美国
证券交易委员会
华盛顿特区20549
表格
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根据1934年证券交易法第13或15(d)条，进行季度报告。 |
截至2024年6月30日季度结束
或
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在 _______ 至 _______ 的过渡期间内
委员会档案编号：
（根据其章程所指定的正式名称）
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| 交易 |
| 每个注册交易所的名称 |
请检查标记，确认注册商是否(1)在过去的12个月内(或更短的期限，注册商在该期限内需要提交此类报告)提交了证券交易法1934年第13条或15(d)条要求提交的所有报告；并且(2)过去90天一直受到此类报告的要求。
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请在方格中勾选公司是否为大型快速提交申报人、快速提交申报人、非快速提交申报人、较小型报告公司，或新兴成长型公司。请参阅交易所法令第1202条中“大型快速提交申报人”、“快速提交申报人”、“较小型报告公司”和“新兴成长型公司”的定义。
大型加速报告档案者 ☐ | 加速报告档案者 ☐ |
较小的报告公司 | |
新兴成长型公司 |
如果新兴成长公司，在Check Mark中指示是否选择不使用交易所法第13(a)款所提供的任何新的或修订的财务会计准则的扩展过渡期符合要求。
检查标记指示申报人是否为空壳公司（如Exchange Act第120亿2条的定义）。 是
截至2024年11月1日，登记人持有
关于前瞻性声明的警告
本季度报告表格10-Q及所引用的文件中包含涉及重大风险和不确定性的前瞻性陈述。在本季度报告表格10-Q或引用文件中所含的所有陈述，除了历史事实的陈述外，关于我们的策略、未来业务、未来财务状况、未来营业收入、预计成本、前景、计划和管理目标的陈述，均属前瞻性陈述。"预期"、"相信"、"估计"、"期望"、"打算"、"可能"、"计划"、"预测"、"项目"、"将"、"将会"、"可能"、"应该"、"潜在"、"寻找"、"评估"、"追求"、"继续"、"设计"、"影响"、"影响"、"预测"、"目标"、"展望"、"计划"、"目标"、"设计"、"优先事项"、"目标"或类似表达方式的词语都意在识别前瞻性陈述，尽管并非所有前瞻性陈述均包含这些识别词。此类陈述基于可能无法实现的假设和期望，天然地受风险、不确定性和其他因素所限，其中许多因素无法准确预测，甚至部份未被预期。
本季度报告表格10-Q中的前瞻性陈述包括，但不限于以下事项的陈述:
| ● | 本季度报告表格10-Q中关于我们能否筹集额外资本用于资助我们的业务运作并继续开发当前和未来产品候选者的陈述; |
| ● | 我们业务的前临床和早期临床性质，以及我们成功推进目前和未来产品候选者进行开发活动、前临床研究和临床试验的能力； |
| ● | 我们从未来产品销售中产生营收的能力，以及我们实现并保持盈利能力的能力； |
| ● | 我们对于支出、资本需求、现金利用和需要额外融资的预测和估计的准确性； |
| ● | 我们对于我们主导产品候选者CNTY-101的成功依赖； |
| ● | 我们在免疫肿瘤学和自身免疫治疗方面的新颖方法，利用iPSC衍生的自然杀手细胞（iNk细胞）和iPSC衍生的t细胞（it细胞），以及由于此类技术的新颖性而面临的挑战; |
| ● | 竞争疗法的成功或可能出现的疗法； |
| ● | 我们对与FUJIFILm Cellular Dynamics Inc.（“FCDI”）的合作关系维持依赖，以获取关键分化和重新编程技术，用于制造和开发我们的产品候选者; |
| ● | 我们开发活动，临床前研究和临床试验的启动，进展，成功，成本和时间表; |
| ● | 未来 Investigational New Drug（“IND”）申请的时机，以及我们获得和维持产品候选药物的 IND 申请的法规清洁机会和能力； |
| ● | 法规申请和核准的时机、范围和可能性，包括我们产品候选药物的最终法规核准； |
3
| ● | our reliance on FCDI to be the exclusive manufacturer of certain product candidates, and our ability to manufacture our own product candidates in the future, and the timing and costs of such manufacturing activities; |
| ● | our reliance on the maintenance of our collaborative relationship with Bristol-Myers Squibb Company (“Bristol-Myers Squibb”) in connection with the furtherance of our collaboration programs; |
| ● | our ability to achieve the anticipated benefits of our acquisition of Clade Therapeutics, Inc. (“Clade”); |
| ● | the performance of third parties in connection with the development of our product candidates, including third parties conducting our current and future clinical trials as well as third-party suppliers and manufacturers; |
| ● | our ability to attract and retain strategic collaborators with development, regulatory, and commercialization expertise; |
| ● | the public opinion and scrutiny of cell-based therapies and its potential impact on public perception of our company and product candidates; |
| ● | our ability to successfully commercialize our product candidates and develop sales and marketing capabilities, if our product candidates are approved; |
| ● | the size and growth of the potential markets for our product candidates and our ability to serve those markets; |
| ● | regulatory developments and approval pathways in the United States and foreign countries for our product candidates; |
| ● | the potential scope and value of our intellectual property and proprietary rights; |
| ● | our ability, and the ability of our licensors, to obtain, maintain, defend, and enforce intellectual property and proprietary rights protecting our product candidates, and our ability to develop and commercialize our product candidates without infringing, misappropriating, or otherwise violating the intellectual property or proprietary rights of third parties; |
| ● | our ability to recruit and retain key members of management and other clinical and scientific personnel; |
| ● | the volatility of capital markets and other macroeconomic factors, including due to inflationary pressures, banking instability geopolitical tensions or the outbreak of hostilities or war; |
| ● | the extent to which pandemics, or any other global health crises may impact our business, including development activities, preclinical studies, clinical trials, supply chain and labor force; and |
| ● | developments relating to our competitors and our industry; |
4
We have based these forward-looking statements largely on our current expectations, estimates, forecasts, and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q, the section titled “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 and the section titled “Risk Factors” set forth in Part II, Item 1A of our subsequent Quarterly Reports on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We intend the forward-looking statements contained in this Quarterly Report on Form 10-Q to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
5
PART I—FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements.
CENTURY THERAPEUTICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
September 30, 2024 | December 31, 2023 | ||||||
| (unaudited) |
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Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | | $ | | |||
Short-term investments |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets | | | |||||
Restricted cash | | | |||||
Long-term investments |
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Goodwill | | — | |||||
Intangible assets | | — | |||||
Security deposits and non-current assets |
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Total assets | $ | | $ | | |||
Liabilities and stockholders’ equity |
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Current liabilities |
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Accounts payable | $ | | $ | | |||
Accrued expenses and other liabilities |
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Deposit liability | | | |||||
Deferred revenue, current | | | |||||
Total current liabilities |
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Operating lease liability, long term |
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Security deposit, non-current | | — | |||||
Deposit liability, non-current | — | | |||||
Deferred revenue, non-current | | | |||||
Contingent consideration liability |
| |
| — | |||
Deferred tax liability |
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| — | |||
Total liabilities |
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Commitments and contingencies (Note 9) |
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Stockholders' equity: | |||||||
Preferred stock, $ | |||||||
Common stock, $ | | | |||||
Additional paid-in capital |
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| | |||
Accumulated deficit | ( | ( | |||||
Accumulated other comprehensive Income | | | |||||
Total stockholders’ equity | | | |||||
Total liabilities and stockholders’ equity | $ | | $ | | |||
See accompanying notes to the consolidated financial statements.
6
CENTURY THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share amounts)
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | ||||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | ||||||||||
Collaboration revenue | $ | | $ | | $ | | $ | | |||||
Operating expenses | |||||||||||||
Research and development | | | | | |||||||||
General and administrative |
| |
| |
| |
| | |||||
In-process research and development |
| - |
| |
| - |
| | |||||
Impairment of long-lived assets | - | — | - | | |||||||||
Total operating expenses |
| |
| |
| |
| | |||||
Loss from operations |
| ( |
| ( |
| ( |
| ( | |||||
Interest expense |
| — |
| — |
| - |
| ( | |||||
Interest income | | | | | |||||||||
Other income (expense) |
| |
| |
| |
| ( | |||||
Total other income | | | | | |||||||||
Loss before provision for income taxes | ( | ( | ( | ( | |||||||||
Benefit (provision) for income taxes | | ( | ( | ( | |||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Net loss per common share | ( | ( | ( | ( | |||||||||
Weighted average common shares outstanding | | | | | |||||||||
Other comprehensive loss | |||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Unrealized gain (loss) on investments | | ( | | | |||||||||
Foreign currency translation (loss) gain | ( | ( | | ( | |||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||
See accompanying notes to the consolidated financial statements.
7
CENTURY THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share amounts)
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | |||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||
Balance, December 31, 2023 | | $ | | $ | | $ | ( | $ | | $ | | ||||||
Issuance of common stock upon the exercise of stock options and 2021 ESPP | | — | | — | — | | |||||||||||
Vesting of restricted stock | | — | — | — | — | — | |||||||||||
Vesting of early exercise stock options | | — | | — | — | | |||||||||||
Vesting of restricted stock units | | — | — | — | — | — | |||||||||||
Issuance of common stock upon the exercise of ATM, net of underwriting discounts and commissions and other issuance costs | | — | | — | — | | |||||||||||
Unrealized loss on investments | — | — | — | — | ( | ( | |||||||||||
Foreign currency translation | — | — | — | — | | | |||||||||||
Stock based compensation | — | — | | — | — | | |||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||
Balance, March 31, 2024 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Issuance of common stock upon the exercise of stock options and 2021 ESPP | | — | | — | — | | |||||||||||
Vesting of early exercise stock options | | — | | — | — | | |||||||||||
Issuance of common stock in connection with the transaction | | — | | — | — | | |||||||||||
Issuance of common stock upon the exercise of PIPE, net of underwriting discounts and commissions and other issuance costs | | | | — | — | | |||||||||||
Unrealized loss on investments | — | — | — | — | ( | ( | |||||||||||
Foreign currency translation | — | — | — | — | | | |||||||||||
Stock based compensation | — | — | | — | — | | |||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||
Balance, June 30, 2024 | | | | ( | ( | | |||||||||||
Issuance of common stock upon the exercise of stock options and 2021 ESPP | | | | — | — | | |||||||||||
Vesting of restricted stock | — | — | — | — | — | — | |||||||||||
Vesting of early exercise stock options | | — | | — | — | | |||||||||||
Vesting of restricted stock units | | — | — | — | — | — | |||||||||||
Unrealized loss on investments | — | — | — | — | | | |||||||||||
Foreign currency translation | — | — | — | — | ( | ( | |||||||||||
Stock based compensation | — | — | | — | — | | |||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||
Balance, September 30, 2024 | | $ | | $ | | $ | ( | $ | | $ | | ||||||
8
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | |||||||||||||
Shares |
| Amount | Capital | Deficit | Loss | Equity | |||||||||||
Balance, December 31, 2022 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Issuance of common stock upon the exercise of stock options | | — | | — | — | | |||||||||||
Vesting of restricted stock | | — | — | — | — | — | |||||||||||
Vesting of early exercise stock options | | — | | — | — | | |||||||||||
Unrealized gain on investments | — | — | — | — | | | |||||||||||
Foreign currency translation | — | — | — | — | ( | ( | |||||||||||
Stock based compensation | — | — | | — | — | | |||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||
Balance, March 31, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Issuance of common stock upon the exercise of stock options | | — | | — | — | | |||||||||||
Vesting of early exercise stock options | | — | | — | — | | |||||||||||
Unrealized gain on investments | — | — | — | — | | | |||||||||||
Foreign currency translation | — | — | — | — | | | |||||||||||
Stock based compensation | — | — | | — | — | | |||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||
Balance, June 30, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Issuance of common stock upon the exercise of stock options | | — | | — | — | | |||||||||||
Vesting of early exercise stock options | |
| — |
| |
| — | — | | ||||||||
Unrealized gain on investments | — | — | — | — | ( | ( | |||||||||||
Foreign currency translation | — | — | — | — | ( | ( | |||||||||||
Stock based compensation | — | — | | — | — | | |||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||
Balance, September 30, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
See accompanying notes to the consolidated financial statements.
