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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 September 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 November 8, 2021, the registrant had 54,641,380 shares of common stock, $0.0001 par value per share, outstanding.

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Page

PART I.

FINANCIAL INFORMATION

5

Item 1.

Financial Statements:

5

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

5

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

6

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

7

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

9

Notes to Unaudited Consolidated Financial Statements

10

Item 2.

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

29

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

41

Item 4.

Controls and Procedures

42

PART II.

OTHER INFORMATION

43

Item 1.

Legal Proceedings

43

Item 1A.

Risk Factors

43

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

43

Item 3.

Defaults Upon Senior Securities

43

Item 4.

Mine Safety Disclosures

43

Item 5.

Other Information

43

Item 6.

Exhibits

44

Signatures

45

2

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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

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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 our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 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

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CENTURY THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

September 30, 2021

December 31, 

    

(unaudited)

    

2020

Assets

Current assets

Cash and cash equivalents

$

101,292

$

27,211

Short-term investments

 

193,860

 

48,542

Escrow deposits, current

 

502

 

783

Prepaid expenses and other current assets

 

4,744

 

2,261

Total current assets

 

300,398

 

78,797

Property and equipment, net

 

48,626

 

15,385

Operating lease right-of-use assets

12,037

9,392

Restricted cash

1,717

517

Escrow deposits, non-current

346

723

Long-term investments

 

105,193

 

1,053

Security deposits

 

1,408

 

909

Total assets

$

469,725

$

106,776

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

 

  

 

  

Current liabilities

 

  

 

  

Accounts payable

$

11,644

$

8,082

Accrued expenses and other liabilities

 

7,258

 

4,030

Deposit liability

966

Total current liabilities

 

19,868

 

12,112

Operating lease liability, long term

 

14,750

 

11,679

Deposit liability, non-current

2,254

Long-term debt, net

 

9,865

 

9,636

Total liabilities

 

46,737

 

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 September 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 September 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 September 30, 2021 and December 31, 2020, respectively, 0 shares issued and outstanding

Common stock, $0.0001 par value, 300,000,000 and 125,236,190 shares authorized; 54,641,380 and 7,481,861 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

5

1

Additional paid-in capital

 

783,018

 

217,832

Subscription receivable

 

 

(31,900)

Accumulated deficit

(359,972)

(292,342)

Accumulated other comprehensive loss

(63)

(3)

Total stockholders’ equity (deficit)

422,988

(106,412)

Total liabilities and stockholders’ equity (deficit)

$

469,725

$

106,776

See accompanying notes to the consolidated financial statements.

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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, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Operating expenses

Research and development

$

19,545

$

10,812

$

53,852

$

27,239

General and administrative

 

6,282

 

2,319

 

13,058

 

6,679

Write off of in-process research and development asset

 

-

 

-

 

-

 

4,722

Total operating expenses

 

25,827

 

13,131

 

66,910

 

38,640

Loss from operations

 

(25,827)

 

(13,131)

 

(66,910)

 

(38,640)

Interest expense

 

(322)

 

(59)

 

(954)

 

(59)

Other income, net

 

140

 

120

 

234

 

655

Net loss

$

(26,009)

$

(13,070)

$

(67,630)

$

(38,044)

Net loss per common share Basic and Diluted

(0.48)

(1.75)

(2.72)

(5.08)

Weighted average common shares outstanding Basic and Diluted

54,472,650

7,481,861

24,838,250

7,481,861

Other comprehensive loss

Net loss

$

(26,009)

$

(13,070)

$

(67,630)

$

(38,044)

Unrealized (loss) gain on investments

(33)

(79)

(28)

45

Foreign currency translation

(27)

(2)

(32)

(2)

Comprehensive loss

$

(26,069)

$

(13,151)

$

(67,690)

$

(38,001)

See accompanying notes to the consolidated financial statements.

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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 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 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

Issuance cost of common stock from initial public offering

217

217

Issuance of common stock upon the exercise of stock options

 

6,799

9

9

Vesting of restricted stock

 

148,347

Vesting of early exercise stock options

 

82,143

14

14

Unrealized loss on investments

 

(33)

(33)

Foreign currency translation

 

(27)

(27)

Stock based compensation

 

1,220

1,220

Net loss

 

(26,009)

(26,009)

Balance, September 30, 2021

 

$

 

$

$

54,641,380

$

5

$

783,018

$

$

(359,972)

$

(63)

 

$

422,988

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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 gain on 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 gain on 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)

Unrealized loss on investments

 

(79)

(79)

Foreign currency translation

(2)

(2)

Warrants on long term debt

46

46

Stock based compensation

 

144

144

Net loss

 

(13,070)

(13,070)

Balance, September 30, 2020

 

35,000,000

$

34,992

 

26,143,790

$

144,839

7,481,861

$

1

$

217,458

$

(70,000)

$

(276,811)

$

40

 

$

(129,312)

See accompanying notes to the consolidated financial statements.

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CENTURY THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

    

(unaudited)

    

(unaudited)

Cash flows from operating activities