0001850119false--12-312021Q20035000000350000000026143790261437907481861544040910P5Yipsc:AccruedExpensesAndOtherLiabilitiesCurrentP4YP4Y0001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesMember2021-03-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesBMember2021-03-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesMember2020-12-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesBMember2020-12-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesMember2020-06-300001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesCMember2020-06-300001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesBMember2020-06-300001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesMember2020-03-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesCMember2020-03-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesBMember2020-03-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesMember2019-12-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesCMember2019-12-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesBMember2019-12-310001850119us-gaap:RestrictedStockMember2019-10-012019-10-310001850119us-gaap:RestrictedStockMember2019-01-012019-12-310001850119us-gaap:RestrictedStockMember2018-01-012018-12-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesMember2021-04-012021-06-300001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesCMember2021-04-012021-06-300001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesBMember2021-04-012021-06-3000018501192021-06-112021-06-110001850119us-gaap:RetainedEarningsMember2021-06-300001850119us-gaap:AdditionalPaidInCapitalMember2021-06-300001850119us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001850119us-gaap:RetainedEarningsMember2021-03-310001850119us-gaap:AdditionalPaidInCapitalMember2021-03-310001850119us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesCMember2021-03-3100018501192021-03-310001850119us-gaap:RetainedEarningsMember2020-12-310001850119us-gaap:AdditionalPaidInCapitalMember2020-12-310001850119us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001850119ipsc:SubscriptionReceivableMember2020-12-310001850119us-gaap:RetainedEarningsMember2020-06-300001850119us-gaap:AdditionalPaidInCapitalMember2020-06-300001850119ipsc:SubscriptionReceivableMember2020-06-300001850119us-gaap:RetainedEarningsMember2020-03-310001850119us-gaap:AdditionalPaidInCapitalMember2020-03-310001850119ipsc:SubscriptionReceivableMember2020-03-310001850119us-gaap:RetainedEarningsMember2019-12-310001850119us-gaap:AdditionalPaidInCapitalMember2019-12-310001850119ipsc:SubscriptionReceivableMember2019-12-310001850119us-gaap:CommonStockMember2021-06-300001850119us-gaap:CommonStockMember2021-03-310001850119us-gaap:CommonStockMember2020-12-310001850119us-gaap:CommonStockMember2020-06-300001850119us-gaap:CommonStockMember2020-03-310001850119us-gaap:CommonStockMember2019-12-310001850119us-gaap:RestrictedStockMember2019-12-310001850119us-gaap:RestrictedStockMember2018-12-310001850119us-gaap:EmployeeStockOptionMember2020-01-012020-12-310001850119us-gaap:EmployeeStockOptionMember2020-12-310001850119us-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-01-012020-12-310001850119us-gaap:EmployeeStockOptionMember2021-06-300001850119us-gaap:EmployeeStockOptionMemberipsc:IncentivePlan2021Member2021-06-170001850119us-gaap:EmployeeStockOptionMemberipsc:EmployeeStockPurchasePlan2021Member2021-05-270001850119us-gaap:OverAllotmentOptionMember2021-06-222021-06-220001850119ipsc:PriorCenturysAssetsMember2019-06-212019-06-210001850119us-gaap:ResearchAndDevelopmentExpenseMemberipsc:ConsultingArrangementsMemberipsc:ShareholdersOfEquityMethodInvestorMember2021-04-012021-06-300001850119us-gaap:ResearchAndDevelopmentExpenseMemberipsc:ConsultingArrangementsMemberipsc:ShareholdersOfEquityMethodInvestorMember2021-01-012021-06-300001850119us-gaap:ResearchAndDevelopmentExpenseMemberipsc:ConsultingArrangementsMemberipsc:ShareholdersOfEquityMethodInvestorMember2020-04-012020-06-300001850119us-gaap:ResearchAndDevelopmentExpenseMemberipsc:ConsultingArrangementsMemberipsc:ShareholdersOfEquityMethodInvestorMember2020-01-012020-06-300001850119us-gaap:SoftwareDevelopmentMember2021-06-300001850119us-gaap:LeaseholdImprovementsMember2021-06-300001850119us-gaap:FurnitureAndFixturesMember2021-06-300001850119us-gaap:ConstructionInProgressMember2021-06-300001850119ipsc:LabEquipmentMember2021-06-300001850119us-gaap:SoftwareDevelopmentMember2020-12-310001850119us-gaap:LeaseholdImprovementsMember2020-12-310001850119us-gaap:FurnitureAndFixturesMember2020-12-310001850119us-gaap:ConstructionInProgressMember2020-12-310001850119ipsc:LabEquipmentMember2020-12-310001850119us-gaap:PreferredClassBMember2021-06-300001850119us-gaap:PreferredClassAMember2021-06-300001850119us-gaap:PreferredClassBMember2020-12-310001850119us-gaap:PreferredClassAMember2020-12-310001850119ipsc:SubscriptionReceivableMember2020-04-012020-06-300001850119ipsc:SubscriptionReceivableMember2020-01-012020-03-310001850119us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001850119us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001850119ipsc:AccruedExpensesAndOtherLiabilitiesCurrentMemberipsc:DistributedBioMasterServiceAgreementMember2021-06-300001850119ipsc:AccruedExpensesAndOtherLiabilitiesCurrentMemberipsc:DistributedBioMasterServiceAgreementMember2020-12-310001850119us-gaap:RetainedEarningsMember2021-04-012021-06-300001850119us-gaap:RetainedEarningsMember2021-01-012021-03-310001850119us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001850119us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001850119ipsc:CenturyTherapeuticsLlcMember2019-06-210001850119srt:MinimumMember2021-06-300001850119srt:MaximumMember2021-06-300001850119ipsc:FcdiCollaborationAgreementMember2021-04-012021-06-300001850119ipsc:FcdiCollaborationAgreementMember2020-04-012020-06-300001850119ipsc:FcdiCollaborationAgreementMember2020-01-012020-06-300001850119ipsc:AccruedExpensesAndOtherLiabilitiesCurrentMember2021-06-300001850119ipsc:AccruedExpensesAndOtherLiabilitiesCurrentMember2020-12-310001850119us-gaap:InProcessResearchAndDevelopmentMemberipsc:EmpiricaAgreementMember2020-06-090001850119ipsc:CenturyTherapeuticsInc.Memberipsc:CenturyTherapeuticsLlcMember2019-06-210001850119us-gaap:PerformanceSharesMember2021-06-300001850119ipsc:TimeBasedVestingMember2021-06-300001850119ipsc:UnvestedRestrictedStockWithTimeBasedVestingMember2021-01-012021-06-300001850119ipsc:TimeBasedVestingMember2021-01-012021-06-300001850119ipsc:UnvestedRestrictedStockWithTimeBasedVestingMember2021-06-300001850119ipsc:FujifilmCellularDynamicsInc.Member2021-06-300001850119ipsc:StockOptionAndGrantPlan2018Member2021-06-300001850119ipsc:Next2OfParticipatingEmployeeContributionsMember2021-01-012021-06-300001850119ipsc:First3OfParticipatingEmployeeContributionsMember2021-01-012021-06-300001850119us-gaap:IPOMember2021-06-220001850119ipsc:TermLoanAgreementWithHerculesCapitalIncMember2021-01-012021-06-300001850119srt:MinimumMemberipsc:TermLoanAgreementWithHerculesCapitalIncMember2020-09-142020-09-140001850119ipsc:Tranche3AdvancesMember2021-09-300001850119ipsc:Tranche2AdvancesMember2021-09-300001850119ipsc:Tranche1AdvancesMember2020-09-140001850119ipsc:TermLoanAgreementWithHerculesCapitalIncMember2020-09-1400018501192020-06-3000018501192019-12-310001850119us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateBondSecuritiesMember2021-06-300001850119us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2021-06-300001850119us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateBondSecuritiesMember2020-12-310001850119us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2020-12-310001850119us-gaap:USTreasurySecuritiesMember2021-06-300001850119us-gaap:CorporateBondSecuritiesMember2021-06-300001850119us-gaap:USTreasurySecuritiesMember2020-12-310001850119us-gaap:CorporateBondSecuritiesMember2020-12-310001850119ipsc:PriorCenturysAssetsMember2019-06-210001850119us-gaap:FairValueInputsLevel2Member2021-06-300001850119us-gaap:FairValueInputsLevel1Member2021-06-300001850119us-gaap:FairValueInputsLevel2Member2020-12-310001850119us-gaap:FairValueInputsLevel1Member2020-12-310001850119us-gaap:WarrantMember2021-01-012021-06-300001850119us-gaap:StockOptionMember2021-01-012021-06-300001850119us-gaap:RestrictedStockMember2021-01-012021-06-300001850119ipsc:EarlyExercisedStockOptionsSubjectToFutureVestingMember2021-01-012021-06-300001850119