9
CENTURY THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended | Nine Months Ended | ||||||
September 30, 2024 | September 30, 2023 | ||||||
|
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Cash flows from operating activities |
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Net loss | $ | ( | $ | ( | |||
Adjustments to reconcile net loss to net cash used in operating activities: |
|
| |||||
Depreciation |
| |
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Amortization of deferred financing cost | — | | |||||
Non-cash operating lease expense (benefit) | ( | ( | |||||
Stock based compensation |
| |
| | |||
Impairment | — | | |||||
Amortization/accretion of investments | ( | — | |||||
Change in fair value of contingent liabilities | ( | — | |||||
Decrease in lease liability due to lease termination | | ||||||
Change in operating assets and liabilities: |
|
| |||||
Escrow deposit |
| — |
| | |||
Prepaid expenses and other assets |
| ( |
| | |||
Operating lease liability | ( | | |||||
Deferred revenue | ( | ( | |||||
Accounts payable |
| ( |
| | |||
Accrued expenses and other liabilities |
| ( |
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Non-current security deposit | | — | |||||
Net cash used in operating activities |
| ( |
| ( | |||
Cash flows from investing activities |
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Acquisition of property and equipment |
| |
| ( | |||
Acquisition of fixed maturity securities, available for sale |
| ( |
| ( | |||
Sale of fixed maturity securities, available for sale |
| |
| | |||
Acquisition of Clade Therapeutics, Inc., net of cash acquired |
| ( |
| — | |||
Net cash provided by investing activities |
| |
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Cash flows from financing activities |
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| |||
Proceeds from issuance of common stock and ESPP | | | |||||
Payments on long term debt | — | ( | |||||
Proceeds from ATM, net of issuance costs | | — | |||||
Proceeds from PIPE, net of issuance costs |
| |
| — | |||
Net cash provided by (used in) financing activities |
| |
| ( | |||
Net increase (decrease) in cash, cash equivalents, and restricted cash |
| |
| ( | |||
Cash, cash equivalents and restricted cash, beginning of period |
| |
| | |||
Cash, cash equivalents and restricted cash, end of period | $ | | $ | | |||
Supplemental disclosure of cash and non-cash operating activities: | |||||||
Cash paid for interest | $ | — | $ | | |||
Cash paid for income tax | $ | | $ | | |||
Supplemental disclosure of non-cash investing and financing activities: |
|
|
| ||||
Stock issued in connection with the Acquisition | $ | | $ | — | |||
Purchase of property and equipment, accrued and unpaid | $ | — | | ||||
Landlord paid leasehold improvements | $ | | $ | — | |||
See accompanying notes to the consolidated financial statements.
10
CENTURY THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except share and per share amounts)
Note 1—Organization and description of the business
Century Therapeutics, Inc. (the “Company”) is an innovative biotechnology company developing transformative allogeneic cell therapies to create products for the treatment of both solid tumor and hematological malignancies and autoimmune diseases with significant unmet medical need. Since inception, the Company has devoted substantially all of its time and efforts to performing research and development activities, building infrastructure and raising capital. The Company is incorporated in the state of Delaware.
Principles of Consolidation
The consolidated financial statements include the consolidated financial position and consolidated results of operations of the Company and the Company’s subsidiaries, Century Therapeutics Canada ULC (“Century Canada”), Clade Therapeutics (“Clade”) and Gadeta B.V. (“Gadeta”). All intercompany balances and transactions have been eliminated in consolidation.
Liquidity
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has limited operating history and its prospects are subject to risks, expenses, and uncertainties frequently encountered by companies in the biotechnology and pharmaceutical industries. These risks include, but are not limited to, the uncertainty of availability of additional financing and the uncertainty of achieving future profitability.
Since inception, the Company has incurred net losses and negative cash flows from operations. During the three and nine months ended September 30, 2024, the Company incurred a net loss of $
Note 2—Summary of significant accounting policies and basis of presentation
Basis of presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the interim period reporting requirements of Form 10-Q and Article 10 of Regulation S-X. The consolidated balance sheet as of September 30, 2024, and the consolidated statements of operations and comprehensive loss, consolidated statements of changes in stockholders’ equity, and the consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 are unaudited, but, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for any interim period are not necessarily indicative of results for the year ending December 31, 2024 or for any other subsequent interim period. The consolidated balance sheet at December 31, 2023 has been derived from the Company’s audited consolidated financial statements.
Certain prior year information has been reclassified to conform to the fiscal year 2024 presentation.
11
Segment information
Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions on how to allocate resources and assess performance. The Company views its operations and manages the business as
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Estimates and assumptions are primarily made in relation to the valuations supporting stock compensation, the estimation of the incremental borrowing rate for operating leases, intangible assets acquired in business combinations and standalone selling prices of performance obligations in collaboration agreements. If actual results differ from the Company’s estimates, or to the extent these estimates are adjusted in future periods, the Company’s results of operations could either benefit from, or be adversely affected by, any such change in estimate.
Concentration of credit risk and other risks and uncertainties
Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist of cash, cash equivalents, U.S. Treasury bills and bonds, as well as corporate bonds. Cash and cash equivalents, as well as short and long-term investments include a checking account and asset management accounts held by a limited number of financial institutions. At times, such deposits may be in excess of insured limits. As of September 30, 2024 and December 31, 2023, the Company has not experienced any losses on its deposits of cash and cash equivalents.
The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, uncertainty of market acceptance of its products, competition from substitute products and larger companies, protection of proprietary technology, strategic relationships, and dependence on key individuals.
Products developed by the Company require clearances from the U.S. Food and Drug Administration (the “FDA”) or other international regulatory agencies prior to commercial sales. There can be no assurance the Company’s future products will receive the necessary clearances. If the Company was denied clearance, clearance was delayed, or if the Company was unable to maintain clearance, it could have a material adverse impact on the Company.
Fair value of financial instruments
The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:
Level 1 | Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date; |
Level 2 | Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active; |
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Level 3 | Inputs are unobservable in which there is little or no market data available, which require the reporting entity to develop its own assumptions that are unobservable. |
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
Cash and cash equivalents
Management considers all highly liquid investments with an insignificant interest rate risk and original maturities of three months or less to be cash equivalents.
Restricted cash
As of September 30, 2024 and December 31, 2023, the Company had $
The following provides a reconciliation of the Company’s cash, cash equivalents, and restricted cash as reported in the consolidated balance sheets to the amounts reported in the consolidated statements of cash flows:
| September 30, 2024 |
| December 31, 2023 | |||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash | | | ||||
Cash, cash equivalents, and restricted cash | $ | | $ | | ||
Investments
The Company invests in fixed maturity securities including U.S. Treasury bills and bonds as well as corporate bonds. The investments are classified as available-for-sale and reported at fair value. Unrealized gains or losses are determined by comparing the fair market value of the securities with their cost or amortized cost. Realized gains and losses on investments are recorded on the trade date and are included in the statement of operations. Unrealized gains and losses on investments are recorded in other comprehensive loss on the consolidated statements of operations and comprehensive loss. The cost of securities sold is based on the specified identification method. Investment income is recognized as earned and discounts or premiums arising from the purchase of debt securities are recognized in investment income using the interest method over the remaining term of the security. Securities with an original maturity date greater than three months that mature within one year of the balance sheet date are classified as short-term, while investments with a maturity date greater than one year are classified as long-term.
Property and equipment, net
Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is generally
13
Expenditures for major additions and improvements are capitalized, while minor replacements, maintenance, and repairs are charged to expense as incurred. When property is retired or otherwise disposed of, the costs and accumulated depreciation are removed from the respective accounts, with any resulting gain or loss recognized concurrently.
Research and development expenses
Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, stock compensation, materials, supplies, rent, depreciation on and maintenance of research equipment with alternative future use, and the cost of services provided by outside contractors. All costs associated with research and development are expensed as incurred.
Clinical trial costs are a component of research and development expenses. The Company expenses costs for its clinical trial activities performed by third parties, including clinical research organizations and other service providers, as they are incurred, based upon estimates of the work completed over the life of the individual study in accordance with associated agreements. The Company uses information it receives from internal personnel and outside service providers to estimate the clinical trial costs incurred.
Stock-based compensation
Employees, consultants, and members of the Board of Directors of the Company have received stock options and restricted stock of the Company. The Company recognizes the cost of the stock-based compensation incurred as its employees and board members vest in the awards. The Company accounts for stock-based compensation arrangements in accordance with provisions of Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation. ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option-pricing model (“Black Scholes”) to determine the fair value of options granted. The Company’s stock-based awards are subject to service-based vesting conditions and performance-based vesting conditions. Compensation expense related to awards to employees and directors with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. For performance-based awards, the Company reassesses at each reporting date whether achievement of the performance condition is probable and accrues compensation expense if and when achievement of the performance condition is probable.
Black Scholes requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. The historical volatility is calculated based on a period of time commensurate with expected term assumption. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be
Foreign currency translation
The reporting currency of the Company is the U.S. dollar. The functional currency of Century Canada is the Canadian dollar. The functional currency of Gadeta is the Euro. Assets and liabilities of Century Canada and Gadeta are translated into U.S. dollars based on exchange rates at the end of each reporting period. Expenses are translated at average exchange rates during the reporting period. Gains and losses arising from the translation of assets and liabilities are included as a component of accumulated other comprehensive loss or income on the Company’s consolidated balance sheets. Gains and losses resulting from foreign currency transactions are reflected within the Company’s consolidated statements of operations
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and comprehensive loss. The Company has not utilized any foreign currency hedging strategies to mitigate the effect of its foreign currency exposure.
Intercompany payables and receivables are considered to be long-term in nature and any change in balance due to foreign currency fluctuation is included as a component of the Company’s consolidated comprehensive loss and accumulated other comprehensive loss within the Company’s consolidated balance sheets.
Basic and diluted net loss per common share
Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period. The Company computes diluted net loss per common share by dividing the net loss applicable to common shareholders by the sum of the weighted-average number of common shares outstanding during the period plus the potential dilutive effects of its warrants, restricted stock and stock options to purchase common shares, but such items are excluded if their effect is anti-dilutive. Because the impact of these items is anti-dilutive during periods of net loss, there were no differences between the Company’s basic and diluted net loss per common share for the three and nine months ended September 30, 2024 and 2023.
Collaboration revenue
The Company may enter into collaboration and licensing agreements with strategic partners for research and development, manufacturing, and commercialization of its product candidates. Payments under these arrangements may include non-refundable, upfront fees; reimbursement of certain costs; customer option fees for additional goods or services; payments upon the achievement of development, regulatory, and commercial milestones; sales of product at certain agreed-upon amounts; and royalties on product sales.
