more
complex and consequently more expensive and take longer than
for other, better known or extensively studied pharmaceutical or other therapeutic
candidates. In addition, under guidelines issued by
the National Institutes of Health, or NIH, gene therapy clinical trials are also subject
subject to review and oversight by an institutional biosafety committee,committees, or IBC, a local institutional
committee that reviews and oversees
research utilizing recombinant or synthetic nucleic acid molecules at that institution. Before a clinical
trial can begin at any institution,
that institution’s institutional review board, or IRB,
and its IBC assesses the safety of the research and identifies any potential
risk to public health or the environment. While the NIH guidelines
are not mandatory unless the research in question is being conducted
at or sponsored by institutions receiving NIH funding of recombinant
or synthetic nucleic acid molecule research, many companies and
other institutions not otherwise subject to the NIH guidelines voluntarily
follow them.
Undesirable
or unacceptable side effects caused
by our therapeutic candidates could cause us or regulatory authorities to interrupt, delay or halt
clinical trials and could result in
a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable
foreign regulatory authorities.
Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects
or unexpected characteristics.
Autologous cell therapies that approved for, or under development by other companies, have shown frequent
rates of CRS and neurotoxicity,
and adverse events have resulted in the death of patients. Our potential future therapeutic candidates
may undergo genetic engineering.
As these are novel technologies, errors may occur or may not present until used in humans in the clinic,
clinic and could cause adverse events.
While we believe that placental-derived cells have an inherent safety profile that may limit adverse
events, there can be no assurance
that this is the case as these are novel therapeutics.
As
we continue to evolve our
placental-derived therapeutic programs, we may need to halt or modify development of certain candidates as
a resultbecause of adverse events.
For example, in designing APPL-001, we made certain modifications and adjustments, including a genetic modification
due to an
increased risk of thrombosis observed in a Phase 1 clinical trial of a legacy placental-derived MLASC done at Celgene Cellular
Therapeutics. The APPL-001 program has since been discontinued.
In
any of our planned clinical trials, patients
may experience severe adverse events related to our allogeneic cell therapeutic candidates,
some of which may result in death. If unacceptable
toxicities arise in the development of our therapeutic candidates, we could suspend
or terminate our trials or the FDAFDA, or comparable foreign
regulatory authorities could order us to cease clinical trials or deny approval
of our therapeutic candidates for any or all targeted
indications. The data safety monitoring board may also suspend or terminate a clinical
trial at any time on various grounds, including
a finding that the research patients are being exposed to an unacceptable health risk,
including risks inferred from other unrelated immunotherapy
trials. Treatment-related side effects could also affect patient recruitment
or the ability of enrolled subjects to complete the trial
or result in potential product liability claims. In addition, these side effects
may not be appropriately recognized or managed by the treating medical staff, as toxicities resulting from cell therapy are not normally
encountered in the general patient population and by
medical personnel. Any of these occurrences may harm our business, financial condition
and prospects significantly.
Initial,
interim and preliminary data from
any clinical trials that we announce or publish from time to time may change as more patient data become
becomes available and are subject to
audit and verification procedures that could result in material changes in the final data.
Future
pandemics may increase the risk of certain
of the events described above and delay our development timelines. For example, in early 2020
and again in mid-2021, we experienced delays
in enrolling our Phase 1 clinical trial of CYNK-001 for acute myeloid leukemia, or AML,
as a resultbecause of the COVID-19 pandemic. We have
since discontinued development of CYNK-001 for AML and are only evaluating it in senolytic/senoablation
for age-related conditions while
we seek a collaboration partner. Any inability to successfully complete preclinical and clinical development
could result in additional
costs to us or impair our ability to generate revenue. In addition, if we make manufacturing or formulation
changes to our therapeutic
candidates, we may be required to, or we may elect to conduct additional studies to bridge our modified candidates
to earlier versions
or may need to conduct additional studies on newly discovered candidates. Clinical study delays could also shorten
any periods during
which our therapeutics have patent protection and may allow our competitors to bring cell therapies to market before
we do, which could
impair our ability to successfully commercialize our therapeutic candidates and may harm our business and results
of operations.
In
NovemberWe 2022continue andto January 2023, we implementedimplement reductions-in-force
that affectedaffect asignificant majorityareas of our workforce, and in the fourth quarter
of 2023, we refocused our cellular therapeutics pipelineworkforce to align with theour results of clinical trialsdevelopment and ongoingcommercial evaluations of our
developmentsales plans. While these measures were are
intended to optimize resources and address our evolving operational needs, they have also
resulted in significant organizational changes andbut could have unintended adverse consequences.
If we need to replace personnel with new qualified individuals we may incur additional costs.
Notably,
we have experienced attrition beyond the intended reductions-in-force, including the departure of key personnel in administrative functions
such as finance and legal. This loss of critical expertise has created challenges in maintaining operational continuity, meeting regulatory
and financial reporting requirements, and supporting our strategic objectives. Replacing these personnel with qualified individuals may
be difficult and could require additional and unanticipated costs.
Any of these consequences could materially and adversely affect our business, financial condition, and results of operations.
The
departure of several executive officers and other key personnel has further compounded these risks, potentially impairing our ability
to execute our business plan, comply with regulatory requirements, and manage our financial and operational risks effectively. Any of
these consequences could materially and adversely affect our business, financial condition, and results of operations.
We
have a purpose-built facility located in Florham
Park, New Jersey, where we process healthy full-term donor placentas for use in cell
therapy and tissue products and operate our biobanking
business. While we have experience managing the process for our research and early
stageearly-stage clinical trial needs, we may not be able to mass-produce
off-the-shelf placental-derived allogeneic cellular therapeutics to satisfy
demands for any of our therapeutic candidates as we expand
into later stage clinical trials, or for commercial production post-approval.
While we believe the manufacturing and processing approaches
are appropriate to support our current needs and that we have a scalable
process, we cannot be sure that our scaled process will result
in allogeneic cells that will be safe and effective. Further, our manufacturing
and storage facility, including for our biobanking and
degenerative disease businesses, must comply with current good manufacturing practices,
or cGMP, which includes, as applicable, the FDA’s
current good tissue practices, or GTPs, for the use of human cellular and tissue
products. Accordingly, we are subject to ongoing periodic
unannounced inspection by the FDA and other governmental agencies to ensure
strict compliance with cGMP, including GTPs as applicable,
and other government regulations. For example, in August 2023, the FDA conducted
an inspection at our Florham Park, New Jersey manufacturing
facility. The FDA issued a Form FDA 483, which is a list of inspectional
observations provided at the conclusion of the inspection, relating
to our Interfyl and CentaFlex human tissue-based biomaterial products.
We provided detailed written responses to the FDA and took actions
in response to the FDA’s observations. As of February 2025,
FDA has taken no further action in connection with this inspection.
The
manufacture of biopharmaceutical products
is complex and requires significant expertise, including the development of advanced manufacturing
techniques and process controls. Manufacturers
of cell therapy products often encounter difficulties in production, particularly in scaling
out and validating initial production and
ensuring the absence of contamination. These problems include difficulties with production
costs and yields, quality control, including
stability of the product, quality assurance testing, operator error, shortages of qualified
personnel, as well as compliance with strictly
enforced federal, state and foreign regulations. The application of new regulatory guidelines
or parameters, such as those related to
release testing, may also adversely affect our ability to manufacture our therapeutic candidates.
Furthermore, if contaminants are discovered
in our supply of therapeutic candidates or in the manufacturing facilities, such supplysupplies may
have to be discarded, and our manufacturing
facilities may need to be closed for an extended period of time to investigate and remedy
the contamination. We cannot assure any stability
or other issues relating to the manufacture of our therapeutic candidates will not
occur in the future.
We
currently have nolimited a cellular therapeutics
marketing sales force. If we are unable to establish future marketing and sales capabilities
or enter into agreements with third parties
to market and sell our therapeutic candidates once approved, we may not be able to generate
cell therapy product revenue.
The
biopharmaceutical industry is characterized
by intense competition and rapid innovation. Our competitors may be able to develop other
compounds, drugs or biomaterials that are able
to achieve similar or better results. Our potential competitors for our cellular therapeutics
and biomaterials include major multinational
pharmaceutical companies, established biotechnology companies, specialty pharmaceutical
companies and universities and other research
institutions. Many of our competitors have substantially greater financial, technical and
other resources, such as larger research and
development staff and experienced marketing and manufacturing organizations and well-established
sales forces. Smaller or early-stage
companies may also prove to be significant competitors, particularly through collaborative arrangements
with large, established companies.
Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more
resources being concentrated inwith our
competitors. Competition may increase further as a resultbecause of advances in the commercial applicability
of technologies and greater availability
of capital for investment in these industries. Our competitors, either alone or with collaborative
partners, may succeed in developing,
acquiring or licensing on an exclusive basis drug or biologic products that are more effective,
safer, more easily commercialized or less
costly than our therapeutic candidates or may develop proprietary technologies or secure patent
protection that we may need for the development
of our technologies and products.
Even
if we obtain regulatory approval offor our
therapeutic candidates, the availability and price of our competitors’ products could limit
the demand and the price we are able
to charge for our therapeutic candidates. We may not be able to implement our business plan if the
acceptance of our therapeutic candidates
is inhibited by price competition or the reluctance of physicians to switch from existing methods
of treatment to our therapeutic candidates,
or if physicians switch to other new drug or biologic products or choose to reserve our therapeutic
candidates for use in limited circumstances. For additional information regarding our competition, see the section entitled “Business
- Competition.”
Our
ability to compete in the highly competitive
biotechnology and pharmaceutical industries depends upon our ability to attract and
retain highly qualified managerial, scientific and
medical personnel. We are highly dependent on our management, scientific and
medical personnel, including our Founder and Chief Executive
Officer, Robert Hariri, M.D., Ph.D. The loss of the services of any of
our executive officers, other key employees, and other scientific
and medical advisors, and our inability to find suitable
replacements could result in delays in product development and harm our business. For example, we have had the departure of key
personnel in administrative functions such as finance and legal. This loss of expertise and background knowledge has created
challenges in maintaining operational continuity, meeting regulatory and financial reporting requirements, and supporting our
strategic objectives. Replacing these personnel with qualified individuals may be difficult and could require additional and
unanticipated costs and challenges including costs associated with engaging additional financial and legal advisors and the
challenges of bringing such third-party advisors current on our operations. We conduct substantially all of our operations at our
facilities in New Jersey. This region is headquarters to many other biopharmaceutical
companies and many academic and research
institutions. Competition for skilled personnel in our market is intense and may limit our ability
to hire and retain highly
qualified personnel on acceptable terms or at all. Despite efforts to retain valuable employees, members of
our management,
scientific and development teams may terminate their employment on short notice. Although we have employment agreements
with our key
employees, these employment agreements provide for at-will employment, which means that any of our employees could leave
employment employment
at any time, with or without notice. We do not maintain “key person” insurance policies on the lives of these individuals
individuals or the lives of any of our other employees. Our success also depends on our ability to continue to attract, retain and
motivate highly
skilled junior, mid-level and senior managers as well as junior, mid-level and senior scientific and medical
personnel.
We
may experience difficulties in managing the growth of our business.
As
our development and commercialization plans and strategies developed, and as we began operations as a public company, we expanded our
employee base and expected to add managerial, operational, sales, research and development, marketing, financial and other personnel.
However, in January 2023, we announced reprioritization of efforts, which resulted in a reduction of approximately 70 full-time employees
and 20 non-employee leased workers in March 2023. Accordingly, as of December 31, 2024, we had 123 full-time employees and 16 non-employee
leased workers. As we reposition our business and our personnel requirements evolve, we may be constrained in our ability to bring on
the necessary personnel to expand operations when and as required given our recent reduction in force.