us-gaap:StockOptionMember2020-01-012020-06-300001850119us-gaap:RestrictedStockMember2020-01-012020-06-300001850119us-gaap:ConvertiblePreferredStockMember2020-01-012020-06-300001850119ipsc:EarlyExercisedStockOptionsSubjectToFutureVestingMember2020-01-012020-06-300001850119us-gaap:RestrictedStockMember2021-04-012021-06-300001850119us-gaap:RestrictedStockMember2021-01-012021-06-300001850119us-gaap:RestrictedStockMember2020-04-012020-06-300001850119us-gaap:RestrictedStockMember2020-01-012020-06-300001850119us-gaap:RetainedEarningsMember2020-04-012020-06-300001850119us-gaap:CommonStockMember2020-04-012020-06-300001850119us-gaap:RetainedEarningsMember2020-01-012020-03-310001850119us-gaap:CommonStockMember2020-01-012020-03-310001850119ipsc:FcdiCollaborationAgreementMember2021-06-3000018501192020-04-012020-06-300001850119us-gaap:InProcessResearchAndDevelopmentMemberipsc:EmpiricaAgreementMember2020-01-012020-12-310001850119ipsc:NonCumulativeConvertiblePreferredStockSeriesCMember2021-01-012021-03-310001850119ipsc:BayerHealthLlcMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2019-12-310001850119us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-3000018501192021-04-012021-06-300001850119us-gaap:CommonStockMember2021-04-012021-06-300001850119us-gaap:CommonStockMember2021-01-012021-03-310001850119us-gaap:EmployeeStockOptionMember2021-01-012021-06-3000018501192020-01-012020-12-310001850119us-gaap:RestrictedStockMember2019-10-310001850119ipsc:IcellInc.SublicenseAgreementMember2020-03-012020-03-310001850119us-gaap:IPOMember2021-06-222021-06-220001850119ipsc:FcdiCollaborationAgreementMember2021-01-012021-06-300001850119ipsc:ConsultingArrangementsMemberipsc:ShareholdersOfEquityMethodInvestorMember2019-01-012019-12-310001850119ipsc:SubscriptionReceivableMember2021-01-012021-03-310001850119ipsc:BayerHealthLlcMemberipsc:AmendmentToCommitmentAgreementMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2021-01-012021-01-310001850119ipsc:BayerHealthLlcMemberipsc:AmendmentToCommitmentAgreementMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-11-012020-11-300001850119ipsc:BayerHealthLlcMemberipsc:AmendmentToCommitmentAgreementMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-06-182020-06-180001850119ipsc:BayerHealthLlcMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2019-01-012019-12-310001850119ipsc:ConsultingArrangementsMemberipsc:ShareholdersOfEquityMethodInvestorMember2019-12-310001850119us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100018501192021-01-012021-03-3100018501192020-01-012020-06-300001850119ipsc:IcellInc.SublicenseAgreementMember2020-03-310001850119ipsc:LoanAmountsPrepaidDuringInterestOnlyPeriodMemberipsc:TermLoanAgreementWithHerculesCapitalIncMember2020-09-142020-09-140001850119ipsc:LoanAmountsPrepaidAfterInterestOnlyPeriodMemberipsc:TermLoanAgreementWithHerculesCapitalIncMember2020-09-142020-09-140001850119ipsc:TermLoanAgreementWithHerculesCapitalIncMember2020-09-142020-09-140001850119ipsc:Tranche2AdvanceNotDrawnOrCompanyAchievedCertainDevelopmentMilestonesMemberipsc:Tranche2AdvancesMember2020-09-140001850119ipsc:DistributedBioMasterServiceAgreementMember2019-07-2400018501192020-09-140001850119ipsc:BayerHealthLlcMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2019-06-210001850119ipsc:BayerHealthLlcMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2019-06-210001850119ipsc:BayerHealthLlcMember2019-06-210001850119ipsc:PriorCenturysAssetsMember2021-01-012021-06-300001850119ipsc:BayerHealthLlcMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2019-06-212019-06-210001850119ipsc:CenturyTherapeuticsLlcMember2019-06-212019-06-210001850119us-gaap:InProcessResearchAndDevelopmentMemberipsc:EmpiricaAgreementMember2020-06-092020-06-0900018501192021-06-3000018501192020-12-310001850119us-gaap:InProcessResearchAndDevelopmentMemberipsc:AccruedExpensesAndOtherLiabilitiesCurrentMemberipsc:EmpiricaAgreementMember2021-06-300001850119us-gaap:InProcessResearchAndDevelopmentMemberipsc:AccruedExpensesAndOtherLiabilitiesCurrentMemberipsc:EmpiricaAgreementMember2020-12-3100018501192021-08-1200018501192021-01-012021-06-30xbrli:sharesiso4217:USDxbrli:pureipsc:leaseipsc:itemiso4217:USDxbrli:sharesipsc:segment