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, (“ASC 606”). This standard applies to all contracts with customers. When an agreement falls under the scope of other standards, such as ASC Topic 808, Collaborative Arrangements, or (“ASC 808”), the Company will apply the recognition, measurement, presentation, and disclosure guidance in ASC 606 to the performance obligations in the agreements if those performance obligations are with a customer. Revenue recognized by analogizing to ASC 606 is recorded as collaboration revenue on the statements of operations.
Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under a collaboration agreement, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations on a relative stand-alone selling price basis; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
As part of the accounting for these arrangements, the Company must use its judgment to determine the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price. The estimation of the stand-alone selling price may include such estimates as forecasted revenues and costs, development timelines, discount rates, and probabilities of regulatory and commercial success. The Company also applies significant judgment when evaluating whether contractual obligations represent distinct performance obligations, allocating transaction price to performance obligations within a contract, determining when performance obligations have been met, assessing the recognition and future reversal of variable consideration and determining and applying appropriate methods of measuring progress for performance obligations satisfied over time. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, current. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, non-current.
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If an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services, the goods and services underlying the customer options are not considered to be performance obligations at the outset of the arrangement, as they are contingent upon option exercise. The Company evaluates the customer options for material rights or options to acquire additional goods or services for free or at a discount. If the customer options are not determined to represent a material right, no transaction price is allocated to these options and the Company will account for these options at that time they are exercised. If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement.
The obligations under the Company’s collaboration agreements may include research and development services to be performed by the Company for or on behalf of the customer. Amounts allocated to these performance obligations are recognized as the Company performs these obligations, and revenue is measured based on an inputs method of costs incurred to date of budgeted costs. Under certain circumstances, the Company may be reimbursed for certain expenses incurred under the research and development services.
At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the statements of operations in the period of adjustment.
Acquisition-Related Contingent Consideration
Acquisition-related contingent consideration consist of our future obligation owed to shareholders of Clade and Gadeta and includes contingent milestone payments, earn out considerations, and indemnification obligations. Acquisition-related contingent consideration was recorded on the acquisition date at the estimated fair value of the obligation, in accordance with the acquisition method of accounting. The fair value measurement is based on significant inputs that are unobservable in the market and thus represents a Level 3 fair value measurement. The fair value of the acquisition-related contingent considerations are remeasured each reporting period, with changes in fair value recorded in the consolidated statements of operations and comprehensive loss with general and administrative expense.
Business Combinations
The Company accounts for business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Identifiable assets acquired and liabilities assumed are recorded at their acquisition date fair values. The excess of the fair value of purchase consideration over the fair values of the identifiable assets and liabilities is recorded as goodwill. Acquisition related costs are expensed as incurred. Upon acquisition, the accounts and results of operations are consolidated as of and subsequent to the acquisition date.
When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. The Company utilizes commonly accepted valuation techniques, such as the income approach in establishing the fair value of intangible assets. See “Note 3 – Business combination” for additional detail.
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Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. Goodwill is not amortized but is tested for impairment at least annually. The Company reviews goodwill for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate that the fair value of a reporting unit may be less than its carrying amount (a “triggering event”). Triggering events may include a sustained period where the Company’s carrying value is in excess of its market capitalization or adverse changes in business climate. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test described in ASC Topic 350, Intangibles – Goodwill and Other. The more likely than not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative goodwill impairment test is unnecessary and goodwill is considered to be unimpaired. However, if based on the qualitative assessment the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company will proceed with performing the quantitative goodwill impairment test. In performing the quantitative goodwill impairment test, the Company determines the fair value of its reporting unit and compares it to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired. If the carrying value of the reporting unit exceeds its fair value, the Company records an impairment loss equal to the difference. For the three and nine months ended September 30, 2024 there were
Indefinite-lived intangibles are carried at the initially recorded fair value less any recognized impairment. Indefinite-lived intangibles are tested at least annually for impairment. Impairment assessments are conducted more frequently if certain conditions exist, including a change in the competitive landscape, any internal decisions to pursue new or different technology strategies, or a significant change in the marketplace, including changes in the size of the market for the Company’s products. In performing the impairment test, the Company estimates the fair value of the indefinite-lived intangible asset and compares it to the carrying value. If they carrying value exceeds the estimated fair value, the Company records an impairment loss for the difference. For the three and nine months ended September 30, 2024, there were
Recent accounting pronouncements
In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires entities to provide additional information in their tax rate reconciliation and additional disclosures about income taxes paid by jurisdiction. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. The guidance should be applied prospectively, but entities have the option to apply it retrospectively for each period presented. The Company is currently evaluating the impact of adopting this new accounting guidance.
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In November 2023, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an interim and annual basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal periods beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact of the guidance on the financial statements and disclosures.
Note 3 – Business combination
On April 11, 2024, the Company acquired
Contingent consideration was estimated at fair value on the date of the close and consists of both additional stock consideration (“Holdback Shares”) as well as a contingent milestone payment of $
The Company recognized $
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The following table summarizes the provisional fair values of the assets acquired and liabilities assumed at the date of the acquisition:
Consideration transferred: | |||
Cash consideration | $ | | |
Fair value of common stock ( | | ||
Contingent consideration | | ||
Total consideration transferred | $ | | |
Assets acquired: | |||
Cash and restricted cash | $ | | |
Prepaid expenses and other assets | | ||
Property and equipment | | ||
Right-of-use operating lease | | ||
In-process research and development ("IPR&D") | | ||
Goodwill | | ||
Total assets acquired | $ | | |
Liabilities assumed: | |||
Accounts payable | $ | | |
Accrued expenses and other current liabilities | | ||
Lease liabilities - operating lease | | ||
Contingent consideration | | ||
Deferred tax liability | | ||
Total liabilities assumed | $ | | |
Net assets acquired | $ | |
The amounts above represent the Company's provisional fair value estimates related to the acquisition as of April 11, 2024 and are subject to subsequent adjustments as additional information is obtained during the applicable measurement period. The primary areas of estimates that are not yet finalized include the valuation of the identifiable intangible assets and income taxes. The purchase price was allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based on their acquisition date estimated fair values. The identifiable intangible assets consist of IPR&D which were assigned fair values of $
These nonrecurring fair value measurements are Level 3 measurements within the fair value hierarchy.
Goodwill represents the excess of the purchase price over the net identifiable tangible and intangible assets acquired. The Company believes the goodwill related to the acquisition was attributable to the expected synergies and value of the assembled workforce as well as the collective experience of the management team with regards to its operations. The goodwill is not expected to be tax deductible.
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Results for nine months ended September 30, 2024, included a net loss of $
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | ||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | ||||||
Revenue | $ | | | | | ||||
Net loss | ( | ( | ( | ( |
The pro forma financial information presented above has been prepared by combining the Company’s historical results and the historical results of Clade and adjusting those results to eliminate historical transaction costs and to reflect the effects of the acquisition as if they occurred on January 1, 2023. These results do not purport to be indicative of the results of operations which actually would have resulted had the acquisitions occurred on the date indicated above, or that may result in the future, and do not reflect potential synergies or additional costs following the acquisition.
Note 4—Financial instruments and fair value measurements
The following table sets forth the Company’s assets that were measured at fair value as of September 30, 2024 by level within the fair value hierarchy:
| Level 1 |
| Level 2 |
| Level 3 |
| Total | |||||
Assets: | ||||||||||||
Cash equivalents | $ | | — | — | $ | | ||||||
U.S. Treasury |
| — |
| |
| — |
| | ||||
Corporate bonds |
| — |
| |
| — |
| | ||||
Total | $ | | $ | | $ | — | $ | | ||||
Liabilities: | ||||||||||||
Contingent consideration | — | — | | | ||||||||
Total | $ | — | $ | — | $ | | $ | | ||||
The following table sets forth the Company’s assets that were measured at fair value as of December 31, 2023, by level within the fair value hierarchy:
| Level 1 |
| Level 2 |
| Level 3 |
| Total | |||||
Cash equivalents | $ | | — | — | $ | | ||||||
U.S. Treasury |
| — |
| |
| — |
| | ||||
Corporate bonds |
| — |
| |
| — |
| | ||||
Total | $ | | $ | | $ | — | $ | | ||||
There were
The Company classifies all of its investments in fixed maturity debt securities as available-for-sale and, accordingly, are carried at estimated fair value.
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The amortized cost, gross unrealized gains and losses, and fair value of investments in fixed maturity securities are as follows as of September 30, 2024:
|
| Gross |
| Gross |
| |||||||
Unrealized | Unrealized | |||||||||||
Amortized Cost | Gains | Losses | Fair Value | |||||||||
U.S. Treasury | $ | | $ | | $ | — | $ | | ||||
Corporate bonds |
| |
| |
| ( |
| | ||||
Total | $ | | $ | | $ | ( | $ | | ||||
The amortized cost, gross unrealized gains and losses, and fair value of investments in fixed maturity securities are as follows as of December 31, 2023:
| Gross |
| Gross |
| ||||||||
Unrealized | Unrealized | |||||||||||
| Amortized Cost | Gains | Losses | Fair Value | ||||||||
U.S. Treasury | $ | | $ | | $ | — | $ | | ||||
Corporate bonds |
| |
| |
| ( |
| | ||||
Total | $ | | $ | | $ | ( | $ | | ||||
The following table provides the maturities of our fixed maturity available-for-sale securities:
| September 30, 2024 |
| December 31, 2023 | |||
Less than one year | $ | | $ | | ||
One to five years |
| |
| | ||
$ | | $ | | |||
The Company has evaluated the unrealized losses on the fixed maturity securities and determined that they are not attributable to credit risk factors. For fixed maturity securities, losses in fair value are viewed as temporary if the fixed maturity security can be held to maturity and it is reasonable to assume that the issuer will be able to service the debt, both as to principal and interest.
