Company Overview and History
Celularity Inc. (CELU) is a pioneering regenerative medicine company at the forefront of developing innovative cellular therapies and advanced biomaterial products derived from the human placenta. With a steadfast commitment to addressing unmet medical needs, Celularity has carved out a unique niche in the dynamic landscape of biotechnology, leveraging the remarkable properties of placental-derived cells to tackle a diverse range of diseases and conditions.
Established in 2016 in Delaware, Celularity’s journey began with the strategic acquisition of Anthrogenesis Corporation from Celgene Corporation in August 2017. This pivotal move provided Celularity with access to Anthrogenesis’ proprietary technologies and processes for recovering large quantities of high-potential stem cells and cellular therapeutic products from postpartum human placentas. In May 2017, the company further expanded its portfolio by acquiring HLI Cellular Therapeutics, LLC, which operated LifebankUSA, a private umbilical cord blood stem cell and cord tissue bank. This acquisition brought with it rights to valuable biomaterial assets, including Biovance and Interfyl. Celularity continued its strategic growth in May 2018 by acquiring certain assets from Alliqua Biomedical, Inc., including the marketing and distribution rights to Biovance and Interfyl.
Throughout its history, Celularity has faced and overcome various challenges. In 2022, the company experienced a sustained decline in its stock price, resulting in its market capitalization falling below the carrying value of its combined reporting units. This triggered an impairment test, leading to a $29.6 million goodwill impairment charge for the cell therapy reporting unit. Despite these setbacks, Celularity has achieved significant milestones, including building a robust global intellectual property portfolio of over 350 patents and patent applications. This portfolio protects the company’s Celularity IMPACT platform, processes, technologies, and key cell therapy programs. Additionally, Celularity has established strategic partnerships and licensing agreements, including a license agreement with Celgene Corporation and a distribution agreement with Genting Innovation PTE LTD.
Core Technology and Pipeline
Celularity’s core focus revolves around the development of its Celularity IMPACT platform, which capitalizes on the inherent advantages of placental-derived cells. These cells demonstrate greater stemness, meaning they have a higher capacity for expansion and persistence compared to adult-derived cells. Moreover, they are immunologically naïve, suggesting the potential for reduced toxicity and graft-versus-host disease in transplant scenarios. Crucially, Celularity’s allogeneic approach allows for the creation of readily available, off-the-shelf treatments that can be delivered more quickly, reliably, and at greater scale to a broader patient population.
From this robust foundation, Celularity has built a diverse pipeline of cellular therapy candidates targeting a wide range of indications, including cancer, infectious diseases, and degenerative disorders. The company’s lead programs include CYNK-1, a placental-derived unmodified natural killer (NK) cell, and CYCART-19, a placental-derived chimeric antigen receptor (CAR) T-cell therapy. While the CYNK-1 program for acute myeloid leukemia and glioblastoma multiforme was recently discontinued due to resource prioritization, Celularity continues to explore the potential of its T-cell platform for the treatment of multiple hematological and solid tumors.
In addition to its cellular therapy efforts, Celularity has also established a commercial biomaterials business that includes the sale of products such as Biovance, Biovance 3L, Interfyl, and CentaFlex. These advanced placental-derived allograft and connective tissue matrices are utilized in surgical and wound care applications, addressing the growing demand for innovative regenerative solutions in the treatment of degenerative disorders and diseases.
Financials
Celularity’s financial performance has been marked by a steady increase in net sales, which reached $22.8 million in 2023, representing a 26.7% year-over-year improvement. This growth was primarily driven by increased demand for the company’s Biovance 3L product, a tri-layer decellularized, dehydrated human amniotic membrane derived from the placenta. Looking ahead, Celularity has raised its full-year 2024 net sales guidance to $54 million to $60 million, building on the strong momentum observed through the first half of the year, where combined net sales reached $26.9 million, a 290% increase compared to the same period in 2023.
Despite the positive strides in its biomaterials business, Celularity has faced challenges in its cellular therapy pipeline. In 2023, the company discontinued its unmodified NK cell and acute myeloid leukemia (AML) Cell Therapy clinical trials, leading to significant impairment charges and a decline in its net income. This strategic decision was driven by the need to prioritize corporate resources and focus on the most promising avenues for its cellular therapy programs.