Moreover,
current and future growth imposes significant added responsibilities on members of management, including:
Our
future financial performance and our ability to commercialize our therapeutic candidates will depend, in part, on our ability to effectively
manage our growth, and our management may also have to divert a disproportionate amount of attention away from day-to-day activities
in order to devote a substantial amount of time to managing these growth activities.
If
we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors,
we may not be able to successfully implement the tasks necessary to further develop, manufacture and commercialize our therapeutic candidates
and, accordingly, may not achieve our research, development, manufacturing and commercialization goals.
We
may form or seek strategic alliances
or enter into additional licensing arrangements in the future, and we may not realize the benefits
of such alliances or licensing arrangements.
We
may form or seek strategic alliances, create
joint ventures or collaborations or enter into additional licensing arrangements with third
parties that we believe will complement or
augment our development and commercialization efforts with respect to our therapeutic candidates
and any future therapeutic candidates
that we may develop. Any of these relationships may require us to incur non-recurring and other
charges, increase our near and long-term
expenditures, issue securities that dilute stockholders or disrupt our management and business.
We licensed certain intellectual property
back to Celgene in connection with the Anthrogenesis acquisition. Given the broad scope of
the license, Celgene could use our intellectual
property to develop therapeutics that compete with us in the chimeric
antigen receptor, or
CAR, field. Additionally, we have potential obligations to Celgene under a
contingent value rights
agreement, or CVR Agreement, under which we may be required to make certain payments to Celgene with respect
to certain of our
future therapeutic candidates. Our payment obligations to Celgene under the CVR Agreement may limit our ability to
partner such assets, were we choose to do so. See “Business - Licensing Arrangements - Celgene Corporation.” for more
information regarding the Celgene relationship.assets.
We
have in the past and in the future will continue
to explore entering into new strategic alliances, collaborations, and licensing arrangements
with third parties related to non-core areas.
Such arrangements are entered into based on information available at the relevanttime time
and may not lead to long-term collaborations after
initial research and development is conducted. We are party to certain agreements,
agreements and may in the future enter into new agreements,agreements that
contain non-competes or otherwise restrict our ability to operate in a particular
field.
We
actively evaluate various strategic transactions
on an ongoing basis. We may acquire other businesses, products or technologies as well
as pursue joint ventures or investments in complementary
businesses. The success of our strategic transactionstransactions, including our license with Sorrento Therapeutics, Inc., or Sorrento, and any future
strategic strategic
transactions depends on the risks and uncertainties involved, including:
If
any of these risks or uncertainties occur,
we may not realize the anticipated benefit of any acquisition or strategic transaction. Additionally,
foreign acquisitions and joint ventures
are subject to additional risks, including those related to integration of operations across
different cultures and languages, currency
risks, potentially adverse tax consequences of overseas operations and the particulareconomic, economic,
political and regulatory risks associated
with specific countries. Future acquisitions or dispositions could result in potentially dilutive
issuances of our equity securities,
the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill,
any of which could harm our financial
condition.
The
ability of the FDA to review and approve new
therapeutics can be affected by a variety of factors, including government budget and funding
levels, ability to hire and retain key personnel
and accept payment of user fees, statutory, regulatory and policy changes, and business
disruptions, such as those that may be caused
by the pandemics. Average review times at the agency have fluctuated in recent years as
a result. In addition, funding of government agencies
on which our operations may rely, including those that fund research and development
activities is subject to the political process, which
is inherently fluid and unpredictable. Disruptions at the FDA and other agencies
may also slow the time necessary for new biologics to
be reviewed and/or approved by necessary government agencies, which would adversely
affect our business. Should the FDA determine that
an inspection is necessary for approval and an inspection cannot be completed during
the review cycle due to restrictions on travel, and
the FDA does not determine a remote interactive evaluation to be adequate, the agency
has stated that it generally intends to issue, depending
on the circumstances, a complete response letter or defer action on the application
until an inspection can be completed. During the COVID-19
public health emergency, a number of companies announced receipt of complete
response letters due to the FDA’s inability to complete
required inspections for their applications. Regulatory authorities outside
the U.S. may adopt similar restrictions or other policy measures
and may experience delays in their regulatory activities. If a prolonged
government shutdown or disruption occurs, it could significantly
impact the ability of the FDA or other regulatory authorities to timely
review and process our regulatory submissions, which could have
a material adverse effect on our business. Further, future government
shutdowns could impact our ability to access the public markets
and obtain necessary capital in order to properly capitalize and continue
our operations.
Because
of the breadth of these laws and the narrowness
of the statutory exceptions and regulatory safe harbors available, it is possible that
some of our business activities, or our arrangements
with physicians, some of whom may receive stock options as compensation for service
on our scientific advisory board, could be subject
to challenge under one or more of such laws. If we or our employees, independent contractors,
consultants, commercial partners and vendors
violate these laws, we may be subject to investigations, enforcement actions or significant
penalties. We have adopted a code of business
conduct and ethics, but it is not always possible to identify and deter employee misconduct
or business noncompliance, and the precautions
we take to detect and prevent inappropriate conduct may not be effective in controlling
unknown or unmanaged risks or losses or in protecting
us from governmental investigations or other actions or lawsuits stemming from
a failure to be in compliance with such laws or regulations.
Efforts to ensure that our business arrangements will comply with applicable
healthcare laws may involve substantial costs. It is possible
that governmental and enforcement authorities will conclude that our business
practices may not comply with current or future statutes,
regulations or case law interpreting applicable fraud and abuse or other healthcare
laws and regulations. If any such actions are instituted
against us, and we are not successful in defending ourselfourselves or asserting our
rights, those actions could have a significant impact on our
business, including the imposition of significant penalties and corrective
measures, any of which could adversely affect our ability to
operate our business and our results of operations. In addition, the approval
and commercialization of any of our therapeutic candidates
or our degenerative disease products outside the United States will also likely
subject us to an additional overlay of foreign equivalents
of the healthcare laws, among other foreign laws.
The
scope and enforcement of each of these laws
is uncertain and subject to rapid change in the current environment of healthcare reform,
especially in light ofconsidering the lack of applicable
precedent and regulations. Federal and state enforcement bodies often scrutinize interactions
between healthcare companies and healthcare
providers, which has led to a number of investigations, prosecutions, convictions and settlements
in the healthcare industry. Ensuring
business arrangements comply with applicable healthcare laws, as well as responding to possible
investigations by government authorities,
can be time- and resource-consuming and can divert a company’s attention from the business.
We
face an inherent risk of product liability as a resultbecause of the clinical testing of our therapeutic candidates and will face an even
greater greater
risk if we commercialize any cellular therapeutics, in addition to the risks from the sale of our degenerative disease
products. For
example, we may be sued if our therapeutic candidates or degenerative disease products cause or are perceived to cause
injury or are
found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability
claims may include
allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the
therapeutic or product, negligence,
strict liability or a breach of warranties. Claims could also be asserted under state consumer
protection acts. If we cannot successfully
defend ourselves against product liability claims, we may incur substantial liabilities
or be required to limit commercialization of
our therapeutic candidates. Even successful defense would require significant financial
and management resources. Regardless of the merits
or eventual outcome, liability claims may result in a number of adverse effects,
any of which could materially harm our financial condition
and results of operations.
Under
Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation
undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in the equity
ownership of certain stockholders over a rolling three-year period), our ability to use our pre-change federal net operating loss, or
NOL, carryforwards and other pre-change tax attributes to offset our post-change income and taxes may be limited. We may experience ownership
changes in the future as a result of subsequent shifts in our stock ownership. As of December 31, 2024, we had approximately $121.8 million
of NOL carryforwards, and theseOur NOL carryforwards could expire unused and be unavailable to offset future income tax liabilities,
which which
could adversely affect our profitability. We anticipate incurring significant additional net losses for the foreseeable future,
and our
ability to utilize NOL carryforwards associated with any such losses to offset future taxable income may be limited to the extent
we we
incur future ownership changes. In addition, at the state level, there may be periods during which the use of NOL carryforwards is
suspended suspended
or otherwise limited, which could accelerate or permanently increase state taxes owed. As a result, we may be unable to use
all or a
material portion of our NOL carryforwards and other tax attributes, which could adversely affect our future cash flows.
The
rules dealing with U.S. federal, state, and local income taxation are constantly under review by persons involved in the legislative
process and by the U.S. Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws (which changes may have
retroactive retroactive
application) could adversely affect us or holders of our securities. In recent years, many such changes have been made made,
and changes are
likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our
business, cash flow,
financial condition or results of operations. For example, the Inflation Reduction Act of 2022, or IRA,
includes a 15% corporate alternative
minimum tax and a 1% excise tax on share repurchases. WeInvestors urge investors toshould consult with their legal
and tax advisers regarding the implications
of changes in tax laws on an investment in our securities.
Management's Discussion & Analysis (MD&A)
Removed heading “Comparison of Year Ended December 31, 2024 to December 31, 2023”
Removed heading “Net Revenues and Cost of Revenues”
Removed heading “Valuation of Goodwill and Intangible Assets”
Largest changes
“To date, we have not had any cellular therapeutics approved for sale and have not generated any revenues from the sale of our cellular therapeutics and we are not actively developing any cellular therapeutics in our pipeline given our liquidity. We do not expect to generate any revenues from cellular therapeutic product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our therapeutic candidates, which we expect will take a number of years. …”see in full comparison
“On November 25, 2024, we entered into a securities purchase agreement with an accredited investor pursuant to which we agreed to sell and issue to the investor and other purchasers in a private placement transaction, in one or more closings, unsecured senior convertible notes (the “November Notes”) and warrants (the “November Warrants”). As of the date of this annual report, we have issued and sold $0.75 million in aggregate principal amount of November Notes and related November Warrants. …”see in full comparison
“On November 25, 2024, we entered into a securities purchase agreement with an accredited investor pursuant to which we agreed to sell and issue to the investor and other purchasers in a private placement transaction, in one or more closings, unsecured senior convertible notes (the “November Notes”) and warrants (the “November Warrants”). As of the date of this annual report, we have issued and sold $0.75 million in aggregate principal amount of November Notes and related November Warrants. …”see in full comparison
“As of the filing date, our current cash resources are not sufficient to fund our operations for a period of 12 months beyond the filing date and we are actively pursuing additional sources of capital and strategic sales partnerships to improve our liquidity and financial position, including transactions designed to monetize assets, reduce indebtedness and transition to a more capital-efficient operating model. …”see in full comparison
“As a small clinical-stage biotechnology company, we are subject to certain inherent risks and uncertainties associated with the development of an enterprise. …”see in full comparison
“Goodwill and indefinite-lived intangible assets are reviewed for impairment annually or when an event occurs that could result in an impairment. The impairment analysis requires the exercise of significant judgment by management and can involve both the assessment of qualitative factors (which are subject to uncertainty and can change significantly from period to period), as well as a quantitative. …”see in full comparison
Full comparison: every changed paragraph (102)
The
following discussion contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. See “Special Note Regarding Forward-Looking Statements.” Such forward-looking statements, which
represent our intent, belief, or current expectations, involve risks and uncertainties and other factors that could cause actual results
and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. In
some casescases, you can identify forward-looking statements by terms such as “may,” “will,” “expect,”
“anticipate,” “estimate,” “intend,” “plan,” “predict,” “potential,”
“believe,” “should” and similar expressions. Factors that could cause or contribute to differences in results
include, but are not limited to, those set forth under Item 1.B. “Risk Factors” and elsewhere in this annual report on Form
10-K. Except as required by law, we undertake no obligation to update these forward-looking statements to reflect events or circumstances
after the date of this report or to reflect actual outcomes.