At September 30, 2024 and December 31, 2023, the Company had
As of September 30, 2024 and December 31, 2023, accrued interest receivable on available-for-sale investment debt securities totaling $
The following is a rollforward of the components of the Company’s contingent consideration liability (See Note 9 – Commitments and contingencies):
Gadeta | Holdback Shares | Milestone | Total | |||||||||
Balance as of April 11, 2024 | $ | | | | | |||||||
Changes in fair value | | ( | | ( | ||||||||
Balance as of September 30, 2024 | $ | | | | |
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The following table includes quantitative information about the significant unobservable inputs for the components of the Company’s contingent consideration liability as of the April 11, 2024 acquisition date and September 30, 2024:
April 11, 2024 | September 30, 2024 | |||||
Gadeta Earnout: | ||||||
Probability adjusted value of payment | $ | | | |||
Discount rate | ||||||
Discount period (years) | | | ||||
Holdback Shares | ||||||
Closing stock price on valuation date | $ | | | |||
Discount for lack of marketability | $ | ( | ( | |||
Clade Milestone: | ||||||
Probability adjusted value of payments | $ | | | |||
Discount rate | ||||||
Discount period (years) | | |
Note 5—Property and equipment, net
The following is a summary of property and equipment, net:
| September 30, 2024 |
| December 31, 2023 | |||
Lab equipment | $ | | $ | | ||
Leasehold improvements |
| |
| | ||
Construction in progress |
| — |
| | ||
Computer software and equipment |
| |
| | ||
Furniture and fixtures |
| |
| | ||
Total | | | ||||
Less: Accumulated depreciation |
| ( |
| ( | ||
Property and equipment, net | $ | | $ | | ||
Depreciation expense was $
Depreciation expense was $
Note 6—Accrued expenses and other liabilities
The following is a summary of accrued expenses:
| September 30, 2024 |
| December 31, 2023 | |||
Payroll and bonuses | $ | |
| $ | | |
Accrued clinical trial related costs | | | ||||
Professional and legal fees |
| |
| | ||
| | |||||
Other |
| |
| | ||
Total accrued expenses and other liabilities | $ | | $ | | ||
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Note 7—Long-term debt
On September 14, 2020, the Company entered into a $
On May 1, 2023, the Company prepaid the Loan Agreement in full. The total amount paid to Hercules in connection with the prepayment was $
The Company issued to Hercules warrants to purchase up to an aggregate of
Interest expense attributable to the Loan Agreement is as follows:
For the Nine Months Ended | For the Nine Months Ended | |||||||
| September 30, 2024 |
| September 30, 2023 | |||||
Interest expense | $ | — | $ | | ||||
Amortization of debt issuance costs, including end of term fee accretion |
| — |
| — | ||||
$ | — | $ | | |||||
Note 8 – Bristol-Myers Squibb Collaboration
On January 7, 2022, the Company entered into the Collaboration Agreement with Bristol-Myers Squibb to collaborate on the research, development and commercialization of iNK and iT cell programs for hematologic malignancies and solid tumors (“Collaboration Program,” and each product candidate a “Development Candidate”). The Collaboration Agreement is within the scope of ASC 808, Collaborative Arrangements as both parties are active participants in the arrangement and are exposed to significant risks and rewards. While this arrangement is in the scope of ASC 808, the Company analogizes to ASC 606 for the accounting for the Collaboration Agreement, including for the delivery of goods and services (i.e., units of account). Revenue recognized by analogizing to ASC 606 is recorded as collaboration revenue in the statements of operations.
Pursuant to the Collaboration Agreement, the Company and Bristol-Myers Squibb will initially collaborate on
23
Under the terms of the Collaboration Agreement, Bristol-Myers Squibb made a non-refundable, upfront cash payment of $
In connection with the Collaboration Agreement, Bristol-Myers Squibb purchased
The Company identified the following commitments under the arrangement: (i) research and development services (“R&D Services”) under each of the
The Company determined that the upfront payment and Equity Premium constitute the transaction price at the inception of the Collaboration Agreement. The future potential development and regulatory milestone payments were fully constrained at contract inception as the risk of significant revenue reversal related to these amounts has not yet been resolved. The achievement of the future potential milestones is not within the Company’s control and is subject to certain research and development success and therefore carries significant uncertainty. The Company will reevaluate the likelihood of achieving these milestones at the end of each reporting period and adjust the transaction price in the period the risk is resolved. In addition, the Company will recognize any consideration related to sales-based milestones and royalties when the subsequent sales occur.
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The total transaction price of $
| ● | Research and development services: The Company recognizes the portion of the transaction price allocated to each of the research and development performance obligations as the research and development services are provided, using an inputs method, in proportion to costs incurred to date for each research development target as compared to total costs incurred and expected to be incurred in the future to satisfy the underlying obligation related to each research and development target. The transfer of control occurs over this period and, in management’s judgment, is the best measure of progress towards satisfying the performance obligation. |
| ● | License option rights: The transaction price allocated to the license options rights, which are considered material rights to license and commercialize the underlying research and development target, are deferred until the period that Bristol-Myers Squibb elects to exercise or elects to not exercise its option or when the option to exercise expires. |
The following table summarizes the allocation of the total transaction price to the identified performance obligations under the arrangement, and the amount of the transaction price unsatisfied as of September 30, 2024:
Cumulative collaboration | Deferred | ||||||||
Performance obligations: | Transaction price | revenue recognized | collaboration revenue | ||||||
Option rights | $ | | $ | - | $ | | |||
Research and development services | | ( | | ||||||
Total | | ( | | ||||||
Less current portion of deferred revenue | - | - | ( | ||||||
Total long-term deferred revenue | $ | | $ | ( | $ | | |||
The following table summarizes the allocation of the total transaction price to the identified performance obligations under the arrangement, and the amount of the transaction price unsatisfied as of December 31, 2023:
Cumulative collaboration | Deferred | ||||||||
Performance obligations: | Transaction price | revenue recognized | collaboration revenue | ||||||
Option rights | $ | | $ | - | $ | | |||
Research and development services | | ( | | ||||||
Total | | ( | | ||||||
Less current portion of deferred revenue | - | - | ( | ||||||
Total long-term deferred revenue | $ | | $ | ( | $ | | |||
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Note 9—Commitments and contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when future expenditures are probable and such expenditures can be reasonably estimated.
Distributed Bio Master Service Agreement
On July 24, 2019, the Company entered into a Master Service Agreement with Distributed Bio, Inc (“DBio”), whereby DBio will screen for protein binders that bind to specific therapeutic targets (the “Master Service Agreement”). The Company pays for such services according to a payment schedule, and if the Company brings the protein binders into the clinic for further development, DBio will receive milestone payments of up to $
The Company had $
iCELL Inc. Sublicense Agreement
In March 2020, the Company entered into a Sublicense Agreement with iCELL Inc (“iCELL”) whereby iCELL granted the Company a license of certain patents and technology. The Company will pay iCELL royalties in the low single digits on net sales of the licensed product. In addition to the earned royalties, the Company will pay sales milestones, not to exceed $
Clade Therapeutics
In connection with the acquisition of Clade Therapeutics (Note – 3), the Company is subject to a contingent milestone payment to the shareholders of Clade. The milestone payment is $
A total of
In connection with the acquisition of Clade, the Company also assumed an earn-out obligation (“Gadeta Milestone”) that is contingent on a clinical development milestone of a product that incorporates Gadeta intellectual property between the acquisition date and December 31, 2032. The total payment to the shareholders of Gadeta is upon the occurrence of such an event is $
Note 10—Leases
The Company has commitments under operating leases for certain facilities used in its operations. The Company maintains security deposits on certain leases in the amounts of $
26
The following table reflects the components of lease expense:
For the | For the | For the | For the | |||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||
Operating lease expense: |
|
|
| |||||||||
Fixed lease cost | $ | | $ | | $ | | $ | | ||||
Variable lease cost |
| |
| |
| |
| | ||||
Short term lease expense | — | | — | | ||||||||
Total operating lease expense | $ | | $ | | $ | | $ | | ||||
The following table reflects supplemental balance sheet information related to leases:
| As of | As of | |||||||
|
| September 30, |
| December 31, | |||||
Location in Balance Sheet | 2024 | 2023 | |||||||
Operating lease right-of-use asset, net |
| Operating lease right-of-use assets | $ | | $ | | |||
Operating lease liability, current |
| $ | | $ | | ||||
Operating lease liability, long-term |
| Operating lease liability, long-term |
| |
| | |||
Total operating lease liability |
|
| $ | | $ | | |||
The following table reflects supplement lease term and discount rate information related to leases:
| As of September 30, 2024 |
| As of December 31, 2023 |
| |
Weighted-average remaining lease terms - operating leases |
| ||||
Weighted-average discount rate - operating leases |
| | % | | % |
The following table reflects supplemental cash flow information related to leases as of the periods indicated:
For the Nine Months Ended | For the Nine Months Ended | ||||||
| September 30, 2024 |
| September 30, 2023 | ||||
Operating cash flows from operating leases | $ | ( | $ | ( | |||
Right-of-use assets obtained in exchange for lease obligations: | $ | — | $ | — | |||
The following table reflects future minimum lease payments under noncancelable leases as of September 30, 2024:
| Operating Leases | ||
2024 | $ | | |
2025 |
| | |
2026 |
| | |
2027 |
| | |
2028 |
| | |
Thereafter |
| | |
Total lease payments |
| | |
Less: Imputed interest |
| ( | |
Less: Tenant incentive receivable | ( | ||
Total | $ | | |
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Note 11—Income taxes
During the three and nine months ended September 30, 2024, the Company recorded an immaterial tax benefit (provision), related to its income tax obligations of its Canadian operations.
During the three and nine months ended September 30, 2023, the Company recorded tax expense of $592 and $2,750, respectively, due primarily to revenue recognition for tax purposes from the Company’s Research Collaboration and License Agreement entered into with Bristol-Myers Squibb Company in 2022, combined with statutory limitations on deductions for research and development expenses, net operating losses, and research credits.
Note 12—Basic and diluted net loss per common share
The Company’s potentially dilutive securities, which include RSUs (“Restricted Stock Units”), restricted stock, warrants, early exercised stock options and stock options to purchase shares of the Company’s common stock, have been excluded from the computation of dilutive net loss per share as the effect would be antidilutive. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share is the same. The Company excluded the following potential shares of common stock presented based on amounts outstanding at each stated period end, from the computation of diluted net loss per share for the nine months ended September 30, 2024 and 2023 because including them would have had an anti-dilutive effect.
Nine Months Ended | Nine Months Ended | ||||
September 30, | September 30, | ||||
| 2024 |
| 2023 | ||
Stock options to purchase common stock | |
| | ||
Early exercised stock options subject to future vesting | |
| | ||
Restricted stock awards subject to future vesting | |
| | ||
Unvested restricted stock units |
| |
| | |
Warrants | | | |||
Total |
| |
| |
Note 13—Stock-based compensation
On June 17, 2021, the Company adopted the Century Therapeutics, Inc. 2021 Equity Incentive Plan (the “2021 Incentive Plan”) which superseded the 2018 Incentive Plan and from that date forward all issuances of incentive awards will be governed by the 2021 Incentive Plan.
The 2021 Incentive Plan provides for the Company to sell or issue common stock or restricted common stock, RSUs, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the Board of Directors, and consultants of the Company under terms and provisions established by the Board of Directors. Under the terms of the 2021 Incentive Plan, options may be granted at an exercise price not less than fair market value.
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Upon adoption of the 2021 Incentive Plan, the Company was authorized to issue
The Company’s stock-based awards are subject to service-based vesting conditions. Compensation expense related to awards to employees and directors with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. Stock awards granted typically vest over a
The Company recognizes the costs of the stock-based payments as the employees vest in the awards.
As of September 30, 2024, the Company had reserved shares of common stock for issuance as follows:
| Shares | |
Options and RSUs issued and outstanding | | |
Shares available for future stock option and RSU grants | | |
Shares available for employee stock purchase plan | | |
Total | |
The shares of Common Stock available under the 2021 Incentive Plan as of September 30, 2024 are as follows:
| Shares | |
Balance December 31, 2023 | | |
Shares reserved for issuance | | |
Options granted | ( | |
RSU’s granted | ( | |
Options and RSUs forfeited / cancelled | | |
Balance September 30, 2024 | |
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Stock Options
The following table summarizes stock option activity for the nine-month period ended September 30, 2024:
Weighted Average | ||||||||||
Remaining | Aggregate | |||||||||
Contractual | Intrinsic | |||||||||
Term | Value | |||||||||
| Shares |
| Exercise Price |
| (years) | (in thousands) | ||||
Outstanding January 1, 2024 |
| | $ | |
| $ | | |||
Granted |
| |
| |
| — |
| — | ||
Exercised |
| ( |
| |
| — |
| — | ||
Forfeited |
| ( | |
| — |
| — | |||
Cancelled | ( | | — | — | ||||||
Outstanding, September 30, 2024 |
| | $ | |
| $ | | |||
Exercisable at September 30, 2024 | | $ | | $ | | |||||
The weighted average grant date fair value of awards for options granted during the nine months ended September 30, 2024 was $
The Company estimates the fair value of its option awards to employees and directors using Black-Scholes, which requires inputs and subjective assumptions, including (i) the expected stock price volatility, (ii) the calculation of the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to the lack of substantial company-specific historical and implied volatility data of its common stock, the Company has based its estimate of expected volatility on the historical volatility of a group of similar public companies. Starting in June of 2023 the Company had sufficient historical information regarding stock trading history, and started to use the Company’s own stock volatility. The Company has never paid dividends and does not expect to in the foreseeable future. The expected term of the options granted to employees is derived from the “simplified” method as described in Staff Accounting Bulletin 107 relating to stock-based compensation. The risk-free interest rates for periods within expected term of the option are based on the U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The Company will account for actual forfeitures as they occur.