For the fiscal year 2023, Celularity reported revenue of $22.77 million, with a net loss of $196.30 million. The company’s operating cash flow (OCF) for 2023 was negative $38.69 million, and its free cash flow (FCF) stood at negative $42.73 million. In the most recent quarter (Q2 2024), Celularity’s revenue reached $12.11 million, with a net loss of $6.49 million. The Q2 2024 OCF was negative $3.45 million, and FCF was negative $3.48 million.
Notably, Celularity experienced significant year-over-year revenue growth in Q2 2024, with a 312.2% increase compared to Q2 2023. This substantial growth was primarily attributed to a $9.06 million increase in product sales, particularly for the Biovance 3L product.
Liquidity
Celularity’s liquidity position remains a concern. As of June 30, 2024, the company had just $0.5 million in unrestricted cash and cash equivalents, with an accumulated deficit of $870.3 million. This has prompted Celularity to actively seek additional sources of outside capital to fund its ongoing operations and investment in research and development. The company’s recent efforts to secure financing, including a $6 million private placement and a $15 million secured loan, provide some relief, but the long-term sustainability of Celularity’s business model remains uncertain without a steadier flow of capital.
The company’s financial ratios further illustrate its liquidity challenges. As of June 30, 2024, Celularity’s debt-to-equity ratio stood at 0.19, while its current ratio was 0.26 and its quick ratio was 0.22. These figures underscore the need for careful financial management and strategic resource allocation in the coming quarters.
Business Segments
Celularity operates in three primary business segments: Cell Therapy, Degenerative Disease, and BioBanking.
The Cell Therapy segment focuses on researching and developing cellular therapies, which are currently unproven and in various phases of development. Celularity does not have any approved cell therapy products and has not generated any revenue from the sale of cellular therapies to date. In 2022, the company had active clinical trials using CYNK-1 for the treatment of acute myeloid leukemia (AML) and glioblastoma multiforme (GBM). However, in early 2023, Celularity announced its intention to cease recruitment in the GBM trial and close the AML trial based on preliminary results. The company also terminated development of CYCART-19, a placental-derived CAR-T cell therapy targeting CD19, in the third quarter of 2023.
The Degenerative Disease segment produces, sells, and licenses products used in surgical and wound care markets, such as Biovance, Biovance 3L, Interfyl, and CentaFlex. This segment has been the primary driver of Celularity’s recent revenue growth. For the six months ended June 30, 2024, revenue in this segment reached $24.23 million, a significant increase from $4.24 million in the prior year period. This growth was primarily driven by a $20.86 million increase in product sales, particularly of the Biovance 3L product. The cost of revenues for this segment was $3.05 million, up from $1.85 million in the prior year, but as a percentage of revenues decreased to 12.6% from 43.6% due to the higher gross margins of the Biovance 3L product.
The BioBanking segment collects stem cells from umbilical cords and placentas and provides storage of such cells on behalf of individuals for future use. Operating primarily under the LifebankUSA brand, this segment generated revenue of $2.56 million for the six months ended June 30, 2024, relatively flat compared to the prior year period of $2.63 million. The cost of revenues for the BioBanking segment was $714,000, down from $957,000 in the prior year.
Challenges and Future Outlook
Geopolitical tensions and macroeconomic headwinds have posed challenges for Celularity. The company’s global supply chain and distribution network have faced disruptions, leading to delays and increased costs. Additionally, the COVID-19 pandemic has had a significant impact on healthcare systems worldwide, potentially affecting the adoption and utilization of Celularity’s products and therapies.
Despite these obstacles, Celularity remains committed to its mission of harnessing the unique properties of placental-derived cells to develop groundbreaking treatments. The company’s robust intellectual property portfolio, which includes over 350 patents and patent applications, provides a strong foundation for its continued innovation and growth.
Celularity operates its own 147,220 square foot manufacturing and storage facility in the U.S., sourcing placental materials from full-term healthy informed consent donors. This vertical integration allows for greater control over the production process and quality of its products.
Looking ahead, Celularity’s success will hinge on its ability to navigate the complex regulatory landscape, secure the necessary funding to sustain its operations and pipeline development, and effectively execute its strategic plans. The company’s focus on its core biomaterials business, particularly the successful Biovance 3L product, while deprioritizing its cell therapy research and development efforts, reflects a strategic shift in response to liquidity constraints and market demands.
As Celularity continues to push the boundaries of regenerative medicine, its progress will be closely watched by investors, patients, and the broader healthcare community. The company’s ability to leverage its placental-derived technologies and expand its commercial product offerings will be critical in addressing its financial challenges and realizing its long-term potential in the regenerative medicine field.
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