We are a cellular and regenerative medicine company focused on advancing health longevity and redefining the standard of care for age-related disease using novel therapies derived from the postpartum human placenta. The objective of extending health longevity is to meaningfully reduce the duration and severity in which an individual experiences aging-related degenerative diseases and disorders associated with increased mortality towards the end of life. Aging is known to be a major risk factor for many degenerative disorders and diseases across multiple high-value therapeutic areas, including immunology and regenerative medicine. Common to all degenerative disorders and diseases is the progressive loss of function or structure (or both) of affected tissues and organs driven by underlying cellular dysfunction. These processes directly impact regenerative capacity, healthspan and overall lifespan. Likewise, age-associated immunosenescence and other physiological changes contribute to increased vulnerability to infections. Infections further exacerbate aging-related decline and are increasingly associated with frailty and adverse clinical outcomes.
Aging and longevity are determined by a complex combination of genetic, nongenetic, and environmental factors. While aging is not itself a disease, it increases vulnerability to disease and is among the most important known risk factors for most chronic diseases. For example, aging is a primary driver of cancer and other chronic conditions. The accumulation of senescent cellsin aged tissues is suggested to be a key factor underlying age related cancer. Likewise, age is a key risk factor for autoimmune disease, and many autoimmune diseases preferentially occur in the second half of adulthood as immune function declines. These processes are increasingly linked to age-related immune dysregulation.
Aging is associated with a progressive degeneration of tissues, resulting in significant impairment on the structure and function of vital organs. Chronic, low-grade systemic inflammation often referred to as “inflammaging” is characterized by higher levels of circulating pro-inflammatory cytokines driven by cellular damage and senescent cell accumulation. Senescent cells contribute to disease progression by limiting the regenerative capacity of tissue stem cells and inducing the accumulation of cellular damage.
There is a close relationship between inflammation and cellular senescence, a process in which cells lose their ability to divide and function properly, and cellular senescence has been described as a link between cancer and age-related degenerative disease. These cells promote inflammation through well-characterized signaling pathways, including NF-κB activation. In younger organisms, cellular senescence prevents the proliferation of damaged cells. With aging, impaired clearance leads to accumulation of these cells, contributing to disease and tissue dysfunction. Stem cell exhaustion also contributes to aging by reducing the regenerative potential of tissues and limits tissue repair capacity. We believe these processes may be modulated by increasing the number and quality of stem cells in order to restore tissues’ regenerative power. Aging is also associated with immunosenescence, or the immune dysfunction that occurs with age and contributes to increased susceptibility to infection and possibly autoimmune disease and cancer. We believe immune function may be improved by increasing the number and the quality of immune cells like natural killer or NK cells and naive T cells that improve immune rejuvenation and repair function in damaged tissues.
We believe the development of effective therapies against the degenerative processes (including aging-ameliorating preventive therapies) that underlie aging-related diseases and disease complications and susceptibilities will be central to the extension of health longevity. By harnessing the placenta’s unique biology and ready availability, we may be able to develop therapeutic solutions that address a significant unmet global need for effective, accessible, and affordable therapeutics to promote health longevity. To this end, we are developing a pipeline of off-the-shelf placental-derived allogeneic cellular therapy product candidates such as, human placental-derived stems cells and MLASCs, including cenplacel-L. These therapeutic candidates have the potential to target indications across multiple age-related degenerative diseases and conditions, including immune and infectious disease and cancer.
Specifically, we are developing a differentiated portfolio of off-the-shelf, placental-derived allogeneic cellular therapies and advanced biomaterial products for the treatment of degenerative disorders and diseases including those associated with aging. Our cellular therapy candidates are designed to address core biological drivers of aging, including stem cell exhaustion and cellular senescence. One of our MLASCs candidates, cenplacel-L, has demonstrated encouraging clinical data in Phase 1 and Phase 2 studies, and we are selectively advancing programs with a focus on longevity applications.
We also develop and market commercial-stage, off-the-shelf placental-derived biomaterial products, including allografts and connective tissue matrices for use in soft tissue repair and reconstructive procedures addressing a broad range of degenerative and surgical indications. We are actively expanding our biomaterials pipeline and advancing multiple product candidates toward regulatory submission. Our currently marketed advanced biomaterial products include:
In addition to our cell therapy candidates, and commercial-stage biomaterial products, we actively pursue revenue-generating opportunities that leverage our core expertise in cellular therapeutic development and manufacturing by providing contract manufacturing and development services to third parties. These services are designed to accelerate translational and clinical development while addressing key industry challenges, including process variability, supply chain constraints and scalability limitations.. Likewise, our biomaterial contract manufacturing and development services enable scalable production across both early-stage and commercial volumes. Leveraging over three decades of experience in human tissue procurement and biobanking, we maintain a reliable supply of cryopreserved placental tissue procured from informed consent donors, enabling on-demand conversion into finished biomaterial products and addressing the structural inefficiencies inherent to most tissue supply chains.
Our Celularity IMPACT (IMmunomodulatory Placenta-derived Allogeneic Cellular Therapy) platform is designed to harness the unique biological advantages of placenta-derived cells to address multiple disease areas through a fully integrated, end-to-end platform, from biosourcing postpartum placentas from informed consent donors through manufacturing cryopreserved and packaged allogeneic cells in our purpose-built U.S.-based 147,215 square foot facility. We believe placental-derived cells offer distinct scientific and economic advantages. First, relative to adult-derived cells, placental-derived cells demonstrate greater stemness, meaning the ability to expand and persist. Second, placental-derived cells are immunologically naïve, meaning the cells have never been exposed to a specific antigen, which may translate into improved tolerability and reduced risk of graft-versus-host disease. Third, our placental-derived cells are allogeneic, meaning they are intended for use in any patient, as compared to autologous cells, which are derived from an individual patient for that patient’s sole use. We believe this enables readily available, off-the-shelf therapies that can be delivered more efficiently, consistently and at scale.
Going Concern
We
are a regenerative and cellular medicines company focused on addressing aging related and degenerative diseases. Our goal is to ensure
all individuals have the opportunity to live healthier longer. We develop off-the-shelf placental-derived allogeneic cell therapy product
candidates including mesenchymal-like adherent stromal cells, or MLASCs, for which we have clinical datasets from Phase I and Phase II
clinical studies and are prioritizing advanced stage programs in diabetic foot ulcer, or DFU, and Crohn’s Disease, or CD. It also
includes natural killer, or NK cells, product candidates for which we have clinical datasets from Phase I and Phase II clinical studies
and are currently investigating in preclinical studies as senoablatant candidates. We believe that by harnessing the placenta’s
unique biology and ready availability, we will be able to develop therapeutic solutions that address a significant unmet global need
for effective, accessible and affordable therapeutics. Our advanced biomaterials business today is comprised primarily of the sale of
Biovance 3L and Rebound product lines, directly or through our distribution network. Biovance 3L is a tri-layer decellularized, dehydrated
human amniotic membrane derived from the placenta of a healthy, full-term pregnancy. It is an intact, natural extracellular matrix that
provides a foundation for the wound regeneration process and acts as a scaffold for restoration of functional tissue. Rebound is a full
thickness extracellular matrix that contains amnion and chorion. We are developing new placental biomaterial products to deepen the biomaterials
commercial pipeline. We also plan to leverage our core expertise in cellular therapeutic development and manufacturing to generate revenues
by providing contract manufacturing and development services to third parties. The initial focus of this new service offering will be
to assist development stage cell therapy companies with the development and manufacturing of their therapeutic candidates for clinical
trials.
We
are working toward a set of milestones with respect to off-the-shelf placental-derived allogeneic biomaterial product candidates and
cell therapy product candidates, respectively. With respect to our biomaterial product candidate pipeline, we expect to submit a 510(k)
application for our Celularity Tendon Wrap, or CTW, in the second half of 2025. We expect to advance the development of our FUSE Bone
Void Filler, or FUSE, with the objective of a 510(k) filing in the second half of 2026, and to advance the development of our Celularity
Placental Matrix, or CPM, with the objective of a 510(k) filing in the second half of 2027. With respect to our MLASCs cell therapy product
candidate for DFU (PDA 002), we expect in the first half of 2025 to request an End of Phase 2, or EOP2, meeting with the FDA as part
of which we intend to discuss with the FDA our Phase 3 plan and protocols. In addition, with respect to our MLASCs cell therapy product
candidate (PDA 001), we expect to complete, in the first half of 2025, our safety and efficacy assessment of previously generated data
that is one factor in determining whether to progress our MLASCs cell therapy product candidate in CD to a Phase 3 clinical trial.
Our
Celularity IMPACT manufacturing process is a seamless, fully integrated process designed to optimize speed and scalability from the sourcing
of placentas from full-term healthy informed consent donors through the use of proprietary processing methods, cell selection, product-specific
chemistry, manufacturing and controls, or CMC, advanced cell manufacturing and cryopreservation. The result is a suite of allogeneic
inventory-ready, on demand placental-derived cell therapy products. We also operate and manage a commercial biobanking business that
includes the collection, processing and cryogenic storage of certain birth byproducts for third-parties. A biobank is an organized collection
of biological human material and its associated information stored for future retrieval and use in research, regenerative medicine, and
innovation. We provide a fee-based biobanking service to expectant parents who contract with us to collect, process, cryogenically preserve
and store certain biomaterial, including umbilical cord blood and placenta derived cells and tissue. We receive a one-time fee for the
collection, processing, and cryogenic preservation of the biomaterials, and a storage fee to maintain the biomaterials in our biobank
payable annually generally over a period of 18 to 25 years. We intend to explore opportunities to diversify our biobanking business,
including adult cell banking.
Our
current science is the product of the cumulative background and effort over two decades of our seasoned and experienced management team.
We have our roots in Anthrogenesis Corporation, or Anthrogenesis, a company founded under the name Lifebank in 1998 by Robert J. Hariri,
M.D., Ph.D., our founder and Chief Executive Officer, and acquired in 2002 by Celgene Corporation, or Celgene. The team continued to
hone their expertise in the field of placental-derived technology at Celgene through August 2017, when we acquired Anthrogenesis. We
have a robust global intellectual property portfolio comprised of over 300 patents and patent applications protecting our Celularity
IMPACT platform, our processes, technologies and cell therapy programs that we are actively developing or are seeking to out-license/find
a collaboration partner to develop. We believe this know-how, expertise and intellectual property will drive the rapid development and,
if approved, commercialization of these potentially lifesaving therapies for patients with unmet medical needs.
On
October 9, 2024, we entered into an asset purchase agreement with Sequence LifeScience, Inc., or Sequence, pursuant to which we acquired
Sequence’s Rebound™ full thickness placental-derived allograft matrix product, or the Product, and certain assets related
thereto, collectively the Asset. We will pay aggregate
consideration for the Asset of up to $5.5 million, which consists of (i) an upfront cash payment
of $1.0 million (ii) an aggregate of up to $4.0 million in monthly milestone payments, or the Milestone Payments, and (iii) a credit
of $0.5 million for the previous payment made by the Company to Sequence pursuant to that certain letter of intent between us and Sequence
dated August 16, 2024. Pursuant to the terms of the Asset Purchase Agreement, the Milestone Payments are calculated based on 20% of net
sales collected by us from our customers during the preceding calendar month, commencing the first full month after the closing of the
transaction. The closing of the transaction occurred on October 9, 2024. Concurrently with the execution of the Asset Purchase Agreement,
we entered into an exclusive supply agreement with Sequence for the manufacture and supply of the Product for a minimum period of six
months. We retain the right to manufacture the Product internally and intend to commence a technology transfer as soon as practicable.