The weighted-average assumptions used to calculate the fair value of stock options granted are as follows:
September 30, 2024 | December 31, 2023 |
| |||
Expected dividend rate | — |
| — | ||
Expected option term (years) |
| ||||
Expected volatility | | % | | % | |
Risk-free interest rate | | % | | % |
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Stock-based compensation expense recorded under ASC 718 related to stock options granted and common stock issued under the 2021 Employee Stock Purchase Plan (the “ESPP”) were allocated to research and development and general and administrative expense as follows:
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | ||||||||
September 30, | September 30, | September 30, | September 30, | ||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Research and development | $ | | $ | | $ | | $ | | |||
General and administrative | | | | | |||||||
Total stock-based compensation | $ | | $ | | $ | | $ | | |||
Stock-based compensation expense by award type included within the condensed consolidated statements of operations is as follows:
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | ||||||||
September 30, | September 30, | September 30, | September 30, | ||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Stock options | $ | | | | $ | | |||||
Restricted stock units | | | | | |||||||
Restricted stock awards | | | | | |||||||
Employee stock purchase plan | | | | | |||||||
Total stock-based compensation | $ | | $ | | $ | | $ | | |||
Restricted Stock Units
The following table summarizes RSU activity for the nine months ended September 30, 2024:
|
| Weighted Average | |||
Shares | Grant Date Fair Value | ||||
Total Unvested December 31, 2023 |
| | $ | | |
Granted | | | |||
Forfeited | ( | | |||
Total Unvested September 30, 2024 |
| | $ | | |
As of September 30, 2024, there was $
Restricted Stock Awards
The following table summarizes restricted stock activity as of September 30, 2024 and December 31, 2023:
|
| Weighted Average | |||
Shares | Grant Date Fair Value | ||||
Total Unvested December 31, 2023 |
| | $ | | |
Granted | — | — | |||
Forfeited | — | — | |||
Vested |
| ( |
| | |
Total Unvested September 30, 2024 |
| | $ | | |
As of September 30, 2024, there was $
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Early-Exercise of Unvested Equity Awards
Certain equity award holders early exercised unvested equity awards. The cash received upon early exercise of options of $
Employee Stock Purchase Plan
The ESPP was adopted by the Board of Directors in May 2021. A total of
Note 14—Related party transactions
License Agreements and Collaborative Agreements with Shareholder
The Company owns licenses and other contracts with FUJIFILM Cellular Dynamics, Inc. (“FCDI”). FCDI is a shareholder of the Company. The acquired licenses and other contracts with FCDI are as follows:
FCDI Agreements
The Company owns a non-exclusive license agreement with FCDI. The license provides the Company with certain patents and know-how related to the reprogramming of human somatic cells to induce pluripotent stem cells (“iPSCs”) (“Reprogramming License Agreement”). Under this agreement, the Company is required to make certain developmental and regulatory milestone payments as well as royalty payments upon commercialization. Royalties are in the low single digits on the sale of all licensed products.
The Company also owns an exclusive license agreement with FCDI (“Differentiation Licenses Agreement”). The Differentiation Licenses Agreement provides the Company with patents and know-how related to human iPSC exclusively manufactured by FCDI.
In October 2019, the Company entered into the Master Collaboration Agreement with FCDI (“Collaboration Agreement”), whereby FCDI provides certain services to the Company to develop and manufacture iPSCs and immune cells derived therefrom. FCDI provides services in accordance with the approved research plan and related research budget. The initial research plan covered the period from October 2019 through March 31, 2022. In July, 2022 the Company amended the Collaboration Agreement to extend the term through September 30, 2025, and in September 2023, the Company amended the Collaboration Agreement in connection with the Autoimmune License (as defined below).
In March 2021, the Company entered into a Manufacturing Agreement with FCDI (“Manufacturing Agreement”), pursuant to which FCDI will provide certain agreed upon technology transfer, process development, analytical testing and cGMP manufacturing services to the Company.
The Company expects that FCDI will continue to manufacture CNTY-101 for the ELiPSE clinical Trial, and the Company will manufacture CNTY-101 for the CALiPSO clinical Trial.
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In January 2022, the Company and FCDI entered into a letter agreement (the “Letter Agreement”), which amended the Reprogramming License Agreement, Differentiation License Agreement and Manufacturing Agreement (the “FCDI Agreements”) pursuant to the Company’s Research Collaboration and License Agreement with Bristol-Myers Squibb. Pursuant to the Letter Agreement, and in consideration for amending the FCDI Agreements, the Company paid to FCDI an upfront payment of $
In September 2023 the Company and FCDI entered into a worldwide license agreement whereby FCDI will grant non-exclusive licenses to the Company for certain patent rights and know-how related to cell differentiation and reprogramming for the development and commercialization of iPSC-derived therapies for the treatment of inflammatory and autoimmune diseases (the “Autoimmune License”). In addition, the Company and FCDI entered into an amendment to each of the Reprogramming License and the Differentiation License to expand the licenses related to the development and commercialization of iPSC-derived cancer immunotherapeutic to also include inflammatory and autoimmune diseases. Under the terms of these agreements, FCDI will be eligible to receive certain development and regulatory milestone payments as well as low single-digit royalties related to products developed in connection with such agreements.
During the three and nine months ended September 30, 2024, the Company made payments of $
During the three and nine months ended September 30, 2023, the amounts paid to FCDI were immaterial.
Bayer Option Agreement
Bayer Health, LLC (“Bayer”) has the right of first refusal to acquire certain products researched and developed by the Company. Subject to certain exceptions, Bayer’s right of first refusal is exercisable with respect to up to four products and may only exercise these option rights in a non-sequential and alternating manner, and such rights are subject to additional limitations.
Note 15 – Common Stock
At-The-Market
The Company has a Sales Agreement (“Sales Agreement”), with Cowen and Company, LLC, or (“Cowen”) to provide for the offering, issuance and sale of up to an aggregate amount of $
Private Placement Offering
In April, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors in a private placement an aggregate of
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The Private Placement closed on April 15, 2024. The Company received aggregate net proceeds from the Private Placement of approximately $
Note 16 – Impairment of long-lived assets
In the second quarter of 2023, the Company made the strategic decision to consolidate
The Company reviewed its property and equipment related assets for impairment by comparing the carrying values of the assets with their estimated future undiscounted cash flows. Impairment charge was calculated as the difference between asset carrying values and fair value as discounted cash flows, indicative fair market quotes received which are considered level three fair value estimates.
The Company analyzed its right-of used assets for impairment based on fair values calculated as discounted cash flows estimated to be received from the lease assets where applicable. The difference between fair value and carrying value of the right of use asset was recognized as an impairment in June 2023 of $
Note 17—Reduction in force
In January 2023, the Company's Board of Directors approved, and management implemented, a new portfolio prioritization and capital allocation strategy. The resulting changes included pausing investments in CNTY-103 for glioblastoma as well as a discovery program in hematologic malignancies. The Company has shifted focus to CNTY-101 and will accelerate key programs, including one follow-on candidate for lymphoma, CNTY-102, CNTY-107 for Nectin-4+ solid tumors, and CNTY-101 in moderate to severe Systemic Lupus Eythematosus (“SLE”), lupus nephritis (“LN”), diffuse cutaneous systemic sclerosis (“dcSSc”), and idiopathic inflammatory myopathy (“IMM”). In addition, the Company continues its partnered programs with Bristol Myers Squibb. The restructuring plan resulted in a reduction in the Company's workforce of approximately
During the nine months ended September 30, 2023, the Company incurred $
Note 18—Subsequent Events
The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements.
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Item 2. Management’s discussion and analysis of financial condition and results of operations
The following discussion and analysis should be read in conjunction with our financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and the financial statements and accompanying notes thereto for the fiscal year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2024 (the “Annual Report”). This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. 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 cases 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 “Risk Factors” in our Annual Report. 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.
Overview
We are an innovative biotechnology company harnessing the power of adult stem cells to develop curative cell therapy products for cancer and autoimmune diseases that we believe will allow us to overcome the limitations of first-generation cell therapies. We have created a comprehensive, genetically engineered allogeneic cell therapy platform that includes:
| • | Industry-leading induced pluripotent stem cells (“iPSCs”) and differentiated know-how to generate immune effector cells from iPSCs (“iPSC-derived cells”); |
| • | Clustered regularly interspaced short palindromic repeats (“CRISPR”) mediated precision gene editing that allows us to incorporate multiple transgenes and remove target genes intended to optimize cell product performance; |
| • | Sophisticated protein engineering capabilities to develop proprietary next generation chimeric antigen receptors (“CARs”); |
| • | Our proprietary Allo-EvasionTM technology intended to prevent rejection of our cell products by the host immune system; and |
| • | Cutting edge manufacturing capabilities intended to minimize product development and supply risk. |
We are leveraging our expertise in cellular reprogramming, genetic engineering, and manufacturing to develop therapies with the potential to overcome many of the challenges inherent to cell therapy and provide a significant advantage over existing cell therapy technologies. We believe that these vertically integrated capabilities will allow us to further expand our existing pipeline and develop therapeutics from iPSC-derived natural killer cells (“iNK cells”) and iPSC-derived T cells (“iT cells”) that may provide enhanced clinical outcomes compared to available therapeutic options. We believe our commitment to developing off-the-shelf cell therapies will expand patient access and provide an unparalleled opportunity to advance the course of treatment. Our vision is to become a premier fully integrated biotechnology company by developing and ultimately commercializing off-the-shelf allogeneic cell therapies that dramatically and positively transform the lives of patients suffering from life-threatening cancers, as well as autoimmune diseases. To achieve our vision, we have assembled a world-class team with decades of collective experience in cell therapy and drug development, manufacturing, and commercialization.
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Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, conducting discovery and research activities, filing patent applications, identifying potential product candidates, conducting our ELiPSE-1 clinical trial, initiating our CALiPSO-1 clinical trial, undertaking preclinical studies, in-licensing intellectual property, and acquiring and integrating Clade Therapeutics. All of our programs are currently in the development stage, and we do not have any products approved for sale. Since our inception, we have incurred net losses each year. We had an accumulated deficit of $746.3 million as of September 30, 2024. Substantially all of our losses have resulted from expenses incurred in connection with our research and development programs, the acquisition of in-process research and development and from general and administrative costs associated with our operations.
To date, we have funded our operations from the issuance and sale of our equity securities and the receipt of payments from Bristol-Myers Squibb, in connection with our collaborations as described below, and have not generated any revenues. Since our inception, through September 30, 2024, we have raised approximately $666 million in net proceeds from sales of our equity securities. As of September 30, 2024, we had cash and cash equivalents of $52.6 million and investments of $192.1 million.