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______                      

Commission File Number: 001-40498

Century Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware

    

84-2040295

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

3675 Market Street
Philadelphia, Pennsylvania
(Address of principal executive offices)

19104
(Zip Code)

(267) 817-5790

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading
Symbol(s)

    

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

IPSC

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer           

Accelerated filer                  

Non-accelerated filer             

Smaller reporting company

Emerging growth company   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

As of August 12, 2021, the registrant had 54,404,091 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

Table of Contents

 

 

Page

PART I.

FINANCIAL INFORMATION

7

Item 1.

Financial Statements:

7

Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020

7

Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2021 and 2020 (unaudited)

8

Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2021 and 2020 (unaudited)

9

Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (unaudited)

11

Notes to Unaudited Consolidated Financial Statements

12

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

30

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

42

Item 4.

Controls and Procedures

43

PART II.

OTHER INFORMATION

44

Item 1.

Legal Proceedings

44

Item 1A.

Risk Factors

44

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

102

Item 3.

Defaults Upon Senior Securities

104

Item 4.

Mine Safety Disclosures

104

Item 5.

Other Information

104

Item 6.

Exhibits

104

Signatures

106

2

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance, as well as our plans, objectives and expectations for our business operations and financial performance and condition. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. In addition, statements that “we believe” or similar statements reflect our beliefs and opinions on the relevant subject. These forward-looking statements include, but are not limited to, statements about:

our ability to raise additional capital to fund our operations and continue the development of our current and future product candidates;
the preclinical nature of our business and our ability to successfully advance our current and future product candidates through development activities, preclinical studies, and clinical trials;
our ability to generate revenue from future product sales and our ability to achieve and maintain profitability;
the accuracy of our projections and estimates regarding our expenses, capital requirements, cash utilization, and need for additional financing;
the extent to which the COVID-19 pandemic, including the emergence of new variants of COVID-19, such as the delta variant, and measures taken to contain its spread ultimately impact our business, including development activities, preclinical studies, and future clinical trials;
our dependence on the success of our product candidates, in particular CNTY-101, CNTY-103, and CNTY-102;
the novelty of our approach to immuno-oncology treatment of cancer, utilizing iPSC-derived natural killer cells, or iNK cells, and iPSC-derived T cells, or iT cells, and the challenges we will face due to the novel nature of such technology;
the success of competing therapies that are or become available;
our reliance on the maintenance of our collaborative relationship with FUJIFILM Cellular Dynamics Inc., or FCDI, for access to key differentiation and reprogramming technology for the manufacturing and development of our product candidates;
the initiation, progress, success, cost, and timing of our development activities, preclinical studies and future clinical trials;
the timing of our future investigational new drug, or IND, applications and the likelihood of, and our ability to obtain and maintain, regulatory clearance of such IND applications for our product candidates;
the timing, scope and likelihood of regulatory filings and approvals, including final regulatory approval of our product candidates;
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;

3

Table of Contents

the performance of third parties in connection with the development of our product candidates, including third parties conducting our 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 immuno-oncology therapies for treating cancer 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;
developments relating to our competitors and our industry; and
other risks and uncertainties, including those described or incorporated by reference under the caption “Risk factors” in this Quarterly Report on Form 10-Q.

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 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, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

4

Table of Contents

SUMMARY RISK FACTORS

Below is a summary of material factors that make an investment in our common stock speculative or risky. Importantly, this summary does not address all the risks and uncertainties that we face. Additional discussion of the risks and uncertainties summarized in this risk factor summary, as well as other risks and uncertainties that we face, can be found under “Cautionary Note Regarding Forward-Looking Statements” and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q. The below summary is qualified in its entirety by those more complete discussions of such risks and uncertainties. You should consider carefully the risks and uncertainties described under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q as part of your evaluation of an investment in our common stock.

We have a limited operating history, have incurred significant losses since our inception, and anticipate that we will continue to incur significant losses in the foreseeable future;
We have never generated revenue from product sales and may never achieve or maintain profitability;
We are very early in our development efforts and our business is dependent on our ability to advance our current and future product candidates through preclinical studies and clinical trials, obtain marketing approval and ultimately commercialize our current and future product candidates;
We are highly dependent on the success of our lead product candidate, CNTY-101 and our other product candidates;
We are highly dependent on our strategic relationships and collaborations and any termination or loss of significant rights under such arrangements with our strategic partners could seriously harm our business;
The COVID-19 pandemic may materially and adversely affect our business and our financial results and could cause a disruption to our supply chain and the development of our product candidates;
Utilizing CAR-iNK and CAR-iT cells represents a novel approach to immuno-oncology treatment of cancer, and we must overcome significant challenges in order to develop, commercialize, and manufacture our product candidates;
Preclinical and clinical development involve a lengthy and expensive process with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our current product candidates or any future product candidates;
As an organization, we have no experience designing or implementing clinical trials. Failure to adequately design a trial, or incorrect assumptions about the design of the trial, could adversely affect the ability to initiate the trial, enroll patients, complete the trial, or obtain regulatory approval on the basis of the trial results, as well as lead to increased or unexpected costs;
The manufacture and distribution of our iPSC-derived cell product candidates is complex and subject to a multitude of risks;
We currently rely on third parties for the manufacture of our product candidates for development, however, we intend to operate our own manufacturing facility in the future for the production of certain of our product candidates. Delays in designing and constructing cGMP-compliant manufacturing facilities could delay our development plans and thereby limit our ability to generate revenues;

5

Table of Contents

If we are unable to successfully commercialize CNTY-101 or any of our other product candidates for which we receive regulatory approval, or experience significant delays in doing so, our business will be materially harmed;
We face significant competition, and if our competitors develop product candidates more rapidly than we do or their product candidates are more effective, our ability to develop and successfully commercialize products may be adversely affected;
We may face difficulties in obtaining, protecting, maintaining, and enforcing our intellectual property rights, including intellectual property rights that are licensed to us;
We do not currently own any issued patents or non-provisional patent applications relating to our product candidates;
The trading price of the shares of our common stock could be highly volatile, and purchasers of our common stock could incur substantial losses; and
Our executive officers, directors, principal stockholders, and their affiliates continue to exercise significant control over our company, which limits the ability of our other stockholders to influence corporate matters and could delay or prevent a change in corporate control.