On November 25, 2024, we
entered into a securities purchase agreement with an accredited investor pursuant to which we agreed to sell and issue to the investor
and other purchasers in a private placement transaction, in one or more closings, unsecured senior convertible notes (the “November
Notes”) and warrants (the “November Warrants”). As of the date of this annual report, we have issued and sold $0.75
million in aggregate principal amount of November Notes and related November Warrants. The November Notes bear interest at an annual rate
of 8% (increasing to 10% in the event of default as defined in the securities purchase agreement) and have a maturity date of one year
from the date of issuance. Upon an event of default, the November Notes are convertible at the holder’s option into shares of our
Class A common stock at a price per share equal to (i) $2.85 (adjusted for stock splits, reverse stock splits, stock dividends, or similar
transactions); or (ii) the offering price of a subsequent financing transaction with gross proceeds of $2.5 million or more, subject to
a floor price of $1.00 per share. The November Warrants entitle the holder thereof to purchase shares of Class A common stock equal to
the principal amount of November Notes purchased by such holder, divided by the exercise price of $2.85 per share. The exercise price,
and the number of shares of Class A common stock issuable under the November Warrants, are subject to a one-time reset upon the completion
of a subsequent financing transaction with gross proceeds of $2.5 million or more, subject to a floor price of $1.00 per share. The November
Warrants are immediately exercisable and have a five-year term. In connection with the transaction, we issued a five-year warrant to the
placement agent to purchase 52,500 shares of Class A common stock (the “Placement Agent Warrants”) at an exercise price equal
to 125% of the offering price, or $3.56. The Placement Agent Warrants are subject to the same one-time reset upon completion of a subsequent
financing transaction as the November Warrants, except that the reset price for the Placement Agent Warrants shall be 125% of the reset
price of the November Warrants.
On December 27, 2024, we
entered into a securities purchase agreement with an institutional investor for the issuance and sale in a private placement (the “December
Placement”) of (i) 1,263,157 shares of our Class A common stock and (ii) five-year warrants to purchase up to 1,263,157 shares of
our Class A common stock, at a purchase price of $2.375 per share of Class A common stock and accompanying warrant. Effective as of January
23, 2025, the December Placement was terminated.
On January 24, 2025, we agreed
with the holder of warrants dated January 16, 2024 to purchase 535,274 shares of Class A common stock (the “2024 Warrant”)
and warrants dated January 9, 2020, as amended, to purchase 652,981 shares of Class A common stock (the “2020 Warrant” and
together with the 2024 Warrants, the “Warrants”) to amend the exercise price of the Warrants to $2.07 per share from $2.49
per share. The holder agreed to exercise the Warrants for gross proceeds to us of approximately $2.46 million.
On January 29, 2025, Dr.
Robert Hariri, our CEO, extended the maturity date of his outstanding loans from December 31, 2024 to December 31, 2025.
On February 12, 2025, we
entered into a binding term sheet with Resorts World Inc Pte Ltd, or RWI, pursuant to which RWI agreed to, among other things, an extension
of that certain second forbearance agreement dated as of March 13, 2024 whereby RWI has agreed not to exercise its rights and remedies
upon the occurrence of any default under certain loans owed to RWI and whereby the maturity date of the foregoing loans is extended to
February 15, 2026. Pursuant to the RWI binding term sheet, we agreed to (i) use a portion of the proceeds from our next registered public
offering to pay RWI approximately $1.3 million, representing cash interest through January 31, 2025 and (ii) issue to RWI, on July 24,
2025, a new five-year warrant to purchase up to 500,000 shares of our Class A common stock. In addition, we agreed to reprice certain
outstanding warrants held by RWI.
On February 12, 2025, we
entered into a binding term sheet, with C.V. Starr & Co., Inc., or Starr, pursuant to which Starr agreed to, among other things, an
extension of that certain forbearance agreement dated March 13, 2024 whereby Starr agreed not to exercise its rights and remedies upon
the occurrence of any default under certain loans owed to Starr and whereby the maturity date of the loan is extended to February 15,
2026. Pursuant to the Starr binding term sheet, we agreed to (i) use a portion of the proceeds from our next registered public offering
to pay Starr approximately $0.8 million, representing cash interest through January 31, 2025 and (ii) issue to Starr a new five-year warrant
to purchase up to 100,000 shares of our Class A common stock. In addition, we agreed to reprice certain outstanding warrants held by Starr.
On April 22, 2025, we
were notified by Nasdaq that we had not paid certain fees required by Listing Rule 5250(f) totalling $70,000, and as a result, we
will be delisted unless we appeal this determination. We paid the assessed fees on April 24, 2025, and Nasdaq informed us on April
30, 2025, that we were in compliance with Listing Rule 5250(f) and the matter is now closed. Additionally, on April 16, 2025, Nasdaq
provided formal notice to us that as a result of our failure to timely file this annual report on Form 10-K, we no longer complied
with the continued listing requirements under the timely filing criteria outlined in Nasdaq Listing Rule 5250(c)(1). Pursuant to
Listing Rule 5810(d)(2), this delinquency serves as an additional and separate basis for delisting, and as such, our common stock
will be suspended from trading on May 1, 2025, unless we appeal Nasdaq’s determination before a Hearing Panel. On April 29,
2025, we filed an appeal requesting an oral hearing with a Nasdaq Hearing Panel. There can be no assurance that the appeal will be
successful or that we will maintain compliance with the Nasdaq listing requirements. If relief is not granted by the Nasdaq Hearing
Panel or we are unable to regain compliance, our securities will be delisted from the Nasdaq.
InThe accordanceCompany with Accounting
Standards Update, or ASU, No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic
205-40), or ASU 205-40, wehas evaluated whether
there are certain conditions and events, considered in the aggregate, that raise substantial
doubt about ourthe Company’s ability to
continue as a going concern within one year after the date thatof thethis consolidated financial statements are issued.filing.
The Company has minimal cash on hand, does not generate sufficient cash from operations to operate the business for the next twelve months, and may not be able to continue as a going concern. The Company has historically funded operations through sales of products and services and equity and debt securities issuances to public and private investors. There is no assurance that such cash flows will continue in the future or that the Company will achieve cash positive operations.
As a small clinical-stage
biotechnology company, we are subject to certain inherent risks and uncertainties associated with the development of an enterprise. In
this regard, since our inception, substantially all of management’s efforts have been devoted to making investments in research
and development including basic scientific research into placentally-derived allogeneic cells, pre-clinical studies to support our current
and future clinical programs in cellular therapeutics, and clinical development of our cell programs as well as facilities and selling,
general and administrative expenses that support our core business operations (collectively the “investments”), all at the
expense of our short-term profitability. We have historically funded these investments through limited revenues generated from our biobanking
and degenerative disease businesses and issuances of equity and debt securities to public and private investors (these issuances are collectively
referred to as “outside capital”). Notwithstanding these efforts, management can provide no assurance that our research and
development and commercialization efforts will be successfully completed, or that adequate protection of our intellectual property will
be adequately maintained. Even if these efforts are successful, it is uncertain when, if ever, we will generate significant sales or operate
in a profitable manner to sustain our operations without needing to continue to rely on outside capital. Continued decline in our share
price could result in further impairment of our goodwill or long-lived assets in a future period.
As of the date the accompanying
consolidated financial statements were issued, or the issuance date, management evaluated the significance of the following adverse conditions
and events in accordanceconsidering withits ASUability 205-40to continue as a going concern:
These uncertainties raise substantial
substantial doubt about ourthe Company’s ability to continue as a going concern. The accompanying consolidated financial statements have been
prepared prepared
on the basis that wethe Company will continue to operate as a going concern, which contemplates that wethe Company will be able
to realize assets and settle
liabilities and commitments in the normal course of business for the foreseeable future. Accordingly, the accompanying consolidated financial
statements do not include any adjustments that may result from the outcome of these uncertainties.
We
manage our operations
through an evaluation of three distinct business segments: Cell Therapy, Degenerative Disease,BioBanking and BioBanking.Degenerative Disease. The reportable
segments were determined based on the distinct nature of the activities performed by each segment.
Cell Therapy broadly refers to
cellular therapies we are researching and developing. Therapies being researched are unproven and in
various phases of development.
All of the cell therapy programs fall into the Cell Therapy segment. Degenerative Disease produces,
sells and licenses products used
in surgical and wound care markets, such as Biovance, Biovance 3L, InterfylInterfylCentaFlex and CentaFlex. Rebound.
We sell products in this segment using
independent sales representatives as well as distributors. We areintend developingto develop additional
tissue-based products for the Degenerative
Disease segment. BioBanking collects stem cells from umbilical cords and placentas and
provides storage of such cells on behalf of
individuals for future use. We operate in the biobanking business primarily under the
LifebankUSA brand. For more information about
our reportable business segments refer to Note 19,21, “Segment
Information” of our audited consolidated financial
statements included elsewhere in this annual report on Form
10-K.
Our principal executive offices are located at 170 Park Avenue, Florham Park, New Jersey 07932, and our telephone number is (908) 768-2170.
Celularity Inc., formerly
known as GX Acquisition Corp. (“GX”), was a blank check company incorporated in Delaware on August 24, 2018. The Company was
formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses. On July 16, 2021 (the “Closing Date”), the Company consummated the previously
announced merger pursuant to the Merger Agreement and Plan of Reorganization, dated January 8, 2021 (the “Merger Agreement”),
by and among GX, Alpha First Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of GX (“First Merger
Sub”), Celularity LLC (f/k/a Alpha Second Merger Sub LLC), a Delaware limited liability company and a direct, wholly owned subsidiary
of GX (“Second Merger Sub”), and the entity formerly known as Celularity Inc., incorporated under the laws of the state of
Delaware on August 29, 2016 (“Legacy Celularity”). Upon completion of the merger transaction, GX changed its name to Celularity
Inc.
Our principal executive offices
are located at 170 Park Avenue, Florham Park, New Jersey 07932, and our telephone number is (908) 768-2170. We maintain a website at https://celularity.com/
where general information about us is available. The information contained on our website is not incorporated by reference into this annual
report on Form 10-K, and you should not consider any information contained on, or that can be accessed through, our website as part of
this annual report or in deciding whether to purchase our securities.
Our
research and development
expenses primarily relate to basic scientific research into placentally derived allogeneic cells,
pre-clinical studies to support our
current and future clinical programs in cellular medicine, clinical development of our NK cell
programs and facilities, depreciation and
other direct and allocated expenses incurred as a result ofthrough research and development activities.
We incur expenses for personnel expenses
for research scientists,scientist personnel, specialized chemicals and reagents used to
conduct biologic research, expenseexpenses for third party testing and validation
and various overhead expenses including rent and facility
maintenance expense.expenses. Basic research, research collaborations involving partners
and research designed to enable successful
regulatory submissions isare critical to our current and future success in cell therapy. The amount
of our research and development
expenditures will depend on numerous factors, including the timing of clinical trials, preliminary evidence
of efficacy in clinical
trials and the number of indications that we choose to pursue.
Selling,
general and administrative
expense consists primarily of personnel costs including salaries, bonuses, stock compensation and benefits
for specialized staff that
support our core business operations. Executive management, finance, legal, human resources and information
technology are key components
of selling, general and administrative expense and those expenses are recognized when incurred. We expect that as a result of our reprioritization
efforts, we will see a decrease in our selling, general and administrative costs in the near term. The magnitude and timing of our selling,
general and administrative costs will depend on the progress of clinical trials, commercialization
efforts for any approved therapies
including the release of new products within the degenerative disease portfolio, changes in the regulatory
environment or staffing needs
to support our business strategy.