In August 2022, the U.S. Food and Drug Administration (“FDA”) notified us that our ELiPSE-1 clinical trial may proceed to assess CNTY-101 in patients with relapsed or refractory CD19 positive B-cell malignancies. The Phase 1 trial, ELiPSE-1, is ongoing in patients with relapsed or refractory CD19-positive B-cell malignancies. In December 2023, we announced preliminary clinical data from seven participants treated at the two lowest dose levels in the trial. In June 2024, we presented encouraging interim efficacy and safety data for 12 safety evaluable and 10 efficacy evaluable participants. We have evaluated dose escalation of CNTY-101 at schedule A (single dose per cycle) up to Dose Level 4 (3 billion cells) and schedule B (3 doses per cycle) up to Dose Level 3 (1 billion cells). As of the data snapshot October 15, 2024, eight additional participants have been treated with CNTY-101 for a total of 20 participants evaluable for safety and 19 for preliminary efficacy.
In December 2023, we were notified by the FDA that the Phase 1 CALiPSO-1 clinical trial may proceed to assess CNTY-101 in participants with moderate to severe systemic lupus erythematosus (SLE) who have failed at least two standard immunosuppressive therapies. We amended the clinical protocol in June 2024 to include a new indication-specific cohort of Lupus Nephritis (LN) patients. To further expand evaluation of CNTY-101 in autoimmune diseases, in September 2024, we amended the protocol to include two additional new indication-specific cohorts of diffuse cutaneous Systemic Sclerosis (dcSSc) and idiopathic inflammatory myositis (IIM) patients. We have activated multiple clinical sites in the United States, and expect to activate additional sites in the coming months, with ability to enroll patients across indications. To further facilitate enrollment, we plan to expand trial sites to select European countries.
In January 2023, we announced a strategic internal portfolio prioritization (the “January 2023 Strategic Reprioritization”) through which, among other discovery efforts, CNTY-103, a CAR-iNK product targeting CD133 and a discovery program for hematological malignancies, were de-prioritized, allowing us to further prioritize our CNTY-102 and CNTY-107 product candidates, which we believe have a higher probability of technical success and greater market potential. As a result of the operational restructuring, lab operations in Seattle, Washington and Hamilton, Ontario, were closed and research activities have been consolidated in Philadelphia, Pennsylvania.
In the second quarter of 2024, we announced plans to expand clinical development for CNTY-101 into additional autoimmune disease indications. To support these increased research and development activities in autoimmune diseases, in April 2024 we completed a private placement offering of our common stock to certain institutional investors and received $60 million in gross proceeds before deducting placement agent fees and other offering related expenses. Concurrently, we announced pipeline and platform enhancements through the acquisition of Clade Therapeutics, Inc. (“Clade”), a privately held biotechnology company focused on discovering and delivering engineerable, off-the-shelf, scalable, and consistent stem cell-based medicines, with a focus on iPSC-derived αβ T cells. The acquisition brings us novel technology enhancing our efforts on Allo-EvasionTM and a newly expanded pipeline incorporating three additional preclinical-stage programs from Clade’s αβ iT platform spanning across cancer and autoimmune diseases. We will share what we believe to
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be the first presentation of iPSC-derived CD4+ and CD8+ CAR T cells that demonstrate function comparable to primary αβ CAR-T cells at the 2024 American Society of Hematology Annual Meeting.
Following the integration of Clade Therapeutics, we are conducting a strategic review of the pre-clinical pipeline to leverage the unique capabilities and technologies at Century towards high-value and differentiated programs. We expect to conclude and communicate the results of this review in the first quarter of 2025. As part of this review, in October, we implemented changes to the organization structure including elimination of overlapping technical and research capabilities to enhance ongoing efficiencies and alignment with the Company’s key programs. With these changes, we have extended expected cash runway into the second half of 2026.
Based on our current business plans, we believe our cash, cash equivalents and investments as of the date of this quarterly report will be sufficient for us to fund our operating expenses and capital expenditures requirements into the second half of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. We anticipate that our expenses and operating losses will increase substantially over the foreseeable future. The expected increase in expenses will be driven in large part by our ongoing activities, if and as we:
| ● | continue to advance our iPSC cell therapy platforms; |
| ● | progress clinical development of CNTY-101 and continue preclinical development of our other product candidates; |
| ● | seek to discover and develop additional product candidates; |
| ● | expand and validate our own clinical-scale current good manufacturing practices (“cGMP”), facilities; |
| ● | seek regulatory approvals for any of our product candidates that successfully complete clinical trials; |
| ● | maintain, expand, protect, and enforce our intellectual property portfolio; |
| ● | continue to incur costs associated with operating as a public company; |
| ● | acquire or in-license other product candidates and technologies; |
| ● | incur additional costs associated with operating as a public company, which will require us to add operational, financial and management information systems and personnel, including personnel to support our drug development and any future commercialization efforts; and |
| ● | increase our employee headcount and related expenses to support these activities. |
We are also investing in building our capabilities in key areas of manufacturing sciences and operations, including development of our iPSC cell therapy platforms, product characterization, and process analytics from the time product candidates are in early research phases. Our investments also include scaled research solutions, scaled infrastructure, and novel technologies intended to improve efficiency, characterization, and scalability of manufacturing.
We anticipate that we will need to raise additional financing in the future to fund our operations, including funding for preclinical studies, clinical trials, and the commercialization of any approved product candidates. We intend to use the proceeds from such financings to, among other uses, fund research and development of our product candidates and development programs, including our pre-clinical and clinical development of CNTY-101, CNTY-102, CNTY-107, and CNTY-108, CNTY-308, CNTY-361, as well as CNTY-104 and CNTY-106 in collaboration with Bristol-Myers Squibb. Until such time, if ever, as we can generate significant product revenue, we expect to finance our operations with our existing cash and cash equivalents, investments, any future equity or debt financings; upfront, and, milestone, and royalty payments, if any, received under current and future licenses or collaborations. We may not be able to raise additional capital on terms acceptable to us
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or at all. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be adversely affected. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability.
License and collaboration agreements
Bristol-Myers Squibb
On January 7, 2022, we entered into the Research, Collaboration and License Agreement, with Bristol-Myers Squibb (the “Collaboration Agreement”), to collaborate on the research, development and commercialization of iNK and iT cell programs for hematologic malignancies and solid tumors (the “Collaboration Program”), and each product candidate (each, a “Development Candidate”). We and Bristol-Myers Squibb will initially collaborate on two Collaboration Programs focused on acute myeloid leukemia, and multiple myeloma, and Bristol-Myers Squibb has the option to add up to two additional Collaboration Programs for an additional fee. We are responsible for generating Development Candidates for each Collaboration Program, and Bristol-Myers Squibb has the option to elect to exclusively license the Development Candidates for pre-clinical development, clinical development and commercialization on a worldwide basis. Following Bristol-Myers Squibb’s exercise of the License Option, we will be responsible for performing IND-enabling studies, supporting Bristol-Myers Squibb’s preparation and submission of an IND, and manufacturing of clinical supplies until completion of a proof of concept clinical trial. Bristol-Myers Squibb will be responsible for all regulatory, clinical, manufacturing (after the proof of concept clinical trial) and commercialization activities for such Development Candidates worldwide. We have the option to co-promote Development Candidates generated from certain specified Collaboration Programs.
Under the terms of the Collaboration Agreement, Bristol-Myers Squibb made a non-refundable, upfront cash payment of $100 million and will pay an exercise fee upon the exercise of the License Option, and product candidates developed under a Licensed Program (the “Licensed Products”). For each Licensed Program, Bristol-Myers Squibb will pay up to $235 million in milestone payments upon the first achievement of certain development and regulatory milestones and will pay up to $500 million per Licensed Product in net sales-based milestone payments. Bristol-Myers Squibb will also pay us tiered royalties per Licensed Product as a percentage of net sales in the high-single digits to low-teens, subject to certain adjustments.
In connection with the Collaboration Agreement, Bristol-Myers Squibb purchased 2,160,760 shares of our common stock at a price per share of $23.14 for an aggregate purchase price of $50 million. We determined the common stock purchase represented a premium of $7.82 per share, or $23.2 million in the aggregate, and the remaining $26.8 million was recorded as issuance of common stock in stockholders’ equity.
We identified the following commitments under the arrangement: (i) research and development services under each of the two initial Collaboration Programs and (ii) License Option to elect to exclusively license the Development Candidates for each of the two initial Collaboration Programs. We determined that these four commitments represent distinct performance obligations for purposes of recognizing revenue and will recognize revenue as we fulfill each performance obligation.
Fujifilm Cellular Dynamics, Inc. (FCDI)
On September 18, 2018, we entered into a license agreement (the “Differentiation License”), with FCDI. The Differentiation License, as amended, provides us with an exclusive license under certain patents and know-how related to human iPSC consisting of cells that are or are modifications of NK cells, T cells, dendritic cells and macrophages derived from human iPSC. In consideration for the Differentiation License, FCDI received 2,980,803 shares of common stock in connection with the January 2023 Strategic Reprioritization.
Also on September 18, 2018, we entered into the non-exclusive license, (the “Reprogramming License”), with FCDI. The Reprogramming License, as amended, provides us with a non-exclusive license under certain patents and know-how related to the reprogramming of human somatic cells to iPSCs and provide us access
38
to iPSC lines for clinical use. Under the Reprogramming License, we are required to make certain developmental and regulatory milestone payments as well as royalty payments upon commercialization in the low single digits. In connection with the Reprogramming License, we entered into a collaboration agreement (the” FCDI Collaboration Agreement”), with FCDI pursuant to which we agreed to fund research and development work at FCDI pursuant to a research plan.
On October 21, 2019, we entered into the FCDI Collaboration Agreement with FCDI, whereby FCDI provides certain services to us to develop and manufacture iPSCs and immune cells derived therefrom. Under the terms of the FCDI Collaboration Agreement, as amended, FCDI will provide services in accordance with the approved research plan and related research budget. The initial research plan covers the period from the date of execution of the FCDI Collaboration Agreement through March 31, 2022. On July 29, 2022, we amended the FCDI Collaboration Agreement to extend the term through September 30, 2025.
On January 7, 2022, we and FCDI entered into a letter agreement, which amends each of the FCDI agreements as further discussed in Note 14 to our consolidated financial statements. Pursuant to the Letter Agreement, and in consideration for amending the FCDI Agreements, we agreed to pay to FCDI (i) an upfront payment of $10 million, (ii) a percentage of any milestone payments received by us under the Collaboration Agreement, in respect of achievement of development or regulatory milestones specific to Japan, and (iii) a percentage of all royalties received by us under the Collaboration Agreement in respect of sales of products in Japan.
On September 22, 2023, we and FCDI entered into a worldwide license agreement whereby FCDI will grant non-exclusive licenses to us for certain patent rights and know-how related to cell differentiation and reprogramming for the development and commercialization of iPSC-derived therapies for the treatment of inflammatory and autoimmune diseases (the “Autoimmune License”). Under the terms of the Autoimmune License, FCDI will be eligible to receive certain development and regulatory milestone payments as well as low single-digit royalties related to products developed in connection with the Autoimmune License. In addition, on September 22, 2023, we and FCDI amended the Reprogramming License, Differentiation License and the Collaboration Agreement to expand our existing license related to the development and commercialization of iPSC-derived cancer immunotherapeutic to also include inflammatory and autoimmune diseases.
During the three and nine months ended September 30, 2024, we made payments of $3.7 million and $6.6 million and incurred research and development expenses of $1.0 million and $6.3 million recorded within general and administrative expenses in its consolidated statements of operations and comprehensive loss.