6

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CENTURY THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

June 30, 2021

December 31, 

    

(unaudited)

    

2020

Assets

Current assets

Cash and cash equivalents

$

272,277

$

27,211

Short-term investments

 

125,290

 

48,542

Escrow deposits, current

 

419

 

783

Prepaid expenses and other current assets

 

4,625

 

2,261

Total current assets

 

402,611

 

78,797

Property and equipment, net

 

34,462

 

15,385

Operating lease right-of-use assets

12,251

9,392

Restricted cash

2,235

517

Escrow deposits, non-current

555

723

Long-term investments

 

42,474

 

1,053

Security deposits

 

1,042

 

909

Total assets

$

495,630

$

106,776

Liabilities, convertible preferred stock, and stockholders’ equity (deficit)

 

  

 

  

Current liabilities

 

  

 

  

Accounts payable

$

13,427

$

8,082

Accrued expenses and other liabilities

 

6,832

 

4,030

Deposit liability

966

Total current liabilities

 

21,225

 

12,112

Operating lease liability, long term

 

14,752

 

11,679

Deposit liability, non-current

2,268

Long-term debt, net

 

9,788

 

9,636

Total liabilities

 

48,033

 

33,427

Commitments and contingencies (Note 11)

 

  

 

  

Non-cumulative convertible preferred stock, Series A, $ 0.0001 par value, 0 and 35,000,000 shares authorized, issued and outstanding at June 30, 2021 and December 31, 2020, respectively

34,922

Non-cumulative convertible preferred stock, Series B, $ 0.0001 par value, 0 and 26,143,790 shares authorized, issued and outstanding at June 30, 2021 and December 31, 2020, respectively

144,839

Stockholders' equity (deficit):

Preferred stock, $ 0.0001 par value, 10,000,000 and 0 shares authorized at June 30, 2021 and December 31, 2020, respectively, and 0 shares issued and outstanding

Common stock, $0.0001 par value, 300,000,000 and 125,236,190 shares authorized; 54,404,091 and 7,481,861 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

5

1

Additional paid-in capital

 

781,558

 

217,832

Subscription receivable

 

 

(31,900)

Accumulated deficit

(333,963)

(292,342)

Accumulated other comprehensive loss

(3)

(3)

Total stockholders’ equity (deficit)

447,597

(106,412)

Total liabilities and stockholders’ equity (deficit)

$

495,630

$

106,776

See accompanying notes to the consolidated financial statements.

7

Table of Contents

CENTURY THERAPEUTICS, INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share amounts)

Three Months Ended

Three Months Ended

Six Months Ended

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Operating expenses

Research and development

$

18,933

$

8,484

$

34,307

$

16,427

General and administrative

 

4,088

 

2,310

 

6,776

 

4,360

Write off of in-process research and development asset

 

-

 

4,722

 

-

 

4,722

Total operating expenses

 

23,021

 

15,516

 

41,083

 

25,509

Loss from operations

 

(23,021)

 

(15,516)

 

(41,083)

 

(25,509)

Interest expense

 

(318)

 

 

(632)

 

Other income, net

 

66

 

215

 

94

 

535

Net loss

$

(23,273)

$

(15,301)

$

(41,621)

$

(24,974)

Net loss per common share Basic and Diluted

(1.93)

(2.05)

(4.26)

(3.34)

Weighted average common shares outstanding Basic and Diluted

12,044,610

7,481,861

9,775,840

7,481,861

Other comprehensive loss

Net loss

$

(23,273)

$

(15,301)

$

(41,621)

$

(24,974)

Unrealized gain on short-term investments

32

97

5

124

Foreign currency translation adjustment

(9)

(5)

Comprehensive loss

$

(23,250)

$

(15,204)

$

(41,621)

$

(24,850)

See accompanying notes to the consolidated financial statements.

8

Table of Contents

CENTURY THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

(In thousands, except share amounts)

Accumulated

Series A

Series B

Series C

 Other 

Convertible

Convertible

Convertible

Additional

Comprehensive

Total

Preferred Stock

Preferred Stock

Preferred Stock

Common Stock

Paid-in

Subscription

Accumulated

Income 

Stockholders’

    

Shares

  

Amount

    

Shares

  

Amount

  

Shares

  

Amount

  

  

Shares

  

Amount

  

Capital

  

 Receivable

  

Deficit

  

(Loss)

    

Equity (Deficit)

Balance, December 31, 2020

35,000,000

$

34,922

26,143,790

$

144,839

$

7,481,861

$

1

$

217,832

$

(31,900)

$

(292,342)

$

(3)

$

(106,412)

Receipt of subscription receivable

31,900

31,900

Issuance of Series C preferred stock, net

24,721,999

159,628

Net assets contributed as result of
merger

 