Because
the acquisitions
of Anthrogenesis from Celgene and HLI CT were accounted for as business combinations, we recognized acquisition-related
contingent contingent
consideration on the balance sheets in accordance with the acquisition method of accounting. See Note 12,15, “Commitments
and and
Contingencies” for more information. The fair value of contingent consideration liability is determined based on a probability-weighted
probability-weighted income approach derived from revenue estimates and a probability assessment with respect to the likelihood of
achieving regulatory and
commercial milestone obligations and royalty obligations. The fair value of acquisition relatedacquisition-related contingent
consideration is remeasured
each reporting period with changes in fair value recorded in the consolidated statementsstatement of operations and comprehensive loss. Changes
Changes in contingent consideration fair value estimates result in an increase or decrease in our contingent consideration
obligation and a corresponding
charge or reduction to operating results. Key elements of the contingent consideration are regulatory
milestone payments, sales milestone
payments and royalty payments. Regulatory payments are due on regulatory approval of certain
cell types in the United States and the
European Union. Regulatory milestone payments are one time but are due prior to any
potential commercial success of a cell type in a
specific indication. Royalty payments are a percentage of net sales. Sales
milestone payments are due when certain aggregate sales thresholds
have been met. Management must use substantial judgment in
evaluating the value of the contingent consideration. Estimates used by management
include but are not limited to: (i) the number
and type of clinical programs that we are likely to pursue based on the quality of our
preclinical data, (ii) the time required to
conduct clinical trials, (iii) the odds of regulatory success in those trials, (iv) the potential
number of patients treatable for
the indications in which we are successful and (v) the pricing of treatments that achieve commercial
status. All of these areas
involve substantial judgment on the part of management and are inherently uncertain.
Product sales were $13.2 million in 2025 compared to $35.3 million in 2024, a decrease of $22.2 million, or 62.7%, mainly driven by lower Biovance 3L and Rebound product sales and in part by changes in customer purchasing behavior due to an uncertain insurance reimbursement environment. Ongoing developments and delays in the rollout of coverage guidance from Medicare Administrative Contractors (MACs), the regional entities responsible for administering Medicare claims and issuing coverage determinations, particularly with respect to skin substitute grafts, created ambiguity around which products would ultimately qualify for reimbursement and under what criteria. As a result, providers and distributors appear to have adopted a more cautious approach to inventory and utilization, including deferring purchases or limiting order volumes until greater clarity on coverage parameters was established.
Revenues from BioBanking services were $5.4 million in 2025 compared to $5.1 million in 2024, an increase of $0.3 million, or 5.7%.
Revenues from license, royalty and other were $7.9 million in 2025 compared to $13.7 million in 2024, a decrease of $5.8 million or 42.2%. Certain license agreements ended during 2025 resulting in lower revenues.
Cost of revenues from product sales were $12.9 million in 2025 compared to $4.9 million in 2024, an increase of $8.0 million or 161.0%. The increase was driven by an inventory realizable value impairment of $4.3 million caused by decreases in product pricing and decreases in the expected price for returns of Rebound product to Sequence. Further, cost of revenues from product sales increased due to a $5.3 million write-off of capitalized bulk material costs that occurred during 2025.
Cost of Services revenues were $0.3 million lower in 2025 compared to 2024 due to lower BioBanking processing costs.
Cost of License, royalty and other revenues decreased $2.5 million in 2025 compared to 2024 primarily due to decreased costs incurred from servicing our licensing agreements.
Comparison of Year Ended December 31, 2024 to December
31, 2023
Net Revenues and Cost of Revenues
Net revenues for the year
ended December 31, 2024 was $54.2 million, an increase of $31.4 million, or 138.1%, compared to the prior year period. The increase was
primarily due to a $22.2 million increase in product sales driven mainly by increased sales of Biovance 3L and Rebound and a $9.6 million
increase in license, royalty and other driven by Rebound distributor sales, which we started selling in the third quarter of 2024 through
an exclusive distribution agreement with Sequence. On October 9, 2024, we acquired Rebound in an asset purchase agreement with Sequence.
For more information about the Rebound asset purchase agreement, see Note 3, “Asset Acquisition” in our audited consolidated
financial statements included elsewhere in this annual report on Form 10-K.
Cost of revenues for the
year ended December 31, 2024 was $15.0 million, a decrease of $1.0 million, or 6.4%, compared to the prior year period. The decrease
was primarily due to a $3.7 million decrease in product sales costs, which was primarily related to lower inventory impairment
charges. Included in product sales costs in the current year were inventory impairment and obsolescence charges of $0.8 million,
compared to inventory impairment charges of $5.4 million in the prior year period due to lower of cost or market adjustments. The
decrease in product sales costs was partially offset by an increase of $3.2 million in licenses, royalty and other costs, primarily
driven by Rebound distributor sales. As a percentage of revenues, cost of revenues decreased to 28% for the year ended December 31,
2024 compared to 70% in the prior year period. This decrease was due to an increase in Biovance 3L and Rebound sales, which have a
higher gross profit margin than other biomaterial products and lower inventory impairment charges.
Research and development expenses were $15.0 million in 2025, a decrease of $2.4 million, or 13.6%, compared to 2024. The decrease was primarily due to a $2.2 million decrease in lab supplies, a decrease of $1.5 million in salaries expense, a decrease in stock-based compensation of $0.5 million, offset primarily by an increase in facilities expense of $2.3 million.
Research and development
expenses for the year ended December 31, 2024 were $17.4 million, a decrease of $13.1 million, or 42.9%, compared to the prior year period.
The decrease was primarily due to: (i) $8.2 million decrease in outside services, driven by a $2.8 million decrease in clinical trial
costs, resulting from discontinuing certain clinical trials related to cell therapy candidates and $4.0 million included in the prior year period in connection with the Pulthera, LLC sublicense agreement for stem cells inventory to be
used in research and development; (ii) $3.6 million decrease in personnel costs, mainly due to a
reduction in force implemented in March 2023; and, (iii) $1.9 million decrease in corporate allocations.
Selling,
general and administrative
expenses for the year ended December 31, 2024 were $58.6$51.2 million, an increase of $8.1 million, or 16.0%,million compared to the$58.6 priormillion yearin period.2024, a decrease of $7.4 million, or
12.6%. The increasedecrease was primarily due to higher$8.6 sellingmillion expenses,decrease whichin weresales drivencommissions on lower sales, a $2.7 million decrease in
facilities expense and a $0.5 million decrease in insurance expense, offset primarily by ana $2.7 million increase in biomaterial sales.professional
fees.
The acquisition-related contingent consideration liability was unchanged at $1.4 million as of December 31, 2025, compared to December 31, 2024, and there were no changes to market-based assumptions related to future consideration payable in connection with the HLI Cellular Therapeutics acquisition.
The acquisition-related contingent
consideration liability decreased to $1.4 million as of December 31, 2024, compared to $1.6 million at December 31, 2023. This decrease,
resulting in a gain of $0.2 million for the year ended December 31, 2024, was driven by adjustments to market-based assumptions related
to future consideration payable in connection with the HLI Cellular Therapeutics acquisition. In 2023, we discontinued our cell therapy
clinical trials, which led to the full write-off the Anthrogenesis acquisition-related contingent consideration liability. As a result,
we recognized a gain of $104.3 million for the year ended December 31, 2023. For more information about changes in the fair value of contingent
consideration liability refer to Note 4, “Fair Value of Financial Assets and Liabilities” of our audited consolidated
financial statements included elsewhere in this annual report on Form 10-K).
Impairments
There were no impairment
charges for the year ended December 31, 2024. For the year ended December 31, 2023, we recorded goodwill and IPR&D impairment charge
of $112.3 million and $107.8 million, respectively, due to the decline in future revenue projections in the Cell Therapy business driven
by discontinuation of clinical trials and changes in our strategy and pipeline.
Total other expense was $30.4 million in 2025 compared to $19.5 million in 2024, an increase of $10.9 million, or 55.7%. The increase was primarily due to the $3.7 million increase in the change in fair value of warrant liabilities, a $2.3 million loss on issuance of convertible note with warrants, a $2.5 million increase in loss on debt extinguishment, an increase in interest expense of $0.5 million, an increase in the change in fair value of debt of $1.3 million and a $2.9 million impairment of preferred stock investment.
For the year ended December
31, 2024, total other expense was $19.5 million compared to $4.0 million in the prior year period. The decrease was primarily due to changes
in the fair value of warrant liabilities of $5.8 million, a loss on debt extinguishment of $3.9 million and an increase in interest expense
of $3.2 million. Change in fair value of warrant liability for the year ended December 31, 2023, was a $6.2 million gain primarily due
to decreases in the price of our Class A common stock during the prior year period (see Note 4, “Fair Value of Financial Assets
and Liabilities” of our audited consolidated financial statements included elsewhere in this annual report on Form 10-K). Included
in the year ended December 31, 2024 was a $3.9 million loss on debt extinguishment recorded in connection with the January 12, 2024 RWI
Second Amended Bridge Loan (for more information about the RWI Second Amended Bridge Loan refer to Note 10, “Debt” in
our audited consolidated financial statements included elsewhere in this annual report on Form 10-K). The $3.2 million increase in interest
expense was primarily driven by interest on the January 12, 2024, RWI Second Amended Bridge Loan. Other expense, net increased $3.3 million
from the prior period primarily due to an accrual for liquidated damages resulting from our failure to satisfy certain public information
conditions pursuant to the securities purchase agreement dated May 18, 2022.
As of December 31, 2025, we had cash and cash equivalents of $6.2 million, an accumulated deficit of $991.5 million, and a working capital deficit of $68.4 million. Our primary sources of cash are from financing activities and from products, services and licensing sales. We use this cash to fund our operations and satisfy our debt obligations.
As of the filing date, our current cash resources are not sufficient to fund our operations for a period of 12 months beyond the filing date and we are actively pursuing additional sources of capital and strategic sales partnerships to improve our liquidity and financial position, including transactions designed to monetize assets, reduce indebtedness and transition to a more capital-efficient operating model. While our ability to secure additional financing is subject to market conditions and other factors, these uncertainties raise substantial doubt about our ability to continue as a going concern.
We are evaluating and pursuing commercialization of certain investigational cellular therapies, including cenplacel-L, in jurisdictions that permit the use of such products outside of traditional regulatory approval pathways, subject to applicable local laws and regulations. If we obtain regulatory approval for any of our therapeutic candidates, we expect to incur significant commercialization expenses related to therapeutic sales, marketing, manufacturing and distribution as our current commercialization efforts are limited to our biobanking and degenerative disease businesses.
We expect to finance our cash needs through equity offerings, debt financings or other capital sources, and from commercial sales of our biomaterials products, and from sales collaborations, licenses and other similar arrangements for our cellular therapeutics. We continue to explore licensing and collaboration arrangements for our cellular therapeutics as well as distribution arrangements for our degenerative disease business. We may be unable to raise additional funds or enter such other arrangements when needed. Failure to raise needed cash could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.
As of December 31, 2024,
we had $0.7 million of unrestricted cash and cash equivalents and an accumulated deficit of $899.7 million. Our primary sources of cash
are revenues generated through our biomaterials and biobanking commercial businesses, as well as financing activities. Our capital resources
are primarily used to fund our operating expenses, including: selling, general and administrative costs to operate our commercial businesses;
costs to maintain our GMP manufacturing and research and development facility; and, costs related to development of our advanced biomaterial
and cell therapy product candidates, along with cash used for debt repayment.
On October 9, 2024, we entered
into an asset purchase agreement with Sequence LifeScience, Inc., or Sequence, pursuant to which we acquired Sequence’s Rebound™
full thickness placental-derived allograft matrix product, or the Product, and certain assets related thereto, collectively the Asset.