During the three and nine months ended September 30, 2023, the amounts paid to FCDI were immaterial
From inception of the FCDI Collaboration Agreement through September 30, 2024, we incurred $42.6 million of expenses under the FCDI Collaboration Agreement.
Components of operating results
Collaboration revenue
We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products for the foreseeable future. Our revenues to date have been generated through our collaboration, option and license agreement with Bristol-Myers Squibb. We recognize revenue over the expected performance period under this agreement. We expect that our revenue for the next several years will be derived primarily from this agreement and any additional collaborations that we may enter into in the future. To date, we have not received any royalties under any of our existing collaboration agreements.
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Operating expenses
Research and development
To date, research and development expenses have related primarily to discovery and development of our iPSC cell therapy platform technology and product candidates and acquired in-process research and development. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are recorded as prepaid expenses until the goods or services are received.
Research and development expenses consist of personnel-related costs, including salaries, and benefits, stock compensation expense, external research and development expenses incurred under arrangements with third parties, laboratory supplies, costs to acquire and license technologies facility and other allocated expenses, including rent, depreciation, and allocated overhead costs, and other research and development expenses.
We deploy our employee and infrastructure resources across multiple research and development programs for developing our iPSC cell therapy platforms, identifying and developing product candidates, and establishing manufacturing capabilities. Due to the number of ongoing projects and our ability to use resources across several projects, the vast majority of our research and development costs are not recorded on a program-specific basis. These include costs for personnel, laboratory, and other indirect facility and operating costs.
Research and development activities account for a significant portion of our operating expenses. We anticipate that our research and development expenses will increase for the foreseeable future as we expand our research and development efforts including expanding the capabilities of our iPSC cell therapy platforms, identifying product candidates, progressing preclinical studies and clinical trials, including for our first clinical product candidate CNTY-101, seeking regulatory approval of our product candidates, and incurring costs to acquire and license technologies aligned with our goal of translating iPSCs to therapies. A change in the outcome of any of these variables could mean a significant change in the costs and timing associated with the development of our product candidates.
General and administrative
General and administrative expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation, for our employees in executive, legal, finance, human resources, information technology, and other administrative functions, legal fees, consulting fees, recruiting costs, and facility costs not otherwise included in research and development expenses. Legal fees include those related to corporate and patent matters.
Interest expense
Interest expense relates to interest incurred on the September 14, 2020 $10.0 million Term Loan Agreement (the “Loan Agreement”) we entered into with Hercules Capital, Inc., as well as amortization of the related deferred financing cost. The loan was repaid in full in May 2023. See Note 7 to our consolidated financial statements for additional information.
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Interest income
Interest income consists of interest earned on our cash, cash equivalents and investment balances.
Income taxes
We have incurred losses and recorded a full valuation allowance on all of our net deferred tax assets. For the nine months ended September 30, 2024, the Company recorded no income tax benefits for the net operating losses incurred or for the research and development tax credits generated in the U.S. due to its uncertainty of realizing a benefit from those items. The tax provision recorded during the 2023 interim period primarily consisted of current federal and state tax expense resulting from revenue recognition for tax purposes from the Company's Research Collaboration and License Agreement entered into with Bristol-Myers Squibb Company in 2022, combined with statutory limitations on deductions for research and development expenses, net operating losses, and research credits.
Results of operations
Comparison of the three months ended September 30, 2024 and 2023.
The following table summarizes our results of operations for the periods presented:
Three Months Ended | Three Months Ended | |||||||||
September 30, 2024 | September 30, 2023 | Change | ||||||||
(in thousands) | ||||||||||
Collaboration revenue | $ | 791 | $ | 148 | $ | 643 | ||||
Operating expenses: |
|
| ||||||||
Research and development |
| 27,228 |
| 22,788 |
| 4,440 | ||||
General and administrative |
| 8,352 |
| 8,986 |
| (634) | ||||
In-process research and development asset |
| — |
| 4,000 |
| (4,000) | ||||
Total operating expenses |
| 35,580 |
| 35,774 |
| (194) | ||||
Loss from operations |
| (34,789) |
| (35,626) |
| 837 | ||||
Other income (expense): | ||||||||||
Interest expense |
| — |
| — |
| — | ||||
Interest income | 3,305 | 3,486 | (181) | |||||||
Other income, net |
| 250 |
| 12 |
| 238 | ||||
Total other income (expense) | 3,555 | 3,498 | 57 | |||||||
Loss before provision for income taxes | (31,234) | (32,128) | 894 | |||||||
Provision for income taxes | 8 | (592) | 600 | |||||||
Net loss | $ | (31,226) | $ | (32,720) | $ | 1,494 | ||||
Collaboration revenue
During the three months ended September 30, 2024 and 2023, we recognized revenue of $0.8 million and $0.1 million under our collaboration agreement with Bristol-Myers Squibb, respectively. Revenue recognized under the collaboration agreement fluctuates based on the amount and timing of expenses incurred under the agreement.
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Research and development expenses
The following table summarizes the components of our research and development expenses for the periods presented:
Three Months Ended | Three Months Ended | ||||||||
September 30, 2024 | September 30, 2023 | Change | |||||||
(in thousands) | |||||||||
Personnel and related costs |
| $ | 11,056 |
| $ | 10,237 |
| $ | 819 |
Facility and other allocated costs |
| 5,502 |
| 6,361 |
| (859) | |||
Research and laboratory |
| 7,098 |
| 5,471 |
| 1,627 | |||
Collaboration |
| 2,602 |
| — |
| 2,602 | |||
Consulting |
| 560 |
| 302 |
| 258 | |||
Other |
| 410 |
| 417 |
| (7) | |||
Total research and development expense | $ | 27,228 | $ | 22,788 | $ | 4,440 | |||
Research and development expenses were $27.2 million and $22.8 million for the three months ended September 30, 2024 and 2023, respectively. The increase of $4.4 million was primarily due to:
| ● | an increase in personnel-related expenses of $0.8 million, including an increase in salary and benefit expense of $0.6 million, and an increase in stock compensation expense of $0.2 million. This is primarily the result of the acquisition of Clade. |
| ● | an increase of $2.6 million in research and laboratory due to progression of ELiPSE-1 trial and start-up costs of CALiPSO-1 trial. |
| ● | An increase of $1.6 million in collaboration due to manufacturing our CNTY-101 product candidate performed under our collaboration with FCDI. |
General and administrative expenses
General and administrative expenses were $8.4 million for the three months ended September 30, 2024 and $9.0 million for three months ended September 30, 2023. The decrease is primarily due to a gain recognized on contingent consideration liabilities.
Interest income
Interest income was $3.3 million and $3.5 million for the three months ended September 30, 2024 and 2023, respectively, which related to interest earned on our cash, cash equivalents, and investment balances.
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Results of operations
Comparison of the nine months ended September 30, 2024 and 2023.
The following table summarizes our results of operations for the periods presented:
Nine Months Ended | Nine Months Ended | ||||||||
September 30, 2024 | September 30, 2023 | Change | |||||||
(in thousands) | |||||||||
Collaboration revenue | $ | 2,416 | $ | 1,967 | $ | 449 | |||
Operating expenses: |
|
| |||||||
Research and development |
| 77,869 |
| 70,414 | 7,455 | ||||
General and administrative |
| 25,400 |
| 26,117 |
| (717) | |||
In-process research and development | — | 4,000 | (4,000) | ||||||
Impairment of long-lived assets |
| — | 4,220 | (4,220) | |||||
Total operating expenses |
| 103,269 |
| 104,751 |
| (1,482) | |||
Loss from operations |
| (100,853) |
| (102,784) |
| 1,931 | |||
Other income (expense): | |||||||||
Interest expense |
| — |
| (540) |
| 540 | |||
Interest income | 10,126 | 9,167 | 959 | ||||||
Other income, net | 248 | (368) | 616 | ||||||
Total other income (expense) | 10,374 | 8,259 | 2,115 | ||||||
Loss before provision for income taxes | (90,479) | (94,525) | 4,046 | ||||||
Provision for income taxes | (14) | (2,750) | 2,736 | ||||||
Net loss | $ | (90,493) | $ | (97,275) | $ | 6,782 | |||
Collaboration revenue
During the nine months ended September 30, 2024 and 2023, we recognized revenue of $2.4 million and $2.0 million under our collaboration agreement with Bristol-Myers Squibb, respectively. Revenue recognized under the collaboration agreement fluctuates based on the amount and timing of expenses incurred under the agreement.
Research and development expenses
The following table summarizes the components of our research and development expenses for the periods presented:
Nine Months Ended | Nine Months Ended | |||||||||
September 30, 2024 | September 30, 2023 | Change | ||||||||
(in thousands) | ||||||||||
Personnel and related costs |
| $ | 31,757 |
| $ | 32,526 |
| $ | (769) | |
Facility and other allocated costs |
| 16,738 |
| 18,587 |
| (1,849) | ||||
Research and laboratory |
| 22,221 |
| 17,267 |
| 4,954 | ||||
Collaboration |
| 4,429 |
| 254 |
| 4,175 | ||||
Consulting |
| 1,472 |
| 964 |
| 508 | ||||
Other |
| 1,252 |
| 816 |
| 436 | ||||
Total research and development expense | $ | 77,869 | $ | 70,414 | $ | 7,455 | ||||
Research and development expenses were $77.9 million and $70.4 million for the nine months ended September 30, 2024 and 2023, respectively. The increase of $7.5 million was primarily due to:
| ● | an increase of $4.9 million in research and laboratory due to progression of ELiPSE-1 trial and start-up costs of CALiPSO-1 trial. |
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| ● | a decrease in personnel-related expenses of $0.8 million, including a decrease in salary and benefit expense of $0.3 million, and a decrease in stock compensation expense of $0.5 million. |
| ● | a decrease of $1.9 million of facility and other allocated costs, which consists of a decrease in rent of $1.1 million, and a decrease of facility services of $1.2 million. This was offset by an increase in depreciation of $0.5 million. |
| ● | An increase in collaboration of $4.2 million due to manufacturing our CNTY-101 product candidate performed under our collaboration with FCDI. |
General and administrative expense
General and administrative expenses were $25.4 million for the nine months ended September 30, 2024 and $26.1 million for nine months ended September 30, 2023. The decrease is primarily due to a gain recognized on contingent consideration liabilities.
Interest expense
Interest expense was $0.0 million and $0.5 million for the nine months ended September 30, 2024 and 2023, respectively, which related to our Loan Agreement with Hercules. On May 1, 2023, we repaid the loan in its entirety and thus expect our interest expenses to decrease accordingly in subsequent periods.
Interest income
Interest income was $10.1 million and $9.2 million for the nine months ended September 30, 2024 and 2023, respectively, which related to interest earned on our cash, cash equivalents, and investment balances. The increase in our interest income was due to higher interest rates earned on average balances of cash, cash equivalents and investments.
Liquidity, capital resources, and capital requirements
Sources of liquidity
To date, we have funded our operations from the issuance and sale of our equity securities, debt financing and collaboration revenues. Since our inception, we have raised approximately $666 million in net proceeds from the sales of our equity securities. As of September 30, 2024, we had cash, and cash equivalents of $52.6 million and investments of $192.1 million. Based on our research and development plans, we believe our existing cash, cash equivalents and investments, will be sufficient to fund our operating expenses and capital expenditures requirements into the second half of 2026. Since our inception, we have incurred significant operating losses. We have not yet commercialized any products and we do not expect to generate revenue from sales of any product candidates for a number of years, if ever. We had an accumulated deficit of $746.2 million as of September 30, 2024.
