Overview

Celularity Inc. is a regenerative and cellular medicines company focused on addressing aging-related and degenerative diseases. The company’s goal is to develop therapeutic solutions that address significant unmet global needs for effective, accessible, and affordable treatments.

Celularity has two main business segments:

1. Cell Therapy: The company is researching and developing off-the-shelf placental-derived allogeneic cell therapy product candidates, including mesenchymal-like adherent stromal cells (MLASCs) and natural killer (NK) cells. These are in various phases of clinical development, with a focus on advancing programs in diabetic foot ulcer and Crohn’s disease.

2. Degenerative Disease: Celularity produces, sells, and licenses biomaterial products used in surgical and wound care markets, such as Biovance, Biovance 3L, Interfyl, and CentaFlex. The company is also developing new placental biomaterial products to expand this commercial pipeline.

In addition, Celularity operates a commercial biobanking business that collects, processes, and cryogenically stores certain birth byproducts, including umbilical cord blood and placenta-derived cells and tissue, for third parties.

Recent Developments

In October 2024, Celularity acquired the Rebound™ full thickness placental-derived allograft matrix product from Sequence LifeScience, Inc. for up to $5.5 million. This included an upfront cash payment of $1 million and up to $4 million in milestone payments based on net sales.

Celularity also raised additional capital through several financing transactions in late 2024, including:

• Issuing $0.75 million in unsecured senior convertible notes and warrants to an accredited investor in November 2024.
• Entering into a securities purchase agreement in December 2024 for the issuance and sale of 1,263,157 shares of Class A common stock and warrants, which was later terminated.
• Amending the exercise price of outstanding warrants held by certain investors in January 2025, resulting in $2.46 million in gross proceeds to Celularity.

However, Celularity also faced challenges, including failing to timely file its annual report, which resulted in a potential Nasdaq delisting that the company is currently appealing.

Going Concern

Celularity has incurred significant operating losses and used substantial net cash in operations since inception. As of the report issuance date, the company had insufficient unrestricted cash and cash equivalents to fund operations for the next 12 months and no additional sources of outside capital secured or deemed probable.

These factors raise substantial doubt about Celularity’s ability to continue as a going concern. The company is exploring options to secure additional financing, but there is no assurance it will be successful. Failure to obtain necessary capital could force Celularity to delay, limit or terminate operations, discontinue commercialization efforts, or pursue other strategic alternatives, including bankruptcy.

Business Segments

Celularity manages its operations through three distinct business segments:

1. Cell Therapy: Focuses on researching and developing cellular therapies, including unproven therapies in various phases of development.

2. Degenerative Disease: Produces, sells, and licenses biomaterial products used in surgical and wound care markets.

3. BioBanking: Collects, processes, and cryogenically stores certain birth byproducts, including umbilical cord blood and placenta-derived cells and tissue, for third parties.

Components of Operating Results

• Net Revenues: Includes sales of biomaterial products and fees for biobanking services.
• Cost of Revenues: Includes labor, material, and overhead costs associated with the biobanking and degenerative disease businesses.
• Research and Development Expense: Primarily related to basic research, pre-clinical studies, and clinical development of cell therapy product candidates.
• Selling, General and Administrative Expense: Primarily personnel costs to support core business operations.
• Change in Fair Value of Contingent Consideration Liability: Adjustments to the fair value of acquisition-related contingent consideration.
• Impairments: Charges related to goodwill and in-process research and development assets.

Results of Operations

In 2024, Celularity’s net revenues increased 138.1% to $54.2 million, driven by higher product sales of Biovance 3L and Rebound, as well as increased license, royalty and other revenue from Rebound distributor sales. Cost of revenues decreased 6.4% due to lower inventory impairment charges.

Research and development expenses decreased 42.9% to $17.4 million, primarily due to lower clinical trial costs and personnel expenses. Selling, general and administrative expenses increased 16.0% to $58.6 million, mainly from higher selling expenses.

Celularity recognized a $0.2 million gain from the change in fair value of contingent consideration liability, compared to a $104.3 million gain in 2023 due to the discontinuation of cell therapy clinical trials. There were no impairment charges in 2024, compared to $220.1 million in 2023.

Total other expense increased to $19.5 million in 2024 from $4.0 million in 2023, primarily due to a $3.9 million loss on debt extinguishment and higher interest expense.

Liquidity and Capital Resources

As of December 31, 2024, Celularity had $0.7 million in unrestricted cash and cash equivalents and an accumulated deficit of $899.7 million. The company’s primary sources of cash are revenues from its commercial businesses and financing activities.

Celularity used $6.4 million in net cash from operations in 2024, an improvement from $38.7 million in 2023, due to higher revenues and lower expenses. Net cash provided by financing activities was $6.7 million in 2024, compared to $24.1 million in 2023.

However, as of the report issuance date, Celularity had insufficient unrestricted cash and cash equivalents to fund operations for the next 12 months and no additional sources of outside capital secured or deemed probable. This raises substantial doubt about the company’s ability to continue as a going concern.

Celularity continues to explore options to secure additional financing, but there is no assurance it will be successful. Failure to obtain necessary capital could force the company to delay, limit or terminate operations, discontinue commercialization efforts, or pursue other strategic alternatives, including bankruptcy.