We will pay aggregate consideration for the Asset of up to $5.5 million, which consists of (i) an upfront cash payment of $1.0 million
(ii) an aggregate of up to $4.0 million in monthly milestone payments, or the Milestone Payments, and (iii) a credit of $0.5 million for
the previous payment made by us to Sequence pursuant to that certain letter of intent between us and Sequence dated August 16, 2024. Pursuant
to the terms of the Asset Purchase Agreement, the Milestone Payments are calculated based on 20% of net sales collected by us from our
customers during the preceding calendar month, commencing the first full month after the closing of the transaction. The closing of the
transaction occurred on October 9, 2024. Concurrently with the execution of the Asset Purchase Agreement, we entered into an exclusive
supply agreement with Sequence for the manufacture and supply of the Product for a minimum period of six months. We retain the right to
manufacture the Product internally and intend to commence a technology transfer as soon as practicable.
What changed in the latest 10-Q
Risk Factors
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on April 30, 2026.
Full comparison: every changed paragraph (1)
Our
operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk
Factors” in our Annual Report on Form 10-K for the year ended December 31, 20242025 filed with the SEC on MayApril 8,30, 2025.2026.
Management's Discussion & Analysis (MD&A)
New heading “Business Realignment”
New heading “Cellular Therapy Platform and Development Strategy”
New heading “Manufacturing and Third-Party Services”
New heading “Corporate Information”
Removed heading “Acquisitions and Divestitures”
Removed heading “Licensing Agreements”
Removed heading “Change in fair value of contingent consideration liability”
Removed heading “Comparison of Three Months Ended September 30, 2025 to September 30, 2024”
Removed heading “Net Revenues and Cost of Revenues”
Removed heading “Comparison of Nine Months Ended September 30, 2025 to September 30, 2024”
Removed heading “Net Revenues and Cost of Revenues”
Removed heading “Research and Development Expenses”
Removed heading “Selling, General and Administrative Expenses”
Removed heading “Other Income (Expense)”
Removed heading “Recent Accounting Pronouncements”
Largest changes
“To date, we have not had any cellular therapeutics approved for sale and have not generated any revenues from the sale of our cellular therapeutics and we are not actively developing any cellular therapeutics in our pipeline given our liquidity. We do not expect to generate any revenue from cellular therapeutic product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our therapeutic candidates, which we expect will take a number of years. …”see in full comparison
“Our current cash resources are not sufficient to fund our operations for a period of 12 months beyond the filing date and we are actively pursuing additional sources of capital and strategic sales partnerships to improve our liquidity and financial position, including transactions designed to monetize assets, reduce indebtedness and transition to a more capital-efficient operating model. While our ability to secure additional financing is subject to market conditions and other factors, these uncertainties raise substantial doubt about our ability to continue as a going concern.”see in full comparison
“On June 29, 2026, we entered into a loan agreement with the Barach Family Trust providing for a $1.0 million secured loan. The loan bears interest at 4% per annum, with a default interest rate of 18% per annum, and matures upon the earlier of 30 days after issuance or the completion of a subsequent transaction meeting the repayment threshold specified in the agreement. In a September 1, 2026 letter, the lender’s counsel asserted that an event of default had occurred, the applicable forbearance had expired and default interest at 18% per annum applied beginning August 5, 2026. …”see in full comparison
“As an emerging clinical-stage biotechnology company, we are subject to certain inherent risks and uncertainties associated with the development of an enterprise. …”see in full comparison
“Pursuant to the License Agreement, we have the option (the “Option”) to purchase from Celeniv all (and not any part) of Celeniv’s right, title and interest in the Licensed Technology (as defined in the License Agreement) and Licensed Marks (“Asset Purchase”). The Option shall be in effect for a period of five years beginning August 13, 2025 (the “Option Period”). …”see in full comparison
“On April 17, 2026, Helena delivered to us a notice of event of default (the “Helena Default Notice”) under the Helena Note. In the Helena Default Notice, Helena asserted that one or more events of default had occurred under the Helena Note, including among other things, our failure to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended, including becoming delinquent in its filings. We believe the asserted default arose from our failure to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2025. …”see in full comparison
Full comparison: every changed paragraph (117)
You
should read the following discussion of our financial condition and results of operations together with the unaudited interim condensed
consolidated financial statements and the notes thereto included elsewhere in this report and otherour audited consolidated financial informationstatements
and the notes thereto included in
this report.our Annual Report on Form 10-K for the year ended December 31, 2025, or the 2025 Form 10-K. The following
discussion maycontains containforward-looking predictions,statements, estimatesincluding statements regarding our business strategy, development programs, manufacturing
activities, strategic transactions and otheranticipated forward-lookingfinancial statements.performance. See “Special Note
Regarding Forward-Looking Statements.”
These forward-looking statements involve a number of risks and uncertainties, including
those discussed in this report and under “Part I — Item 1A. Risk
Factors” in the 20242025 Form 10-K.10-K, These risksthat could
cause our actual results to differ materially from anythose futureexpressed performanceor suggestedimplied below.by these
forward-looking statements..
We are a longevity-focused regenerative and cellular medicine company developing and manufacturing placenta-derived cellular therapy candidates intended to address age-related diseases, tissue degeneration and declines in human function. Our business combines cellular therapy research and development, manufacturing capabilities, biobanking services and participation in the commercialization and supply of placental-derived biomaterial products through licensing and other contractual arrangements. Our strategy is to concentrate resources on our cellular therapy platform and manufacturing infrastructure while pursuing opportunities to generate revenue from third-party manufacturing services, biobanking and our retained biomaterials activities.
Business Realignment
Our business has evolved from the broader development and direct commercialization model historically associated with our cellular therapy, biomaterials and biobanking activities. In March 2026, we entered into agreements with NexGel, Inc., or NexGel, providing for the transfer of certain commercial and other assets associated with our biomaterials portfolio and an exclusive license to develop and commercialize specified products, subject to territorial and other contractual limitations. We subsequently completed the transaction in April 2026. The transaction shifted responsibility for specified biomaterials commercialization and development activities to NexGel while preserving certain contractual rights and opportunities for future economic participation.
Our biomaterials portfolio has included Biovance®, Biovance® 3L, Biovance® 3L Ocular, Interfyl®, CentaFlex® and Rebound™, which are placental-derived allografts and connective tissue matrices developed for surgical, wound care and related applications. Our continuing activities with respect to these products depend on the applicable product rights, territories and manufacturing, supply, licensing and distribution arrangements. Accordingly, our historical biomaterials product sales and operating expenses may not be indicative of our results following the transaction and related organizational changes.
In connection with this realignment, we reduced personnel and other expenditures associated with certain commercial and product development functions. These actions are intended to reduce operating costs and concentrate investment on our cellular therapy programs and manufacturing capabilities. The extent to which we realize these benefits will depend on our execution, the performance of our counterparties and our ongoing contractual obligations.
Cellular Therapy Platform and Development Strategy
Our cellular therapy strategy is based on the potential of cells derived from the postpartum placenta to address biological processes associated with age-related disease, including chronic inflammation, impaired tissue repair and immune dysfunction. Our objective is to develop therapies that may extend healthspan, which we define as the period of life spent in good health and with preserved function.
Aging is associated with progressive changes in tissue structure, regenerative capacity and immune function. Cellular senescence, stem cell exhaustion and chronic inflammation are among the biological processes implicated in these changes. We believe placenta-derived cells may offer opportunities to modulate certain of these processes. However, the ability of our product candidates to produce clinically meaningful benefits must be established through appropriate studies.
Our development priorities include cenplacel-L, a placenta-derived mesenchymal-like adherent stromal cell, product candidate. We are pursuing its potential application in diabetic foot ulcers and evaluating development opportunities in age-related frailty and other degenerative conditions. Our broader platform also includes placenta-derived natural killer, or NK, cells, including CYNK-001, which we are evaluating for potential applications involving immune function and the clearance of senescent cells. The advancement, timing and scope of individual programs depend on available funding, regulatory requirements, scientific and clinical results, and strategic priorities.
Our cellular therapy candidates are investigational and have not been approved by the U.S. Food and Drug Administration. Their safety and effectiveness for the proposed indications have not been established. We also evaluate opportunities involving physician access and collaborations in jurisdictions with potentially applicable treatment pathways, subject to federal, state and foreign legal and regulatory requirements. These activities do not constitute regulatory approval or establish the safety or effectiveness of our candidates.
Manufacturing and Third-Party Services
Our Celularity IMPACT (IMmunomodulatory Placenta-derived Allogeneic Cellular Therapy) platform integrates the sourcing of postpartum placentas from donors who have provided informed consent with cell isolation, expansion, characterization, cryopreservation and manufacturing. Our infrastructure includes our purpose-built, approximately 147,215-square-foot facility in Florham Park, New Jersey, which supports our cellular therapy programs and other manufacturing and biobanking activities.
We believe postpartum placentas provide a scalable source of cells with biological properties that may support the development of allogeneic therapies. Allogeneic therapies use donor-derived cells and are intended for use in multiple recipients, potentially enabling inventory-based, off-the-shelf supply. The suitability, tolerability and clinical performance of each candidate depend on its characteristics, manufacturing process, route of administration and intended use.
In addition to supporting our internal programs, we pursue revenue-generating opportunities to provide manufacturing and related technical services to third parties. Depending on the engagement, these services may include cell processing and expansion, production, analytical testing, cryopreservation, storage and related support. We also undertake biomaterials manufacturing and supply activities under applicable contractual arrangements. These activities are intended to utilize our existing infrastructure and expertise, although their contribution to revenue and operating results depends on customer demand, capacity utilization, contractual terms and our ability to meet applicable specifications and delivery requirements.
Biobanking
We continue to operate our biobanking business primarily under the LifebankUSA brand, providing collection, processing and storage services for umbilical cord and placental blood and tissue for potential future use. This business provides service revenue and supports our broader expertise in biological material processing, cryopreservation and long-term storage. We are also evaluating opportunities to expand cell banking services in support of our longevity-focused strategy. The potential future use of banked materials depends on their suitability and the availability of appropriate therapies and regulatory pathways.
Our ability to advance our development programs, expand manufacturing services and realize the anticipated benefits of our business realignment remains dependent on access to capital, effective management of our operating expenses, regulatory developments and the performance of our commercial and strategic counterparties.
We
are a regenerative and cellular medicines company focused on addressing aging related diseases including cancer and degenerative diseases.
Our goal is to ensure all individuals have the opportunity to live healthier longer. We develop and market off-the-shelf placental-derived
allogeneic advanced biomaterial products including allografts and connective tissue matrices for soft tissue repair and reconstructive
procedures in the treatment of degenerative disorders and diseases including those associated with aging. We believe that by harnessing
the placenta’s unique biology and ready availability, we will be able to develop therapeutic solutions that address a significant
unmet global need for effective, accessible and affordable therapeutics. Our advanced biomaterials business today is comprised primarily
of the sale of our Biovance 3L products, directly or through our distribution network. Biovance 3L is a tri-layer decellularized, dehydrated
human amniotic membrane derived from the placenta of a healthy, full-term pregnancy. It is an intact, natural extracellular matrix that
provides a foundation for the wound regeneration process and acts as a scaffold for restoration of functional tissue. We are developing
new placental biomaterial products to deepen the biomaterials commercial pipeline. We also plan to leverage our core expertise in cellular
therapeutic development and manufacturing to generate revenues by providing contract manufacturing and development services to third
parties. The initial focus of this new service offering will be to assist development stage cell therapy companies with the development
and manufacturing of their therapeutic candidates for clinical trials.