 

 

 

 

 

 

1,061

 

 

 

 

1,061

Issuance of common stock upon the exercise of stock options

40,790

47

47

Vesting of restricted stock

150,799

Vesting of early exercise stock options

199,083

123

123

Unrealized loss on short-term investments

(27)

(27)

Foreign currency translation

 

 

 

 

 

4

 

4

Stock based compensation

 

 

95

 

 

 

 

 

95

Net loss

 

 

 

 

(18,348)

 

 

(18,348)

Balance, March 31, 2021

35,000,000

$

34,922

26,143,790

$

144,839

24,721,999

$

159,628

7,872,533

$

1

$

219,158

$

$

(310,690)

$

(26)

$

(91,557)

Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other issuance costs

12,132,500

1

221,184

221,185

Conversion of convertible preferred stock upon initial public offering

(35,000,000)

(34,922)

(26,143,790)

(144,839)

(24,721,999)

(159,628)

34,126,528

3

339,385

339,388

Issuance of common stock upon the exercise of stock options

79,796

74

74

Vesting of restricted stock

130,463

Vesting of early exercise stock options

62,271

46

46

Unrealized gain on short-term investments

32

32

Foreign currency translation

 

 

 

 

 

(9)

 

(9)

Stock based compensation

 

 

1,711

 

 

 

 

 

1,711

Net loss

 

 

 

 

(23,273)

 

 

(23,273)

Balance, June 30, 2021

 

$

 

$

$

54,404,091

$

5

$

781,558

$

$

(333,963)

$

(3)

 

$

447,597

9

Table of Contents

Accumulated

Series A

Series B

 Other 

Convertible

Convertible

Additional

Comprehensive

Total

Preferred Stock

Preferred Stock

Common Stock

Paid-in

Subscription

Accumulated

Income 

Stockholders’

    

Shares

  

Amount

    

Shares

  

Amount

  

Shares

  

Amount

Capital

  

 Receivable

  

Deficit

  

(Loss)

    

Deficit

Balance, December 31, 2019

35,000,000

$

34,992

26,143,790

$

144,839

7,481,861

$

1

$

216,910

$

(70,000)

$

(238,767)

$

(3)

$

(91,859)

Unrealized loss on short-term investments

27

27

Stock based compensation

 

 

221

 

 

 

 

 

221

Net loss

 

 

 

 

(9,673)

 

 

(9,673)

Balance, March 31, 2020

35,000,000

$

34,992

26,143,790

$

144,839

7,481,861

$

1

$

217,131

$

(70,000)

$

(248,440)

$

24

$

(101,284)

Unrealized loss on short-term investments

97

97

Stock based compensation

 

 

137

 

 

 

 

 

137

Net loss

 

 

 

 

(15,301)

 

 

(15,301)

Balance, June 30, 2020

 

35,000,000

$

34,992

 

26,143,790

$

144,839

7,481,861

$

1

$

217,268

$

(70,000)

$

(263,741)

$

121

 

$

(116,351)

See accompanying notes to the consolidated financial statements.

10

Table of Contents

CENTURY THERAPEUTICS, INC.

CONDENSED STATEMENT OF CASH FLOWS

(Unaudited)

Six Months Ended

Six Months Ended

June 30, 2021

June 30, 2020

    

(unaudited)

    

(unaudited)

Cash flows from operating activities

 

  

 

  

 

Net loss

$

(41,621)

$

(24,974)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Write off of in-process research and development asset

 

 

4,722

Depreciation

 

1,653

 

482

Amortization of deferred financing cost

152

Non-cash operating lease expense

442

110

Stock based compensation

 

1,806

 

358

Change in operating assets and liabilities:

 

 

Escrow deposit

 

532

 

(1,506)

Prepaid expenses and other assets

 

(2,497)

 

1,360

Operating lease liability

132

959

Accounts payable

 

(3,562)

 

797

Accrued expenses and other liabilities

 

2,295

 

(1,132)

Net cash used in operating activities

 

(40,668)

 

(18,824)

Cash flows from investing activities

 

  

 

  

Acquisition of property and equipment

 

(12,513)

 

(3,415)

Acquisition of fixed maturity securities, available for sale

 

(142,069)

 

(4,415)

Asset acquisition, net of cash acquired

 

 

(4,722)

Sale of fixed maturity securities, available for sale

 

23,900

 

10,100

Net cash used in investing activities

 

(130,682)

 

(2,452)

Cash flows from financing activities

 

  

 

  

Payments of deferred financing cost

(11)

Proceeds from initial public offering, net of underwriting discounts and commissions

221,878

Proceeds from issuance of common stock

121

Proceeds from early exercises of common stock options

2,281

Proceeds from subscription receivable

 

31,900

 

Proceeds from issuance of Series C preferred stock, net of issuance costs

159,628

Cash contributed as a result of merger

2,326

Net cash provided by (used in) financing activities

 

418,134

 

(11)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

246,784

 

(21,287)

Cash, cash equivalents and restricted cash, beginning of period

 

27,728

 

44,064

Cash, cash equivalents and restricted cash, end of period

$

274,512

$

22,777

Supplemental disclosure of cash and non-cash operating activities:

Cash paid for interest

$

483

$

Supplemental disclosure of non-cash investing and financing activities:

  

 

  

Conversion of convertible preferred stock upon initial public offering

$

339,388

$

Purchase of property and equipment, accrued and unpaid

$

8,214

$

150

Deferred offering cost, accrued and unpaid

$

693

$

See accompanying notes to the consolidated financial statements.

