Company Overview
Celularity Inc. is a regenerative and cellular medicine company at the forefront of developing innovative solutions to address a wide range of health challenges, from cancer and infectious diseases to degenerative conditions. With a unique focus on harnessing the remarkable potential of placental-derived cells, the company is poised to transform the landscape of healthcare and improve the lives of patients worldwide.
Company History
Founded in 2016, Celularity's origins can be traced back to Anthrogenesis Corporation, a pioneering company in the field of placental-derived technology founded in 1998. Anthrogenesis was later acquired by Celgene Corporation in 2002, where Celularity's current management team, led by founder and CEO Robert J. Hariri, M.D., Ph.D., continued to develop placental-derived technology. In 2017, Celularity acquired Anthrogenesis from Celgene, gaining access to a robust intellectual property portfolio and a seasoned team of experts dedicated to unlocking the remarkable potential of placental-derived cells.
Through the Anthrogenesis acquisition, Celularity obtained proprietary technologies and processes for the recovery of large quantities of high-potential stem cells and cellular therapeutic products derived from postpartum human placentas. This acquisition also provided the company with a portfolio of pre-clinical and clinical stage assets, including key cellular therapeutic assets that Celularity continues to develop.
In 2018, Celularity further expanded its commercial biomaterials business by acquiring certain assets from Alliqua Biomedical, Inc., including the marketing and distribution rights to Biovance and Interfyl. These acquisitions have played a crucial role in shaping Celularity's current product portfolio, which consists of three key business segments: Cell Therapy, Degenerative Disease, and Biobanking.
Business Segments
Cell Therapy
The Cell Therapy segment focuses on researching and developing cellular therapies, which are currently in various phases of development. It's important to note that Celularity has not generated any revenue from the sale of cellular therapies to date, as it does not have any approved cell therapy products yet.
Degenerative Disease
The Degenerative Disease segment focuses on the production, sale, and licensing of advanced biomaterial products, such as Biovance, Biovance 3L, Interfyl, and CentaFlex, which are used in surgical and wound care markets. Celularity sells these products through independent sales representatives as well as distributors and is also developing additional tissue-based products for this segment.
Biobanking
The Biobanking segment, operating under the LifebankUSA brand, provides the collection, processing, and cryogenic storage of umbilical cord and placental stem cells for future use. This business was further strengthened by Celularity's 2017 acquisition of HLI Cellular Therapeutics, LLC, which provided the company with rights to a portfolio of biomaterial assets as well as the LifebankUSA private umbilical cord blood stem cell and cord tissue bank.
Financials
Financially, Celularity has demonstrated resilience in the face of market challenges. For the full year 2023, the company reported combined net sales of $22.8 million, a 26.7% increase over the previous year. This strong performance has continued into 2024, with the company's expected combined net sales for the first half of the year reaching $26.9 million, representing a remarkable 290% growth over the same period in 2023.
For the nine months ended September 30, 2024, Celularity's total net revenues were $36.09 million, a significant increase of 238.6% compared to the prior year period. This impressive growth was primarily driven by the strong performance of the Degenerative Disease segment.
Breaking down the performance by segment:
The Degenerative Disease segment generated $32.23 million in net revenues for the nine months ended September 30, 2024, a substantial increase of 388% compared to the prior year period. This growth was primarily driven by a $22.57 million, or 621%, increase in product sales, mainly from higher sales of Biovance 3L. The cost of revenues for this segment increased by $1.64 million, or 19.3%, to $7.60 million. However, as a percentage of revenues, cost of revenues decreased from 60% to 21% due to the higher gross margins of Biovance 3L sales.
The BioBanking segment generated $3.86 million in net services revenue for the same period, a slight decrease of 5% compared to the prior year period. The cost of revenues for this segment was $952,000, a decrease of $403,000, or 29.7%, from the prior year period.
For the most recent quarter, Celularity reported: - Revenue: $9,296,000 - Net income: -$16,098,000 - Operating Cash Flow (OCF): -$144,000 - Free Cash Flow (FCF): -$179,000
However, Celularity continues to incur significant operating losses as it focuses on the research and development of its cellular therapy pipeline, which has not yet generated any product revenues. The Cell Therapy segment, while promising, is still in various phases of development and has not contributed to the company's revenue stream.
Despite these obstacles, Celularity remains committed to advancing its pipeline of placental-derived allogeneic cell therapy product candidates, including T cells, natural killer (NK) cells, mesenchymal-like adherent stromal cells (MLASCs), and exosomes, which target a diverse range of indications across cancer, infectious, and degenerative diseases.
Technology and Innovation
One of Celularity's key strengths lies in its proprietary Celularity IMPACT platform, which enables the seamless integration of bio-sourcing, manufacturing, and cryopreservation of its placental-derived cell therapy products. This innovative approach aims to drive speed, scale, and cost-effectiveness in the development and delivery of these potentially transformative therapies.
Celularity has also demonstrated its ability to leverage its core expertise in cellular therapeutic development and manufacturing to generate additional revenue streams. The company has entered into strategic collaborations with other cell therapy companies, such as BlueSphere Bio, to provide contract manufacturing and development services, further diversifying its business model.
Challenges and Risks
However, Celularity's journey has not been without its challenges. In 2024, the company faced issues with its Nasdaq listing due to delays in filing its quarterly reports. This resulted in the company receiving a notice from Nasdaq, prompting it to request a hearing and submit a plan to regain compliance. While the company has since resolved this matter, the episode highlights the importance of maintaining robust internal controls and timely financial reporting.
Over the years, Celularity has faced challenges common to early-stage biotechnology companies, such as the need to secure additional capital to fund its research and development efforts, as well as regulatory hurdles in advancing its therapeutic candidates through clinical trials. The company has relied on issuances of equity and debt securities, as well as limited revenues from its biobanking and degenerative disease businesses, to fund its operations to date.
Liquidity
Celularity's liquidity position has been a critical focus for the company as it continues to invest in research and development while scaling its commercial operations. The company has employed various strategies to maintain adequate liquidity, including equity offerings, debt financing, and strategic partnerships. However, as with many early-stage biotech companies, maintaining sufficient liquidity to fund ongoing operations and clinical trials remains an ongoing challenge.
As of the most recent financial report, Celularity's liquidity ratios are as follows: - Current ratio: 0.1903924168625031 - Quick ratio: 0.1383633761766598
These ratios indicate that the company's short-term liquidity position may be constrained, as both ratios are below 1, suggesting that current liabilities exceed current assets and liquid assets, respectively.
Future Outlook
Despite these obstacles, Celularity remains steadfast in its mission to transform the healthcare landscape. The company's commitment to its placental-derived technology platform, its diversified business model, and its experienced management team position it well to navigate the ever-evolving industry landscape and deliver innovative solutions to patients in need.
As Celularity continues to execute on its strategic priorities, investors will be closely watching the company's progress in advancing its clinical pipeline, expanding its commercial biomaterials business, and enhancing its financial stability. With a strong focus on innovation and a relentless pursuit of improving patient outcomes, Celularity is poised to play a significant role in shaping the future of regenerative and cellular medicine.