We
are working toward a set of milestones with respect to off-the-shelf placental-derived allogeneic biomaterial product candidates and
cell therapy product candidates, respectively. With respect to our biomaterial product candidate pipeline, we expect to submit a 510(k)
application for our Celularity Tendon Wrap, or CTW, in the fourth quarter of 2025. We expect to advance the development of our FUSE Bone
Void Filler, or FUSE, with the objective of a 510(k) filing in the second half of 2026, and to advance the development of our Celularity
Placental Matrix, or CPM, with the objective of a 510(k) filing in the second half of 2027. Recently, a number of states have enacted
legislation to expand access to stem cell and other cell therapies which have not yet received FDA approval, including a new Florida
law that went into effect on July 1, 2025, allowing Florida physicians to administer stem cell treatments for wound care, pain management
and orthopedics purposes, subject to certain requirements and limitations. We are actively assessing opportunities in Florida and elsewhere
to supply our MLASCs cell therapy product candidates PDA 001 and PDA 002 to physicians for use in accordance with state law. Additionally,
when we are sufficiently capitalized, we plan to complete our safety and efficacy assessment to determine progress to a Phase III clinical
trial of, respectively, our MLASCs cell therapy product candidate PDA 001 in Crohn’s disease and our MLASCs cell therapy product
candidate PDA 002 in DFU.
Our
Celularity IMPACT manufacturing platform is a seamless, fully integrated process designed to optimize speed and scalability from the
sourcing of placentas from full-term healthy informed consent donors through the use of proprietary processing methods, cell selection,
product-specific chemistry, manufacturing and controls, or CMC, advanced cell manufacturing and cryopreservation. The result is a suite
of allogeneic inventory-ready, on demand placental-derived cell therapy products. We also operate and manage a commercial biobanking
business that includes the collection, processing and cryogenic storage of certain birth byproducts for third parties. A biobank is an
organized collection of biological human material, and its associated information stored for future retrieval and use in research, regenerative
medicine, and innovation. We provide a fee-based biobanking service to expectant parents who contract with us to collect, process, cryogenically
preserve and store certain biomaterial, including umbilical cord blood and placenta derived cells and tissue. We receive a one-time fee
for the collection, processing, and cryogenic preservation of the biomaterials, and a storage fee to maintain the biomaterials in our
biobank payable annually generally over a period of 18 to 25 years. We intend to explore opportunities to diversify our biobanking business,
including adult cell banking.
Our
current science is the product of the cumulative background and effort over two decades of our seasoned and experienced management team.
We have our roots in Anthrogenesis Corporation, or Anthrogenesis, a company founded under the name Lifebank in 1998 by Robert J. Hariri,
M.D., Ph.D., our founder and Chief Executive Officer, and acquired in 2002 by Celgene Corporation, or Celgene. The team continued to
hone their expertise in the field of placental-derived technology at Celgene through August 2017, when we acquired Anthrogenesis. We
have a robust global intellectual property portfolio comprised of over 290 patents and patent applications protecting our Celularity
IMPACT platform, our processes, technologies and cell therapy programs that we are actively developing on our own or seeking to out-license
or to find a collaboration partner to develop. We believe this know-how, expertise and intellectual property will drive the rapid development
and, if approved, the commercialization of these potentially lifesaving therapies for patients with unmet medical needs.
On
April 30, 2025 and May 7, 2025, we entered into multiple merchant cash advance (“MCA”) agreements with Genesis Equity Group
Funding LLC (“GEG”) under which we transferred the rights to specified future receivables of an aggregate Purchase Amount
of approximately $1.5 million in exchange for aggregate upfront cash proceeds of approximately $0.9 million, until the Purchased Amount
is fully collected. On August 15, 2025, we entered into an additional merchant cash advance agreement (the “Second MCA”)
with GEG under which we transferred the rights to specified future receivables of an aggregate approximate $2.5 million (the “Second
Purchased Amount”) in exchange for aggregate upfront cash proceeds of approximately $1.5 million, net of fees. The proceeds from
the Second MCA were used to repay the First MCA and for working capital needs.
On
June 23, 2025, we entered into a Securities Purchase Agreement for a private placement of 739,284 shares of Class A common stock at $1.40
per share, resulting in gross proceeds of approximately $1.0 million. In conjunction with the offering, we agreed to modify certain existing
warrants held by the investors, reducing the exercise price to $2.50 and extending the expiration date to June 30, 2030. The proceeds
are intended for working capital and general corporate purposes.
On
June 25, 2025, we amended the conversion price of certain unsecured senior convertible notes to $1.60 per share. In connection with
the amendment, the notes, including $670 of principal and accrued interest, were automatically converted into 490,632 shares
of our Class A common stock.
On
July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant provisions,
such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, and the restoration of favorable tax treatment
for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented
through 2027. The Company analyzed the impact of the OBBBA and the OBBBA did not have a material impact on the consolidated financial
statements of the Company as of and for the nine months ended September 30, 2025.
On
July 14, 2025, we entered into a Securities Purchase Agreement with an institutional investor for the private placement of 1,230,769
shares of Class A common stock and accompanying warrants to purchase an equal number of shares. The purchase price was $1.63 per share
and warrant, with gross proceeds of approximately $2.0 million. The warrants are exercisable at $1.50 per share for a term of two years.
The net proceeds are to be used for working capital and general corporate purposes.
On
July 21, 2025, we issued a promissory note in the aggregate principal amount of $6.8 million to Lim Kok Thay, a former Director of the
Company. In addition, Mr. Thay received a warrant to purchase 3,700,000 shares of Class A common stock. The warrant is exercisable at
$2.53 per share for five years from the date of issuance. The July 21, 2025 promissory note bears interest at 2% per annum and has a
maturity date of March 21, 2026. The promissory note was subsequently assigned by Mr. Thay to Celeniv Pte. Ltd. (“Celeniv”).
The Company agreed with Mr. Thay that a portion of the net proceeds from the issuance of the promissory note will be used to fully settle
the principal and all accrued interest of the loan from C.V. Starr & Co. pursuant to the loan agreement between us and Starr dated
March 17, 2023. On July 29, 2025, we paid C.V. Starr $5.9 million in satisfaction of the outstanding principal and interest owed under
the C.V. Starr & Co loan. As a result, we recognized a gain from the forgiveness of accrued interest of approximately $1.0 million.
On
August 5, 2025, we entered into a Series Seed Preferred Stock Purchase Agreement with Defeye, Inc. (“Issuer”) for the issuance
of 7,198,630 shares of the Issuer’s Series Seed-2 Preferred Stock (“Preferred Stock”), in exchange for $2.89 million
of product purchase credits pursuant to a supply and distribution agreement between us and the Issuer.
On
August 13, 2025, we entered into an asset purchase agreement (the “APA”) with Celeniv Pte. Ltd (“Celeniv”). Concurrently
with the APA, two of our lenders agreed to assign their note payables to Celeniv. Pursuant to the APA, we agreed to sell Celeniv certain
purchased intellectual property in exchange for the assignment of our obligations due under the three note payables. Collectively, the
assigned note payables had a principal value of approximately $33.8 million and accrued interest of $4.1 million immediately prior to
the assignment of their obligations.
In
connection with the APA, we entered into a License Agreement with Celeniv, granting us an exclusive, worldwide, royalty-bearing license
under certain intellectual property. We will pay Celeniv a royalty in an amount equal to a low double digit percentage of the purchase
price payable in quarterly installments commencing on the one year anniversary through the earlier of (A) the closing of the Asset Purchase
(as defined below) and (B) the fifth anniversary of the License Agreement (including the Negotiation Period).
Pursuant
to the License Agreement, we have the option (the “Option”) to purchase from Celeniv all (and not any part) of Celeniv’s
right, title and interest in the Licensed Technology (as defined in the License Agreement) and Licensed Marks (“Asset Purchase”).
The Option shall be in effect for a period of five years beginning August 13, 2025 (the “Option Period”). The purchase price
for the Asset Purchase shall be as follows: (i) if the Option is exercised on or prior to August 13, 2026, the purchase price shall be
a mid-eight digit amount (the “Option Purchase Price”) and (ii) if the Option is exercised after August 13, 2026, the purchase
price shall be the Option Purchase Price, plus an amount equal to a low double digit percentage of the Purchase Price, plus the amount
of any Quarterly Payments (and penalty interest if any) accrued but unpaid through the date of the closing. If we do not exercise the
Option before the end of the Option Period, the Option shall lapse, and the Term of the License Agreement shall automatically extend
for 90 days (the “Negotiation Period”). If the Option is exercised during the Option Period, the Term of the License Agreement
shall be extended through the closing of the Asset Purchase.
During
the three months ended September 30, 2025 the holder of a convertible promissory note issued by us elected to convert the promissory
note into common stock. As a result, principal of $2,000 and accrued interest of $255 was converted and we issued the holder
1,525,008 shares of common stock.
We have determined there are conditions that raise substantial doubt about our ability to continue as a going concern within one year from the date these financial statements were issued. We have minimal cash on hand, do not generate sufficient cash from operations to operate the business for the next twelve months, and may not be able to continue as a going concern. We have historically funded operations through sales of products and services and equity and debt securities financings from both public and private investors. There is no assurance that such cash flows will continue in the future or that we will achieve cash positive operations.
We have generally not been profitable and since our inception, we have incurred significant operating losses and used net cash for operating activities. During the three months ended March 31, 2026, we recorded net income of $874. Net cash provided by operating activities was $1,447 for the three months ended March 31, 2026, which included $12,159 of proceeds from the sale of New Jersey net operating loss carryforwards; excluding those proceeds, operating activities used net cash. As of March 31, 2026, we have an accumulated deficit of $990,609 and have a working capital deficit of $64,282. We restructured operations in the first months of 2026 and believe increased sales are required to achieve break even operating cash flows in the next 6 to 12 months, however there is no assurance this will be achieved and significant operating losses and net cash uses for operations may continue for the foreseeable future. We will need to secure additional financing however there is no assurance that financing can be raised or at acceptable terms. These factors indicate we may be unable to meet our obligations as they become due over the next 12 months, or sooner, and continue as a going concern.
On May 27, 2026, we received a notice from Nasdaq Stock Market LLC indicating that we are not in compliance with the timely filing requirement under Nasdaq Listing Rule 5250(c)(1) due to our failure to timely file its Form 10-Q for the period ended March 31, 2026. On July 23, 2026, Nasdaq notified the Company of its failure to maintain a sufficient minimum bid price. We intend to regain compliance; however, there can be no assurance that we will be able to do so within any applicable period or that our securities will continue to be listed on Nasdaq.
In the event we are unable to secure additional outside capital to fund our obligations when they become due over the next 12 months beyond the filing date, which includes the funds needed to repay our outstanding debt, management will be required to seek other strategic alternatives, which may include, among others, a significant curtailment of our operations, a sale of certain of our assets, a sale of the entire Company to strategic or financial investors, and/or allowing us to become insolvent by filing for bankruptcy protection under the provisions of the U.S. Bankruptcy Code.
In
accordance with Generally Accepted Accounting Principles, “GAAP,” we evaluated whether there are certain conditions and events,
considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the
date that the unaudited condensed consolidated financial statements are issued.
As
an emerging clinical-stage biotechnology company, we are subject to certain inherent risks and uncertainties associated with the development
of an enterprise. In this regard, since our inception, substantially all of management’s efforts have been devoted to making investments
in research and development including basic scientific research into placentally-derived allogeneic cells, pre-clinical studies to support
our current and future clinical programs in cellular therapeutics, and clinical development of our cell programs as well as facilities
and selling, general and administrative expenses that support our core business operations (collectively the “investments”),
all at the expense of our short-term profitability. We have historically funded these investments through limited revenues generated
from our biobanking and degenerative disease businesses and issuances of equity and debt securities to public and private investors (these
issuances are collectively referred to as “outside capital”). Notwithstanding these efforts, management can provide no assurance
that our research and development and commercialization efforts will be successfully completed, or that adequate protection of our intellectual
property will be adequately maintained. Even if these efforts are successful, it is uncertain when, if ever, we will generate significant
sales or operate in a profitable manner to sustain our operations without needing to continue to rely on outside capital. Continued decline
in our share price could result in impairment of goodwill or long-lived assets in a future period.