11

Table of Contents

CENTURY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Note 1—Organization and description of the business

The Company (as defined below) is an innovative biotechnology company developing transformative allogeneic cell therapies to create products for the treatment of both solid tumor and hematological malignancies with significant unmet medical need. The Company’s vision is to become a premier cell therapy company by developing and ultimately commercializing allogeneic cell therapies that dramatically and positively transform the lives of patients suffering from life-threatening cancers. The Company has created a comprehensive allogeneic cell therapy platform that includes industry-leading induced pluripotent stem cell (“IPSC”) differentiation know-how to generate immune effector cells from iPSCs, clustered regularly interspaced short palindromic repeats (“CRISPR”) mediated precision gene editing that allows the Company 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, Allo-EvasionTM technology to prevent rejection of its cell products by the host immune system, and cutting edge manufacturing capabilities intended to minimize product development and supply risk. To achieve the Company’s vision, the Company has assembled a world-class team whose members collectively have decades of experience in cell therapy and drug development, manufacturing, and commercialization.

Century Therapeutics, Inc. (“Prior Century”), was incorporated in the state of Delaware on March 5, 2018. Since inception, Prior Century has devoted substantially all of its time and efforts to performing research and development activities and raising capital.

On June 5, 2019, Century Therapeutics, LLC (the “Company”) was formed by Prior Century and entered into an LLC Agreement (“Agreement”). On June 21, 2019, Prior Century, through the execution of a commitment agreement and other transaction documents (altogether the “Commitment Agreement”) with Bayer Health, LLC (“Bayer”), financed the creation of the Company and amended the Agreement to account for the provisions in the Commitment Agreement that outlined the rights, obligations, and capital contributions of both Bayer and Prior Century in accordance with the newly executed and amended Agreement and related Commitment Agreement (the “Transaction”). The Transaction resulted in Prior Century contributing substantially all of its assets, liabilities, and operations in exchange for a retained 72% equity interest in the Company. Subsequent to June 21, 2019, Prior Century had no significant operations and accounted for its interest in the Company under the equity method of accounting.

In June 2020, the Company formed Century Therapeutics Canada ULC (“Century Canada”), a wholly owned subsidiary, to acquire the assets of Empirica Therapeutics, Inc. (“Empirica”).

On February 25, 2021, the Company converted from a Delaware limited liability company to a Delaware corporation, and changed its name to “CenturyTx, Inc.” Upon completion of this conversion, Prior Century merged with and into CenturyTx, Inc., with CenturyTx, Inc. as the surviving entity and CenturyTx, Inc. changed its name to “Century Therapeutics, Inc.” In connection with this merger, the holders of equity interests in Prior Century received equivalent equity interests in Century Therapeutics, Inc.

On June 22, 2021, the Company completed its initial public offering (“IPO”) of 10,550,000 shares of Common Stock. On June 22, 2021, the Company sold an additional 1,582,500 shares of Common Stock from the exercise of the overallotment option granted to the underwriters in the IPO. The public offering price of the shares sold in the IPO was $20.00 per share. The Company raised a total of $242,650 in gross proceeds from the offering, or $221,185 in net proceeds after deducting underwriting discounts and commissions of $16,985 and other offering costs of approximately $4,480. Upon the closing of the offering, all shares of the Company’s redeemable convertible preferred stock automatically converted into 34,126,528 shares of common stock.

12

Table of Contents

Principles of Consolidation

The consolidated financial statements include the consolidated financial position and consolidated results of operations of the Company and Century Canada. 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 six months ended June 30, 2021, the Company incurred a net loss of $23,273 and $41,621 respectively and for the six months ended June 30, 2021, used $40,668 of cash for operations. Cash and cash equivalents and short and long-term investments were $440,041 at June 30, 2021. Management expects to incur additional losses in the future to fund its operations and conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan. The Company believes it has adequate cash and financial resources to operate for at-least the next 12 months from the date of issuance of these consolidated financial statements.

Note 2—Summary of significant accounting policies and basis of presentation

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2020, included in the Company’s final prospectus that forms part of the Company’s Registration Statement on Form S-1 (Reg. No. 333-256648) and filed with the SEC pursuant to Rule 424(b)(4) on June 21, 2021. Since the date of those financial statements, there have been no changes to its significant accounting policies.