In July 2022, we entered into a Sales Agreement, with Cowen and Company, LLC (“Cowen”), under which we may offer and sell, from time to time in our sole discretion, shares of our common stock, having an aggregate offering price of up to $150 million through Cowen as sales agent. In February of 2024, 4,084,502 shares of common stock were issued and sold pursuant to the Sales Agreement at a weighted-average price of $4.50 per share, resulting in approximately $18.4 million in gross proceeds.
In April 2024, we entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional accredited investors (the “Investors”), pursuant to which we agreed to issue and sell to the Investors in a private placement an aggregate of 15,873,011 shares of common stock (the “Private Placement Shares”), at a price of $3.78 per share (the “Private Placement”). We received aggregate gross proceeds from the Private Placement of approximately $60 million, before deducting placement agent fees and offering expenses.
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Future funding requirements
We expect to incur additional losses in the foreseeable future as we conduct and expand our research and development efforts, including conducting preclinical studies and clinical trials, developing new product candidates, establishing internal and external manufacturing capabilities, and funding our operations generally. We anticipate that we will need to raise additional financing in the future to fund our operations, including the commercialization of any approved product candidates. We are subject to the risks typically related to the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business.
Our future capital requirements will depend on many factors, including:
| ● | the scope, timing, progress, costs, and results of discovery, preclinical development, and clinical trials for our current and future product candidates; |
| ● | the number of clinical trials required for regulatory approval of our current and future product candidates; |
| ● | the costs, timing, and outcome of regulatory review of any of our current and future product candidates; |
| ● | the cost of manufacturing clinical and commercial supplies of our current and future product candidates; |
| ● | the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval; |
| ● | the costs and timing of preparing, filing, and prosecuting patent applications, obtaining, maintaining, protecting, and enforcing our intellectual property rights, and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon, misappropriating, or violating their intellectual property rights; |
| ● | our ability to maintain existing, and establish new, strategic collaborations, licensing, or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty, or other payments due under any such agreement; |
| ● | the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; |
| ● | expenses to attract, hire and retain, skilled personnel; |
| ● | costs of operating as a public company; |
| ● | our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payors; |
| ● | the effect of competing technological and market developments; and |
| ● | the extent to which we acquire or invest in businesses, products, and technologies. |
Until and unless we can generate substantial product revenue, we expect to finance our cash needs through the proceeds from a combination of equity offerings and debt financings, and potentially through additional license and development agreements or strategic partnerships or collaborations with third parties. Financing may not be available in sufficient amounts or on reasonable terms. In addition, market volatility resulting from the effects of pandemics, inflationary pressures, disruptions of financial institutions, political unrest and hostilities, war or other factors could adversely impact our ability to access capital as and when needed. We have no commitments for any additional financing and will likely be required to raise such financing through the sale of additional securities, which, in the case of equity securities, may occur at prices lower than the offering price of our common stock. If we sell equity or equity-linked securities, our current stockholders, may
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be diluted, and the terms may include liquidation or other preferences that are senior to or otherwise adversely affect the rights of our stockholders. Moreover, if we issue debt, we may need to dedicate a substantial portion of our operating cash flow to paying principal and interest on such debt and we may need to comply with operating restrictions, such as limitations on incurring additional debt, which could impair our ability to acquire, sell or license intellectual property rights which could impede our ability to conduct our business.
Cash flows
The following table summarizes our cash flows for the periods indicated:
Nine Months Ended |
| Nine months ended | ||||
September 30, 2024 |
| September 30, 2023 | ||||
(in thousands) | ||||||
Net cash (used in) provided by: | ||||||
Operating activities | $ | (85,912) | $ | (62,118) | ||
Investing activities |
| 16,876 |
| 42,529 | ||
Financing activities |
| 75,165 |
| (9,369) | ||
Net (decrease) increase in cash, cash equivalents, and restricted cash | $ | 6,129 | $ | (28,958) | ||
Operating activities
Net cash used in operating activities was $85.9 million and $62.1 million for the nine months ended September 30, 2024 and 2023, respectively. Net cash used in operating activities during the nine months ended September 30, 2024 consisted primarily of our net loss of $90.5 million and a decrease of $11.1 million in our net operating assets and liabilities, partially offset by non-cash charges of $15.7 million. The non-cash charges of $14.7 million consisted primarily of $10.0 million for depreciation expense, non-cash operating lease benefit of $0.4 million, a decrease in lease liability due to lease termination, and stock-based compensation expense of $10.0 million, partially offset by amortization of marketable securities of $3.8 million and gain on contingent consideration liability of $1.1 million. The change in operating assets and liabilities was primarily due to a $3.1 million increase in prepaid expenses and other assets, a $4.1 million decrease in operating lease liability, a $2.4 million decrease in deferred revenue, and a $1.8 million decrease in accounts payable.
Net cash used in operating activities was $62.1 million for the nine months ended September 30, 2023, which consisted primarily of our net loss of $97.3 million, partially offset by and an increase of $12.3 million in our net operating assets and liabilities and non-cash charges of $22.9 million. The non-cash charges of $22.9 million consisted of $9.5 million for depreciation expense, stock-based compensation expense of $11.1 million, and impairment of $4.2 million. The change in operating assets and liabilities was primarily due to the receipt of $11.7 million of tenant reimbursement, and a $1.7million increase in accrued expenses and other liabilities, partially offset by a $2.0 million increase in deferred revenue.
Investing activities
Net cash provided by investing activities was 16.9 million and $42.5 million for the nine months ended September 30, 2024 and 2023, respectively. Cash provided by investing activities for the nine months ended September 30, 2024 consisted primarily of the sale of fixed maturity securities, available for sale of $128.6 million, which was partially offset by purchases of fixed maturity securities of $102.1 million, and the acquisition of Clade of $9.6 million.
Cash provided by investing activities was $42.5 million for the nine months ended September 30, 2023 and consisted primarily of the sale of fixed maturity securities, available for sale of $254.6 million, which was partially offset by purchases of fixed maturity securities of $199.3 million and acquisition of property and equipment of $12.8 million.
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Financing activities
Net cash provided by (used in) financing activities was $75.2 million and ($9.4) million for the nine months ended September 30, 2024 and 2023, respectively. Cash provided by financing activities consisted of $17.8 million from proceeds from our at-the-market capital raise, $56.6 million from proceeds from our PIPE financing, and $0.7 million from issuance of our common stock from equity incentive plans pursuant to the exercise of employee stock options.
Net cash used in financing activities was $9.4 million for the nine months ended September 30, 2023. Cash provided by financing activities consisted of $10.2 million for payments on long term debt and offset by $0.9 million from issuance of our common stock from equity incentive plans pursuant to the exercise of employee stock options.
Contractual obligations and commitments
The following table summarizes our significant contractual obligations and commitments as of September 30, 2024:
Payments Due by Period | |||||||||||||||
1 Year | 1 to 3 Years | 3 to 5 Years | More than 5 Years | Total | |||||||||||
(in thousands) | |||||||||||||||
Operating leases |
| $ | 9,703 |
| $ | 18,947 |
| $ | 19,782 |
| $ | 38,571 |
| $ | 87,003 |
Payment obligations under our license, collaboration, and acquisition and merger agreements as of September 30, 2024 are contingent upon future events such as our achievement of pre-specified development, regulatory, and commercial milestones, or royalties on net product sales. As of September 30, 2024, the timing and likelihood of achieving the milestones and success payments and generating future product sales are uncertain and therefore, any related payments are not included in the table above. We also enter into agreements in the normal course of business for sponsored research, preclinical studies, contract manufacturing, and other services and products for operating purposes, which are generally cancelable upon written notice. These obligations and commitments are not included in the table above. See Note 9 “Commitments and contingencies” for additional information.
We have commitments under operating leases for certain facilities used in our operations.
JOBS Act accounting election
As a company with less than $1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise generally applicable to public companies. As such, we may take advantage of reduced disclosure and other requirements otherwise generally applicable to public companies, including:
| ● | not being required to have our registered independent public accounting firm attest to management’s assessment of our internal control over financial reporting; |
| ● | presenting reduced disclosure about our executive compensation arrangements; |
| ● | an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; |
| ● | not being required to hold non-binding advisory votes on executive compensation or golden parachute arrangements; and, |
| ● | extended transition periods for complying with new or revised accounting standards. |
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The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period to enable us to comply with new or revised accounting standards and, therefore, we will adopt new or revised accounting standards at the time private companies adopt the new or revised accounting standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.
We will remain an emerging growth company until the earliest of (i) December 31, 2026, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million as of the last business day of the second fiscal quarter of such year. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Critical accounting policies and significant judgments and estimates
Refer to Note 2, Summary of Significant Accounting Policies, included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of our critical accounting policies.
During the nine months ended September 30, 2024, there were no material changes to our critical accounting policies from those described in our audited financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K filed with the SEC on March 14, 2024, except as noted above.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. We do not currently have any material exposure to foreign currency fluctuations and do not engage in any hedging activities as part of our normal course of business.
Interest rate risk
We had cash, cash equivalents, and restricted cash of $52.6 million as of September 30, 2024, which consisted of bank deposits and money market funds. We also had investments of $192.1 million as of September 30, 2024. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the low risk profile of the instruments in our portfolio, a change in market interest rates would not have a material impact on our financial condition and/or results of operations.
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Banking Instability
Future disruptions of financial institutions where we bank or have credit arrangements, or disruptions of the financial services industry in general, could adversely affect our ability to access our cash and cash equivalents.
Effects of Inflation
Inflation generally affects us by increasing our cost of labor and laboratory consumables. We believe that inflation has not had a material effect on our financial statements.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosures controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of September 30, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2024, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.
Changes in Internal Control over Financial Reporting
Management determined that, as of September 30, 2024, there were no changes in our internal control over financial reporting that occurred during the nine months then ended that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. Our management believes that there are currently no claims or actions pending against us, the ultimate disposition of which would have a material adverse effect on our results of operations, financial condition or cash flows.
Item 1A. Risk Factors
Other than what is set forth below, there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Recent Sales of Unregistered Securities
There were no unregistered sales of equity securities during the period covered by this report.
Repurchase of Shares of Company Equity Securities
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b-1 Trading Plans
During the quarter ended September 30, 2024, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act)
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Item 6. Exhibits.
Exhibit Number |
| |
10.1● | Executive Employment Agreement, dated September 20, 2024, by and between the Company and Morgan Conn | |
10.2● | Executive Employment Agreement, dated September 13, 2024, by and between the Company and Chad Cowan | |
10.3● | ||
31.1 | ||
31.2 | ||
32.1* | ||
32.2* | ||
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
101.SCH | Inline XBRL Taxonomy Extension Schema | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | |
104 | The cover page from Century Therapeutics, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL and contained in Exhibit 101 |
* | This certification is being furnished solely to accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing of the registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
● | Indicates management contract or compensatory plan. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
Century Therapeutics, Inc. | ||
Date: November 5, 2024 | By: | /s/ Brent Pfeiffenberger, PharmD, MBA |
Brent Pfeiffenberger, PharmD, MBA | ||
Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: November 5, 2024 | By: | /s/ Morgan Conn, PhD |
Morgan Conn | ||
Chief Financial Officer | ||
(Principal Financial Officer) | ||
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