As
of the date the accompanying unaudited condensed consolidated financial statements were issued, or the issuance date, management evaluated
the significance of the following adverse conditions and events in accordance with ASU 205-40:
These
uncertainties raise substantial doubt about our ability to continue as a going concern. The accompanying unaudited condensed consolidated financial
financial statements have been prepared on the basis that we will continue to operate as a going concern, which contemplates that we
will be able
to realize assets and settle liabilities and commitments in the normal course of business for the foreseeable future. Accordingly, the
the accompanying unaudited condensed consolidated financial statements do not include any adjustments that may result from the outcome
of these uncertainties.
We
manage our operations through an evaluation of three distinct business segments: Cell Therapy, Degenerative Disease,BioBanking and BioBanking.Degenerative Disease. The
The reportable segments were determined based on the distinct nature of the activities performed by each segment. Cell Therapy broadly refers
refers to cellular therapies we are researching and developing,developing. whichTherapies being researched are unproven and in various phases of development.
All of the cell
therapy programs fall into the Cell Therapy segment. We have no approved cell therapy product and have not generated revenue from the
sale of cellular therapies to date. Degenerative Disease produces, sells and licenses products used
in surgical and wound care markets,
such as Biovance, Biovance 3L, InterfylInterfyl, CentaFlex and CentaFlex.Rebound. We sell products in this segment
using independent sales representatives as well
as distributors. We areintend developingto develop additional tissue-based products for the Degenerative
Disease segment. BioBanking collects stem cells
from umbilical cords and placentas and provides storage of such cells on behalf of individuals
for future use. We operate in the biobanking
business primarily under the LifebankUSA brand. For more information about our reportable
business segments refer to Note 20, “Segment
Information” of our accompanying unaudited condensed consolidated financial statements included elsewhere in this
quarterly report
on Form 10-Q.
Corporate Information
Our principal executive offices are located at 170 Park Avenue, Florham Park, New Jersey 07932, and our telephone number is (908) 768-2170.
Acquisitions
and Divestitures
On
October 9, 2024, we entered into an asset purchase agreement with Sequence LifeScience, Inc. (“Sequence”) to acquire Sequence’s
Rebound™ full thickness placental-derived allograft matrix product and certain related intangible assets. Rebound adds to our portfolio
of placental-derived advanced biomaterial products. We will pay aggregate consideration for the assets of up to $5.5 million, which consists
of (i) an upfront cash payment of $1.0 million (ii) an aggregate of up to $4.0 million in monthly milestone payments, and (iii) a credit
of $0.5 million for the previous payment made by us to Sequence pursuant to a letter of intent between us and Sequence dated August 16,
2024. Pursuant to the terms of the asset purchase agreement, the milestones are calculated based on 20% of net sales collected by us
from our customers during the preceding calendar month, commencing the first full month after the closing of the transaction. Transaction
costs incurred with in connection with the Rebound asset acquisition were de minimis. As of September 30, 2025, we have accrued a total
of $3.0 million for milestone payments due Sequence based on cumulative net sales collected from customers.
Licensing
Agreements
In
the ordinary course of business, we license intellectual property and other rights from third parties and have also outlicensed our intellectual
property and other rights, including in connection with our acquisitions and divestitures, described above. Additional details regarding
our licensing agreements can be found in Note 19, “License and Distribution Agreements” to our unaudited condensed consolidated
financial statements included elsewhere in this quarterly report on Form 10-Q.
In
August 2017, in connection with the Anthrogenesis acquisition, we entered into a license agreement, or the Celgene License, with Celgene,
which has since been acquired by Bristol Meyers Squibb. Pursuant to the Celgene License, we granted Celgene a worldwide, royalty-free,
fully-paid up, non-exclusive license, without the right to grant sublicenses (other than to its affiliates), under Anthrogenesis’
intellectual property in existence as of the date of the Celgene License or as developed by Celgene in connection with any transition
services activities related to the merger for non-commercial pre-clinical research purposes, as well as to develop, manufacture, commercialize
and fully exploit products and services that relate to the construction of any CAR, the modification of any T-cell or NK cell to express
such a CAR, and/or the use of such CARs or T-cells or NK cells for any purpose, which commercial license is sublicensable. Either party
may terminate the Celgene License upon an uncured material breach of the agreement by the other party or insolvency of the other party.
In
August 2017, Legacy Celularity also issued shares of its Series X Preferred Stock to Celgene as merger consideration and entered into
a contingent value rights agreement, or the CVR Agreement, with Celgene pursuant to which Legacy Celularity issued one contingent value
right or CVR, in respect of each share of Legacy Celularity Series X Preferred Stock issued to Celgene in connection with the Anthrogenesis
acquisition. The CVR Agreement entitles the holders of the CVRs to an aggregate amount, on a per program basis, of $50.0 million in regulatory
milestones and an aggregate $125.0 million in commercial milestone payments with respect to certain of our investigational therapeutic
programs. In addition, with respect to each such program and calendar year, the CVR holders will be entitled to receive a royalty equal
to a mid-teen percentage of the annual net sales for such program’s therapeutics from the date of the first commercial sale of
such program’s therapeutic in a particular country until the latest to occur of the expiration of the last to expire of any valid
patent claim covering such program therapeutic in such country, the expiration of marketing exclusivity with respect to such therapeutic
in such country, and August 2027 (i.e., the tenth anniversary of the closing of the acquisition of Anthrogenesis). No payments under
the CVR Agreement have been made to date. We estimate the liability associated with the CVR quarterly. Changes to that liability include
but are not limited to changes in our clinical programs, assumptions about the commercial value of those programs and the time value
of money.
On
August 25, 2023, we entered into a multi-year research collaboration services agreement with Regeneron Pharmaceuticals, Inc. (“Regeneron”),
pursuant to which we support the research effort of Regeneron’s allogeneic cell therapy candidates (the “Regeneron Services
Agreement”). We received payments totaling $1.3 million under the Regeneron Services Agreement, of which $688 was recognized in
revenue during the fourth quarter of 2024 based on achievement of defined milestones. On August 6, 2025, Regeneron provided us with notice
of termination of the agreement. Accordingly, the remaining $637 was recognized in revenue during the third quarter of 2025. For additional
information about the Regeneron Service Agreement, refer to Note 19, of the Notes to the Condensed Consolidated Financial Statements
included elsewhere in this report.
On
December 11, 2023, we entered into a license agreement with BioCellgraft, Inc. whereby we granted an exclusive license to BioCellgraft,
with the right to sublicense, to develop and commercialize certain licensed products to the dental market in the United States over an
initial four year term, which license agreement will automatically renew for an additional two years unless either party provides written
notice of termination. BioCellgraft agreed to pay us total license fees of $5.0 million over a two-year period. Upon execution of the
agreement, we received an initial $0.3 million payment towards the first year of the two-year period.
OurResearch
research and development expenses primarily relate to basic scientific research into placentally derived allogeneic cells, pre-clinical studies
studies to support our current and future clinical programs in cellular medicine, clinical development of our NK cell programs and facilities,
depreciation and other direct and allocated expenses incurred as a result ofthrough research and development activities. We incur expenses for
personnel expenses for research
scientist scientists,personnel, specialized chemicals and reagents used to conduct biologic research, expenseexpenses for third party
testing and validation
and various overhead expenses including rent and facility maintenance expense.expenses. Basic research, research collaborations
involving partners
and research designed to enable successful regulatory submissions isare critical to our current and future success in
cell therapy. The
amount of our research and development expenditures will depend on numerous factors, including the timing of clinical
trials, preliminary
evidence of efficacy in clinical trials and the number of indications that we choose to pursue.
GeneralSelling,
general and administrative expense
Selling,
general and administrative expense consists primarily of personnel costs including salaries, bonuses, stock compensation and benefits
for specialized staff that support our core business operations. Executive management, finance, legal, human resources and information
technology are key components of selling, general and administrative expense and those expenses are recognized when incurred. We expect
that as a result of our reprioritization efforts, we will see a decrease in our selling, general and administrative costs in the near
term. The magnitude
and timing of our selling, general and administrative costs willcommercialization depend on the progress of clinical trials, commercializationefforts
efforts for any approved therapies including the release of new products within the degenerative disease portfolio, changes in the regulatory
environment or staffing needs to support our business strategy.
Change
in fair value of contingent consideration liability
Because
the acquisitions of Anthrogenesis from Celgene and HLI CT were accounted for as business combinations, we recognized acquisition-related
contingent consideration on the balance sheets in accordance with the acquisition method of accounting. See Note 15, “Commitments
and Contingencies” for more information. The fair value of contingent consideration liability is determined based on a probability-weighted
income approach derived from revenue estimates and a probability assessment with respect to the likelihood of achieving regulatory and
commercial milestone obligations and royalty obligations. The fair value of acquisition related contingent consideration is remeasured
each reporting period with changes in fair value recorded in the condensed consolidated statements of operations. Changes in contingent
consideration fair value estimates result in an increase or decrease in our contingent consideration obligation and a corresponding charge
or reduction to operating results. Key elements of the contingent consideration are regulatory milestone payments, sales milestone payments
and royalty payments. Regulatory payments are due on regulatory approval of certain cell types in the United States and the European
Union. Regulatory milestone payments are one time but are due prior to any potential commercial success of a cell type in a specific
indication. Royalty payments are a percentage of net sales. Sales milestone payments are due when certain aggregate sales thresholds
have been met. Management must use substantial judgment in evaluating the value of the contingent consideration. Estimates used by management
include but are not limited to: (i) the number and type of clinical programs that we are likely to pursue based on the quality of our
preclinical data, (ii) the time required to conduct clinical trials, (iii) the odds of regulatory success in those trials, (iv) the potential
number of patients treatable for the indications in which we are successful and (v) the pricing of treatments that achieve commercial
status. All of these areas involve substantial judgment on the part of management and are inherently uncertain.
Product sales were $0.9 million in the three months ended March 31, 2026, compared to $9.0 million in 2025, a decrease of $8.2 million, or 90.4%, mainly driven by lower Biovance 3L and Rebound product sales and in part by changes in customer purchasing behavior due to the insurance reimbursement environment. Ongoing developments and delays in the rollout of coverage guidance from Medicare Administrative Contractors (MACs), the regional entities responsible for administering Medicare claims and issuing coverage determinations, particularly with respect to skin substitute grafts, created ambiguity around which products would ultimately qualify for reimbursement and under what criteria. As a result, providers and distributors appear to have adopted a more cautious approach to inventory and utilization, including deferring purchases or limiting order volumes.
Revenues from BioBanking services were $1.3 million in 2026 compared to $1.4 million in 2025, a decrease of $0.2 million, or 11.2%.
Revenues from license, royalty and other were $1.7 million in 2026 compared to $1.0 million in 2025, an increase of $0.7 million or 73.0%, including $0.2 million recognized on the Biocellgraft arrangement.
CELU insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-04-13 | Brigido Stephen |
Shares withheld for tax | 268 | $1.28 | $343 |
| 2026-04-13 | Brigido Stephen |
Option exercise | 821 | — | — |
| 2026-04-13 | Haines John R |
Option exercise | 1,641 | — | — |
| 2026-04-13 | Haines John R |
Shares withheld for tax | 583 | $1.28 | $746 |
| 2026-04-13 | Hariri Robert J |
Option exercise | 3,281 | — | — |
| 2026-04-13 | Hariri Robert J |
Shares withheld for tax | 1,182 | $1.28 | $1.5K |
Well-known investors holding CELU (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 99,054 | $59.2K | 0.0% | New position |