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“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 June 30, 2021, the consolidated statements of operations and comprehensive loss, and consolidated statements of convertible preferred stock and stockholders’ equity (deficit) for the three and six months ended June 30, 2021 and 2020, and the consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 are unaudited, but, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, which we consider 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, 2021 or for any other subsequent interim period.  The consolidated balance sheet at December 31, 2020 has been derived from our audited consolidated financial statements.

Merger and capital restructuring

Upon the conversion of Century Therapeutics, LLC to a corporation and the merger of the newly converted corporation with Prior Century, the existing capital structure of Century Therapeutics, LLC was restructured with no consideration transferred. In accordance with ASC 505-10-S99-4, such a restructuring requires retroactive effect within the balance sheets presented. As such, the Company retroactively adjusted its consolidated balance sheets to cancel the existing LLC units and give effect to their conversion into capital

13

Table of Contents

stock of the Company as if those effects happened as of January 1, 2020. See Note 10 for further information on the Company’s capital restructuring.

Reverse Stock Split

In June 2021, the Company’s Board of Directors approved an amendment to the Company’s amended and restated certificate of incorporation to effect a 2.5161-for-1 reverse stock split of the Company’s common stock, which was effected on June 11, 2021. Stockholders entitled to fractional shares as a result of the reverse stock split will receive a cash payment in lieu of receiving fractional shares. The par value of the common stock was not adjusted as a result of the reverse stock split. Shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the appropriate securities agreements. Shares of common stock reserved for issuance upon the conversion of the convertible preferred stock were proportionately reduced and the respective conversion prices were proportionately increased. All common share and per share data have been retrospectively revised to reflect the reverse stock split.

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 one operating segment.

Use of estimates

The preparation of consolidated financial statements in conformity with US 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 and the estimation of the incremental borrowing rate for operating leases. 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 June 30, 2021 and December 31, 2020, 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 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.

14

Table of Contents

In January 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a “Public Health Emergency of International Concern,” which continues to spread throughout the world and has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets. The COVID-19 outbreak and government responses are creating disruption in global supply chains and adversely impacting many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. Vaccines were introduced late in the fourth quarter of 2020 and became widely available by the end of the first quarter of 2021. While the vaccines have proven effective in reducing the severity and mortality of COVID-19 including the variants that have evolved to date, the overall vaccination rate in the United States has not reached the level required for herd immunity. Certain variants of COVID-19, such as the delta variant, are proving to be more easily spread than earlier variants. The continued low vaccination rate, and the emergence of new variants which could prove resistant to existing vaccines could again result in major disruptions to businesses and markets worldwide. The Company continues to monitor the impact of the COVID-19 outbreak closely. The extent to which the COVID-19 outbreak will impact its operations or financial results is uncertain.

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;

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 June 30, 2021 and December 31, 2020, the Company had $2,235 and $517 in cash on deposit to secure certain lease commitments. Restricted cash is recorded separately in the Company’s consolidated balance sheets.

15

Table of Contents

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:

    

June 30, 2021

    

December 31, 2020

Cash and cash equivalents

$

272,277

$

27,211

Restricted cash

2,235

517

Cash, cash equivalents, and restricted cash

$

274,512

$

27,728

Fixed maturity securities

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. 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.

Foreign currency translation

The reporting currency of the Company is the U.S. dollar. The functional currency of Century Canada is the Canadian dollar. Assets and liabilities of Century Canada 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 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 shares

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 are 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 six months ended June 30, 2021 and 2020.

Early exercised options

The Company allowed certain of its employees and its consultants to exercise options granted under the 2018 Plan (Note 15) prior to vesting. The Shares related to early exercised stock options are subject to the Company’s repurchase right upon termination of employment or services at the lesser of the original purchase price or fair market value at the time of repurchase. In order to vest, the holders are required to provide continued service to the Company. The early exercise by an employee or consultant of a stock option

16

Table of Contents

is not considered to be a substantive exercise for accounting purposes, and therefore, the payment received by the employer for the exercise price is recognized as a liability. For accounting purposes, unvested early exercised shares are not considered issued and outstanding and therefore not reflected as issued and outstanding in the accompanying consolidated balance sheets or the consolidated statements of changes in convertible preferred stock and stockholders’ equity (deficit) until the awards vest. The deposits received are initially recorded in deposit liability. The liabilities are reclassified to common stock and additional paid-in-capital as the repurchase right lapses. At June 30, 2021, $3,234 was recorded in deposit liability related to shares held by employees and nonemployees that were subject to repurchase. At December 31, 2020, there was no deposit liability as the initial deposit liability was recognized on February 25, 2021 when the merger discussed in Note 2 occurred.

All shares that were early exercised by the executives of the Company are considered legally issued, however, for accounting purposes, only vested shares are considered issued. Below is a reconciliation of shares issued and outstanding:

    

June 30, 2021

    

December 31, 2020

Total shares legally outstanding

56,437,204

8,865,992

Less: unvested early exercised shares

(1,161,937)

(330,629)

Less: unvested restricted stock

(871,176)